Seeking Alpha
Newsletter provider, fund holdings, insider ownership
Profile| Send Message|
( followers)  

Since the global financial turmoil had sunk share prices all over the world, the stock markets have rebounded more than 60% from their low point in March 2009. During this uptrend, many stocks took advantage of the dovish environment to raise their dividend payouts and provide steady returns to investors.

However, some of these dividend growth stocks may have gone unnoticed by many investors recently, since these stocks have relatively low dividend yields due to larger increases in their prices over the last few years. We believe investors should seek long records of dividend payments in defensive stocks. We think that the stocks that are able to increase dividends are attractive options for conservative investors that demand consistency and some inflation protection.

Below, we provided a list of 12 Dow stocks that achieved consistent dividend growth over the last three years. Market data are sourced from Fidelity. Companies in this list haven't cut their dividends in any single year since the end of 2008, and each has a three-year annualized dividend growth rates of at least 5.

Dividend Yield

3-Year Div. Growth (Annualized)

YTD Return

Intel Corp.

INTC

4.26%

14.47%

-3.86%

Johnson & Johnson

JNJ

3.58%

7.41%

5.66%

Travelers Company

TRV

3.41%

10.97%

-11.72%

Procter & Gamble

PG

3.40%

9.49%

-1.56%

Chevron Corp.

CVX

3.28%

6.27%

6.76%

McDonald's Corp.

MCD

2.87%

6.85%

13.27%

Wal-Mart Stores Inc.

WMT

2.84%

15.40%

-2.76%

United Technologies Corp.

UTX

2.72%

7.63%

-8.85%

Coca Cola Co.

KO

2.71%

7.34%

7.00%

Exxon Mobil Corp.

XOM

2.65%

5.52%

-1.17%

Microsoft Corp.

MSFT

2.49%

7.17%

-6.02%

IBM Corp.

IBM

1.86%

14.47%

11.37%

Average

9.42%

0.68%

These 12 Dow stocks' three-year annualized dividend growth is 9.42% on average. Since the beginning of this year, the average return of these 12 stocks was 0.68% vs. -5.06% for the DJI. Two stocks in this group -- IBM (NYSE:IBM) and McDonald's (NYSE:MCD) -- have provided double-digit returns in 2011.

Here are the 12 Dow stocks that achieved consistent dividend growth over the last three years:

1. Intel Corp. (NASDAQ:INTC) is a global technology company that manufactures and supplies microprocessor products worldwide. INTC has a 4.26% dividend yield but lost -3.86% since the beginning of this year. INTC raised its annualized dividend per share from $0.56 to $0.84 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 14.47%. INTC has a market cap of $103.44B and P/E ratio of 8.91. Paul Ruddock’s Lansdowne Partners has the largest INTC holding among the 300-plus funds we are tracking.

2. Johnson & Johnson (NYSE:JNJ) is a large company that provides consumer healthcare and pharmaceutical products worldwide. JNJ has a 3.58% dividend yield and returned 5.66% since the beginning of this year. JNJ raised its annualized dividend per share from $1.84 to $2.28 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 7.41%. JNJ has a market cap of $174.40B and P/E ratio of 15.22. Warren Buffett is the most prominent JNJ investor, with a $2.8 billion position.

3. Travelers Company Inc. (NYSE:TRV) is a US company providing insurance services. TRV has a 3.41% dividend yield and lost -11.72% since the beginning of this year. TRV raised its annualized dividend per share from $1.20 to $1.64 in the past three years. TRV has a 3-Year Annualized Dividend Growth of 10.97%. The stock has a market cap of $20.16B and P/E ratio of 9.44. Mason Hawkins had more than $800 million in TRV at the end of June 2011.

4. Procter & Gamble (NYSE:PG) is a multinational company providing a wide variety of consumer goods worldwide. PG has a 3.40% dividend yield but lost -1.56% since the beginning of this year. PG raised its annualized dividend per share from $1.60 to $2.10 in the past three years. PG has a 3-Year Annualized Dividend Growth of 9.49%. The stock has a market cap of $169.94B and P/E ratio of 15.74. Warren Buffett has the largest position in PG. Jim Simons, Ken Fisher, Bill Miller and D.E. Shaw also have large PG positions in their portfolios.

