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The single most defining factor in coming up with these 5 picks was for the company in question to have increased its dividends for at least 29 years in a row. For investors looking for companies with a minimum history of consecutively increasing their dividends for 40 years or more, our latest dividend champions article could prove to be interesting.

We also screened for the following factors:

  1. Market cap of $ 2 billion or higher.
  2. Paying dividends for 50 or more years.
  3. Operating cash flow of at least $250 million or a quarterly revenue growth rate of 12% or higher and or a quarterly earnings growth rate of 25% or higher. OCF is generally a better metric than earnings per share because a company can show positive net earnings and still not be able to properly service its debt; the cash flow is what pays the bills.

Levered free cash flow rates have also been provided for all the five stocks listed below. Levered free cash flow is the amount of cash available to stock holders after interest payments on debt are made. A company with a small amount of debt will only have to spend a modest amount of money on interest payments, which in turn means that there is more money to send to shareholders in the form of dividends and vice versa. For investors willing to take on more risk our latest article titled 5 Contrarian Speculative Stock Plays could provide some food for thought.

We like PG for because it has a massive levered cash free flow rate of $7.6 billion, a decent quarterly revenue growth rate of 8.9%, has been paying dividends since 1891 and has increased dividends consecutively for 57 years in a row. We like PBI because of its high dividend yield, its 29 year history of consecutively increasing dividend payments, for its very strong quarterly earnings growth rate of 94% and its strong levered free cash flow rate of $888 million.

Two other noteworthy plays are American Express Co. (AXP) and Abbott Labs (ABT). AXP has been paying dividends since 1870, has a five year dividend growth rate of 6.22%, a payout ratio of only 18%, a three year total rate of return of 145% and a dividend rate of $0.72. Net income for the last three years is as follows; in 2008, it was $2.6 billion, in 2009 it came in at $2.1 billion and in 2010 it surged to $4.1 billion dollar. For 2011, net income so far is at $3.75 billion. ABT has been paying dividends since 1926, has increased its dividends consecutively for 38 years in a row, has a five year dividend growth rate of 10.14%, a payout ratio of 65%, a dividend rate of $1.92, and has a total three year return of 13%. Net income for the last three years is as follows; in 2008, it was $4.8 billion, in 2009 it came in at $5.75 billion and in 2010 it surged to $4.62 billion dollar. For 2011, net income so far stands at $3.106 billion.

Old Republic International Corp (ORI)

ORI has an enterprise value of $1.88 billion and price/sales value of 0.63. It has a quarterly revenue growth of 12.9%, a five-year dividend growth rate of 3.52%, an anaemic total return of 5.25% for the past three years, and has been paying dividends since 1942. It has a rather large negative levered free cash flow rate of -$1.18 billion. After dropping for two years in a row, net income is starting to rise again. In 2008, it was -$558 million, in 2009 it was -$99 million and in 2010, net income turned positive to $30.1 million. For 2011, things are not looking bright; net income has experienced another huge drop and turned negative once again; for the year, net income so far is -$194 million.

  • ROE -5.32%
  • Return on assets -1.15%
  • Total debt $912M
  • 200 day moving average $9.89
  • Book value $14.98
  • Dividend yield 5 year Average 5.90%
  • Dividend rate $ 0.70
  • Payout ratio 532%
  • Dividend growth rate 5 year average 3.51%
  • Paying dividends since 1942
  • Total return last 3 years 5.26%
  • Total return last 5 year -45%

Pitney Bowes Inc. (PBI)

Pitney Bowes has an enterprise value of $7.4 billion and price/sales value of 0.68. It has a quarterly revenue growth of -3.4%, a very strong quarterly earnings growth rate of 94.3%, a sizzling ROE for 164%, a five-year dividend growth rate of 3.52%, an anaemic total return of -8.23% for the past three years, and has been paying dividends since 1934. It has a rather hefty levered free cash flow rate of $888 million. Net income for the past three years is as follows; in 2008, it stood at $419 million, in 2009 it moved up a bit to $444 million and in 2010, it dropped down to $310 million. Net income for 2011 so far is roughly $360 million.

