7 Solid Dividend Stocks

Are you confident and secure in your investing process? It appears many people are not. From the famed Canadian dividend investor Derek Foster who sold all his dividend investments in February to co-workers who have moved to the sidelines waiting on the bottom, many investors are abandoning their process.

I have read that most investors will lose money in the stock market over their lifetime. It is not that the market is a bad place to invest your money, but left unchecked the psychology of the market will lead you to do just the opposite of what you should to be doing. The great investors know this. Consider Warren Buffett’s famous quote, ‘We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful’. How do we overcome our natural instincts to sell when we should be buying?

First, we must follow a process we are 100% confident in. Doubt is the gateway to destructive behavior. Many approaches have proven successful over time. I have chosen income investing, primarily through individual dividend stocks. How do we become so confident in a process that we are willing to trust our life’s savings to as the world crumbles around us?

Confidence comes from knowledge and experience. We must study our approach and understand the process that it is following. It is easy for me to watch stock prices crater knowing that it is not only providing an excellent entry point for future capital appreciation, but also higher current yields that will grow each year as the companies continue to raise their dividends. Knowing how it works is good, but comfort in the process comes from having been there before and experiencing the gains after coming out of a downturn.

Finally, the most important step is selecting great investments. For me, those are good solid dividend companies that have a proven track record of increasing their dividends and the financial ability to continue doing so in the future. Here are seven companies that have increased dividends for more than 30 consecutive years for your consideration:

• McDonald’s Corp (MCD) - 32 Years - Yield: 3.61%
• Wal-Mart Stores Inc. (WMT) - 35 Years - Yield: 2.08%
• PepsiCo Inc. (PEP) - 36 Years - Yield: 3.25%
• Sysco Corp. (SYY) - 38 Years - Yield: 4.30%
• Johnson & Johnson (JNJ) - 47 Years - Yield: 3.58%
• 3M Company (MMM) - 51 Years - Yield: 4.02%
• Procter & Gamble Co. (PG) - 52 Years - Yield: 3.29%

Each of the above companies has a proven business model that has not only got them though the good times, but more importantly seen them through tough economic times. Sure, some companies that have been cornerstones for decades may slip, that’s part of investing, but there are always great companies ready to step in and fill the void. It is easy to be confident and secure when you invest in the best dividend stocks in the world!

Full Disclosure: Long MCD,WMT, PEP, SYY, JNJ, MMM, PG

Comments

[Vobogeck:]

I have been critical of this site in the past, calling it Seeking Bears because it seemingly provides a forum for short sellers. So it behooves me to compliment you for writing a positive article about the merits of long term investing in great companies. I hold 5 of the 7 stocks you mention, many of them for decades. Investing in high quality companies for the long term, and staying invested through troubled times like this, is the only way to achieve long term wealth. It is sad that too many of the people who write on this site don't feel the same way.

Apr 09 06:57 PM

[Dustinnoe:]

Great Article! I have been pumping every spare cent into companies like these since the downturn. I have even taken a margin position, which I hate, but I know that now is the time to get my hands on as many shares as possible.

I would like to see more articles that promote long term investing.

Apr 10 03:54 AM

[ECONOMICS 101:]

Warren Buffet said and says "If you are not going to own it for 10 years, don't buy it". People must decide if they want to trade or invest. They are two very very different things.

Apr 10 08:55 AM

[football frank:]

I agree with every company that you listed. I was surprised that
you said most people will lose money in the stock market over their
life time. Maybe so, but if you stay in the market over your life time,
I'm sure you will make lots of money, especially since dividends
are a big part of your total return. Re-invest those dividends and
let the compounding process make you rich.

Apr 10 09:26 AM

[Brad Castro:]

Good article and good comments.

"Finally, the most important step is selecting great investments."

Funny how often that's overlooked - in a world overrun with underperforming mutual funds, speculative ETFs, and short term momentum mindsets, it takes a real contrarian to actually remember what true investing really is - buying into and partnering with the best long term quality and profitable businesses you can identify.

The example I love to use is the 25% dividend yield that McDonald's investors who purchased shares back in 1991-92 are now receiving.

Apr 10 12:02 PM

[wobatus:]

I have 4 as well. I thought about jnj, but went with bmy for the div and what I had hoped was a takeover premium. I have mcd, mmm, wmt and pg. Sysco is good as well.

To the guy that took out margin to buy? Well, maybe you got a very low price, but that isn't wise and negates the dividend bonus.


On Apr 09 06:57 PM Vobogeck wrote:

> I have been critical of this site in the past, calling it Seeking
> Bears because it seemingly provides a forum for short sellers. So
> it behooves me to compliment you for writing a positive article about
> the merits of long term investing in great companies. I hold 5 of
> the 7 stocks you mention, many of them for decades. Investing in
> high quality companies for the long term, and staying invested through
> troubled times like this, is the only way to achieve long term wealth.
> It is sad that too many of the people who write on this site don't
> feel the same way.

