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Summary

  • There are 17 stocks that have a dividend yield over 3.5% and have increased dividends for at least 25 consecutive years.
  • A company that can raise dividend payouts regardless of economic environment can add stability to a portfolio.
  • A 25+ years of proven results is hard to argue against.

Investors who rely on dividend income know how important dividend stability is when selecting a stock. Stability is often given a backseat in favor of higher yields, which can result is fluctuating dividend payments. This article will profile companies that have an impeccable record of increasing dividends year after year, regardless of market condition or political tension. There are 17 small to large-cap stocks that have a current dividend yield of at least 3.5% and have increased dividends for at least 25 consecutive years. Some of the stocks on the list are fairly predictable, but many are quite surprising.

Company

Market Cap ($ billions)

P/E

Dividend Yield

Consecutive Years w/ dividend increase

Northwest Natural Gas (NYSE:NWN)

$ 1.2

20.5

3.99%

58

Vectren Corp (NYSE:VVC)

$ 3.3

23.8

3.61%

54

Cincinnati Financial (NASDAQ:CINF)

$ 7.8

17.4

3.69%

53

Target (NYSE:TGT)

$ 37.6

20.1

3.50%

46

Altria Group (NYSE:MO)

$ 83.4

19.4

4.57%

44

Leggett & Platt (NYSE:LEG)

$ 4.6

24.8

3.65%

42

Universal Corp. (NYSE:UVV)

$ 1.3

10.3

3.76%

42

Middlesex Water Co. (NASDAQ:MSEX)

$ 0.3

20.4

3.65%

41

Consolidated Edison (NYSE:ED)

$ 16.8

13.7

4.39%

40

WGL Holdings (NYSE:WGL)

$ 2.1

117.5

4.31%

37

Piedmont Natural Gas (NYSE:PNY)

$ 2.8

18.3

3.56%

35

Old Republic International Corp (NYSE:ORI)

$ 4.4

8.3

4.35%

32

AT&T (NYSE:T)

$ 186.2

10.5

5.13%

29

HCP Inc. (NYSE:HCP)

$ 19.3

21.5

5.16%

28

Mercury General (NYSE:MCY)

$ 2.6

21.9

5.22%

28

Tompkins Financial Corp (NTMP)

$ 0.7

13

3.51%

28

Universal Health Realty Income Trust (NYUTH)

$ 0.6

41.4

5.74%

28

Source: Dividend.com & CNBC

When you think of all the economic recessions, wars, inflation pressure, political tension, natural disasters and stock crashes over the last 28-58 years, this list is pretty remarkable. Being able to raise dividend payments during times of crisis, when many companies are just trying to keep their head above water should be priceless to investors. Not having to worry about the income your portfolio generates during difficult economic times is a luxury few investors achieve. There are over 100 companies that have increased dividends for at least 25 consecutive years, but there are only 17 that also pay the high yields, of at least 3.5%, that many investors look for in an investment.

Top Picks

It's hard to argue against adding any stock to a portfolio that has 25+ years of proven results, but after reviewing this list 6 stocks jump out to me as strong buys.

Altria Group

Altria's 44 years of consecutive dividend increases goes back to when it was part of Philip Morris (NYSE:PM), where the company has been paying dividends since 1970. Altria owns popular brands including, Marlboro, Virginia Slim, Parliament, Copenhagen and Skoal. While some investors may be turned off by a tobacco company, there track record and 4.57% yield make the stock a solid addition to a dividend income portfolio. Altria also owns 28% of one of the largest brewing companies in the world, SABMiller. This further diversifies the company and increases its attractiveness.

Middlesex Water Co.

Middlesex Water Co. provides regulated and unregulated water and wastewater utility services to customers in New Jersey, Delaware and Pennsylvania. The company was founded in 1897 and has paid a cash dividend since 1912 with a dividend increase for the past 41 consecutive years. The stock falls under a small-cap company with a market cap of just $332 million, but its water distribution services have proven they can sustain a high dividend yield over the long-term. Ordinarily I wouldn't recommend a stock with such a small market cap for a dividend investor, but I believe the water industry will start to command a premium over the next 5+ years. Intense and lingering drought conditions throughout the Southwest and parts of the Midwest have put a spotlight on the water industry as a whole. As people begin to recognize the importance of water scarcity and security, investors will soon follow by placing a premium on water stocks as a whole.