  • ROE - 164.71%
  • Return on assets 6.14
  • Total debt $4.52 B
  • 200 day moving average $20.33
  • Book value $-0.23
  • Dividend yield 5 year Average 5.90%
  • Dividend rate $ 1.48
  • Dividend growth rate 5 year average 2.96%
  • Paying dividends since 1934
  • Total return last 3 years -8.35%
  • Total return last 5 year -45%

Procter & Gamble Co (PG)

It has an enterprise value of $208 billion and price/sales value of 2.10. It has a quarterly revenue growth of 8.9%, a ROE of 18.23%, a very healthy five-year dividend growth rate of 11.2, a quarterly earnings growth rate of - 1.90%, a total return of 19.43% for the past three years, and has been paying dividends since 1891. It has an enormous levered free cash flow rate of $7.66 billion. Net income has been dropping for the past three years. In 2008, it was $13.4 billion, in 2009 it was $12.73 billion and in 2010 net income was $11.79 billion. For 2011, the net income so far is roughly $8.3 billion dollars..

  • ROE 18.23%
  • Return on assets 7.24%
  • Total debt $38.5B
  • 200 day moving average $ 63.43
  • Book value $23.27
  • Dividend yield 5 year Average 2.70%
  • Dividend rate $2.10
  • Payout ratio 51%
  • Dividend growth rate 5 year average 11.2%
  • Paying dividends since 1891
  • Total return last 3 years 19.43%
  • Total return last 5 year 15.6%

Altria Group Inc. (MO)

It has an enterprise value of $ 69 billion and price/sales value of 3.61. It has a very strong ROE of 72%, a payout ratio of 92%, a quarterly earnings growth rate of 3.7%, a total return of 116% for the past three years, and has been paying dividends since 1928. It also has a mammoth levered free cash flow rate of $ 4.66 billion. Net income for the past three years is as follows; in 2008, it came in at $4.9 billion, in 2009 it dropped to $3.2 billion and in 2010, it moved up a bit to $3.9 billion. Net income for 2011 so far stands at $2.54 billion.

  • ROE 72.12%
  • Return on assets 10.9%
  • Total debt $ 13.6B
  • 200 day moving average $ 26.94
  • Book value $2.15
  • Dividend yield 5 year Average 8.9%
  • Dividend rate $1.64
  • Payout ratio 92%
  • Dividend growth rate 5 year average -11.26%
  • Paying dividends since 1928
  • Total return last 3 years 116%
  • Total return last 5 year 78%

Cincinnati Financial Corp. (CINF)

It has an enterprise value of $5.3 billion and price/sales value of 1.26. It has a revenue growth of -11.9%, a very decent five-year dividend growth rate of 4.16%, an attractive price/book value of 1.00, a total return of 13% for the past three years, and has been paying dividends since 1954. It has a levered free cash flow rate of - $4.5 Million. CINF will trade ex dividend on the 19th of December; the payment will amount to $0.4025 and is payable on the 17th of Jan 2012. As of last Fridays close, this works out to a quarterly yield of 1.34%

  • ROE 3.23%
  • Return on assets 0.89%
  • Total debt $894M
  • 200 day moving average $ 27.83
  • Book value $29.54
  • Dividend yield 5 year Average 5.00%
  • Dividend rate $1.61
  • Payout ratio 163%
  • Dividend growth rate 5 year average 4.16%
  • Paying dividends since 1954
  • Total return last 3 years 13%
  • Total return last 5 year 19%

Disclaimer: This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is very important that you check the finer details in each of the mentioned plays before investing any capital in them.

Source: 5 Magnificent Dividend Plays With Tempting Yields And Stellar Payment Histories