Apr 10 02:15 PM

[David Van K...:]

Good article, more of the kind needed on Seeking Alpha. Too much attention has been given lately to the glooomy S&P dividend statistics that show dividends declined in the first quarter and probably will decline year-over-year from 2008-2009. Those articles cause many to miss the fact that hundreds of companies have not and will not decrease their dividends, in fact they increased them in the first quarter and will continue to do so in the coming months.

The list of companies in the article is sound, I too own 5 of the 7. And because of the long bear market, many of these companies (and others like them) can be purchased at lower prices (and therefore higher yields) than at any time in years.

There are strategies for making money in the stock market that do not involve rapid-fire trading or shorting stocks. As stated in another comment, they are built around buying chunks of the best long term businesses you can identify and gaining the advantages of paybacks like dividends. Over the long run, this is a great strategy. It doesn't have the sexiness of articles that get picked as Editors' Choices, but there is an audience out here that "gets it" and seeks out articles such as this one.

I will give kudos to Seeking Alpha for finally creating a category for dividend investing in their email Alerts.

Apr 10 03:50 PM

[E Nuff Sed:]

I would also add another criteria - i.e. these stocks be non-financial have low leverage and have what Buffet call wide moats.
Other stocks which may qualify are PAYX, KO, MRK, LLY, GD, MSFT, INTC, UN, KMB.

Apr 10 04:42 PM

[tc1:]

I can tell that many of the longtime investors here are quite happy about their investments in big successful companies that have seen their stock split two, three or more times over the years and now have substantial dividend payments coming their way.

But many of these big companies aren't going to grow much at this point, compared to the upcoming successful small and medium cap firms. Moreover, why would the socially responsible investor want to invest in labor-punishing Wal-Mart or junk food kings McDonald's, PepsiC, et al.?

I do like 3M as a great company that does well by its workers and the environment.

These days i think investors wanting to take long positions could find far better dividend-yielding income from investments in the renewable alt-energy Canadian income trusts like Boralex Power Income Fund (BLXJF.PK), Great Lakes Hydro Income Fund (GLHIF.PK), and the like. And after this credit freeze thaws a bit more later this year, the wind, solar and other renewable firms should make great cap gain and eventual dividend yields for many investors who get in at this early stage, just like PG, JNJ, et al., eventually became big returners for their investors who got in 20, 30, or 40 years ago.

Just my two cents' worth.

Apr 10 09:28 PM

[wobatus:]

Labor-punishing Walmart? I prefer to think of them as consumer-benefiting. Coke isn't just sugar-water. And nothing wrong with a little sugar water treat now and then. There's diet coke, water, etc. And McDonalds has salads. I even own Altria. Smoke'em if you got'em. I don't smoke much myself, but every once in a while I like a cigarette. My wife kicked them to have our daughetr, just born. She hasn't had one in 10 months. Not one. And she smoked about a pack every 3 days or so for years.

I can sleep at night about it.


On Apr 10 09:28 PM tc1 wrote:

> I can tell that many of the longtime investors here are quite happy
> about their investments in big successful companies that have seen
> their stock split two, three or more times over the years and now
> have substantial dividend payments coming their way.
>
> But many of these big companies aren't going to grow much at this
> point, compared to the upcoming successful small and medium cap firms.
> Moreover, why would the socially responsible investor want to invest
> in labor-punishing Wal-Mart or junk food kings McDonald's, PepsiC,
> et al.?
>
> I do like 3M as a great company that does well by its workers and
> the environment.
>
> These days i think investors wanting to take long positions could
> find far better dividend-yielding income from investments in the
> renewable alt-energy Canadian income trusts like Boralex Power Income
> Fund (seekingalpha.com/symbo...), Great Lakes Hydro
> Income Fund (seekingalpha.com/symbo...), and the like.
> And after this credit freeze thaws a bit more later this year, the
> wind, solar and other renewable firms should make great cap gain
> and eventual dividend yields for many investors who get in at this
> early stage, just like PG, JNJ, et al., eventually became big returners
> for their investors who got in 20, 30, or 40 years ago.
>
> Just my two cents' worth.

Apr 11 12:40 PM

[wobatus:]

And spicing it up with some growth is fine, but long history of sustainable if unexciting growth is safer. I have many non-div payers as well. Heck, Berkshire doesn't pay a div. But I mean stuff like sigma designs.


On Apr 11 12:40 PM wobatus wrote:

> Labor-punishing Walmart? I prefer to think of them as consumer-benefiting.
> Coke isn't just sugar-water. And nothing wrong with a little sugar
> water treat now and then. There's diet coke, water, etc. And McDonalds
> has salads. I even own Altria. Smoke'em if you got'em. I don't
> smoke much myself, but every once in a while I like a cigarette.
> My wife kicked them to have our daughetr, just born. She hasn't had
> one in 10 months. Not one. And she smoked about a pack every 3 days
> or so for years.
>
> I can sleep at night about it.

Apr 11 12:43 PM