Consolidated Edison

Energy utility companies are often a mainstay in dividend portfolios, but Consolidated Edison is one of my favorite picks in the entire industry. Back in March 2014, I wrote an article, Utility Company Dividend Analysis, comparing the top utility companies and selected Consolidated Edison as one of my top picks. The company provides electricity and natural gas to customers in New York City and Westchester County. The stock has one of the lowest P/E ratios (13.7) and betas (0.19) in the industry. Consolidated Edison's attractive valuation compared to its peers and 40 consecutive years of increasing dividend payments makes the company one of the best utility stocks.

Company

Market Cap. ($billions)

P/E (TTM)

Fwd. Dividend Yield

Beta

Duke Energy (NYSE:DUK)

$51.7

26.9

4.35%

0.23

Southern Co. (NYSE:SO)

$39.9

20.7

4.69%

0.16

Consolidated Edison

$16.7

13.7

4.41%

0.19

American Electric Power (NYSE:AEP)

$26.3

15.7

3.71%

0.38

PG&E Corp. (NYSE:PCG)

$21.9

26.4

3.87%

0.31

PPL Corp. (NYSE:PPL)

$21.2

21.3

4.43%

0.2

AT&T

AT&T is the largest company on this list and pays out nearly $10 billion in annual dividends. With a dividend yield of 5.13%, it is also one of the highest yielding stocks on the list. The company has a solid core wireless communications business as well as an expanding U-verse internet and television business. While AT&T is a mature business, the company isn't standing still, as shown by their proposed acquisition of DirectTV (NASDAQ:DTV). The $48.5 billion buyout would give AT&T enormous cost synergies estimated at $1.6 billion over 3 years. The savings of this potential merger would save in programming costs, operational efficiencies and reductions in broadcast infrastructure. AT&T estimates U-verse content costs, after completion of the transaction, would save roughly 20%. It's difficult for a company the size of AT&T to grow at a quick pace, but this acquisition could really increase profits for the company going forward. With AT&T's track record of 29 consecutive years of increasing dividends, it is likely any additional profit from cost savings could be passed along to shareholders.

HCP Inc.

HCP is a REIT that primarily invests in properties serving the healthcare industry including senior housing, life science, medical office, hospital and skilled nursing. This pick is based on getting exposure to an aging US population over the next 10-15 years that will be increasingly utilizing senior living facilities and healthcare facilities. As a REIT, HCP is legally required to payout at least 90% of their taxable earnings to shareholders. Over the past 5 years, the company has an average yearly dividend increase of 3.5%. The company has $22 billion in assets under management with senior housing and hospital and post-acute care accounting for 68% of their portfolio. This is a reliable high-yielding dividend play in one of the fastest growing sectors in the market over the next 10-15 years.

Johnson & Johnson (NYSE:JNJ)

While Johnson & Johnson didn't make the list of 17 due to a dividend yield below 3.5%, it has 51 years of consecutive dividend increases and is my favorite dividend stock. Exposure to a wide array of healthcare products makes this company extremely attractive over the foreseeable future. The company has everyday consumer staple healthcare products like Band-Aid, Neutrogena, Clean & Clear, Rogaine, Neosporin, Bengay, Listerine, Tylenol, Sudafed, Pepcid, Benadryl, Nicorette and Immodium. Johnson & Johnson also produces a wide variety of medical devices used by health professionals in orthopedics, neurological disease, vision care, diabetes care, infection prevention, diagnostics, cardiovascular disease and aesthetics. In addition to healthcare staples and medical devices, the company also benefits from a broad list of prescription pharmaceuticals. In 2013, prescription pharmaceutical sales increased 10% to $28.1 billion. The company will continue to benefit from its prescription pipeline and will maintain its core business in healthcare staple products. A dividend yield of 2.75% isn't as attractive as others on this list, but Johnson & Johnson is an extremely safe investment that still can benefit from capital appreciation over the next 5+ years.

Conclusion

Company

Market Cap

Dividend Yield

Consecutive Years w/ dividend increase

Altria

$ 83.4

4.57%

44

Middlesex Water Co

$ 0.3

3.65%

41

Consolidated Edison

$ 16.8

4.39%

40

AT&T

$ 186.2

5.13%

29

HCP Inc.

$ 19.3

5.16%

28

Johnson & Johnson

$ 289.0

2.74%

51

Portfolio Average

$ 99.2

4.27%

38.8

Combining all these picks into a portfolio yields pretty impressive results. The 6 stocks combine for a dividend yield of 4.27% and an average of nearly 39 years of consecutive dividend increases. These dividend aristocrats can be a safe addition to any portfolio for investors looking to increase yield and add stability. Past history cannot guarantee future results, but I always side with 25+ years of proven results.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Source: 6 Stocks To Add Yield And Stability To Any Portfolio