5. Chevron Corp. (NYSE:CVX) is a large U.S. energy company operating worldwide. CVX has a 3.28% dividend yield and gained 6.76% since the beginning of this year. CVX increased its annualized dividend per share from $2.60 to $3.12 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 6.27%. CVX has a market cap of $190.66B and P/E ratio of 8.31. Phill Gross’ Adage Capital holds more than $300 million of CVX.

6. McDonald’s Corp. is a large fast-food chain operating worldwide. MCD has a 2.87% dividend yield and returned 13.27% since the beginning of this year. MCD raised its annualized dividend per share from $2.00 to $2.44 in the past three years. MCD has a 3-Year Annualized Dividend Growth of 6.85%. The stock has a market cap of $87.73B and P/E ratio of 17.18. Jim Simons has the largest MCD position among the 300-plus funds we are tracking.

7. Wal-Mart Stores Inc. (NYSE:WMT) is a global company operating retail store chains worldwide. WMT has a 2.84% dividend yield but lost -2.76% since the beginning of this year. WMT increased its annualized dividend per share from $0.95 to $1.46 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 15.40%. WMT has a market cap of $177.02B and P/E ratio of 11.59. Warren Buffett holds more than $2 Billion of WMT.

8. United Technologies Corp. (NYSE:UTX) is a large US conglomerate providing aerospace technology products and related services worldwide. UTX has a 2.72% dividend yield and lost -8.85% since the beginning of this year. UTX raised its annualized dividend per share from $1.54 to $1.92 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 7.63%. UTX has a market cap of $64.09B and P/E ratio of 13.64. Ken Fisher had more than $500 Million in UTX at the end of June 2011.

9. Coca-Cola Co. (NYSE:KO) is one of the largest non-alcoholic beverage providers in the world. KO has a 2.71% dividend yield and returned 7.00% since the beginning of this year. KO increased its annualized dividend per share from $1.14 to $1.88 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 7.34%. KO has a market cap of $159.28B and P/E ratio of 12.94. Warren Buffett has a massive position in KO (check out the legendary Buffett’s biggest holdings).

10. Exxon Mobil Corp. (NYSE:XOM) is a giant U.S. company that manufactures and sells branded motor fuels and related products worldwide. XOM has a 2.65% dividend yield and returned -1.17% since the beginning of this year. XOM increased its annualized dividend per share from $1.60 to $1.88 in the past three years. XOM has a 3-Year Annualized Dividend Growth of 5.52%. The stock has a market cap of $345.26B and P/E ratio of 9.33. Phill Gross and Ken Fisher are large XOM holders with nearly $600 million worth of positions.

11. Microsoft Corp. (NASDAQ:MSFT) is the largest provider of software products in the world. MSFT has a 2.49% dividend yield and lost -6.02% since the beginning of this year. MSFT increased its annualized dividend per share from $0.52 to $0.64 in the past three years. MSFT has a 3-Year Annualized Dividend Growth of 7.17%. The stock has a market cap of $215.66B and P/E ratio of 9.57. Ken Fisher, Boykin Curry and David Einhorn are the most prominent MSFT investors. Einhorn explained his investment thesis for Microsoft in detail at the Ira Sohn Investment Conference (read Einhorn's speech here).

12. IBM Corp. is a large technology and consulting company operating worldwide. IBM has a low dividend yield of 1.86% and gained 11.37% since the beginning of this year. IBM raised its annualized dividend per share from $2.00 to $3.00 in the past three years. IBM has a 3-Year Annualized Dividend Growth of 14.47%. The stock has a market cap of $192.72B and P/E ratio of 13.11. Lansdowne Partners had more than $700 million in IBM at the end of June 2011.

Source: 12 Dow Stocks With Consistent, And Growing, Dividends