Companies that have continued to grow their dividend yields offer the ideal stability and progressive outlook that both individual investors and institutions like to see. No greater is their confidence than in companies that have consecutively raised their dividend rates every year for multiple decades. For many investors, these elite companies have come to symbolize some of the most steady income plays, which can serve as the foundation for a dividend growth portfolio.
The following are five companies that have sequentially raised their dividend rates for 40 years or more. Each of these companies represent a part of a well-rounded selection that collectively offers broad diversification across several segments of the economy. Additionally, each of these companies offer yields that exceed the current market average yield of 1.97% as represented by the S&P 500. This can be seen in the graphic below. All values were taken as of October 15, 2012.
Colgate-Palmolive Company (CL)
Colgate-Palmolive Company was founded in 1806 and its headquarters is in New York City. The company is a global consumer products leader with a focus on its core business segments of Oral Care, Personal Care, Home Care and Pet Nutrition. Overall, it specializes in the production and distribution of soaps, detergents, toothpastes, veterinary products, and more. Several of the company's numerous brands include Colgate Total, Irish Spring, Speed Stick, Ajax and Palmolive. Colgate-Palmolive currently supports a market capitalization of $51.43 billion and a high forward P/E ratio of 18.45. The company offers a forward annual dividend of 2.3% with a quarterly rate of $0.62. The company maintains a respectable payout ratio of 47% and has been raising its dividend since 1964.
Illinois Tool Works Inc. (ITW)
Illinois Tool Works was founded in 1912 and continues to celebrate its 100th year of operations. The company is a global diversified manufacturer of engineered products and specialty systems. As a worldwide leader of commercial innovation, the company operates multiple business segments including Transportation, Industrial Packaging, Power Systems & Electronics, Food Equipment, Construction Products, Polymers & Fluids and Decorative Surfaces. The company currently supports a market capitalization of $27.60 billion and a below-average forward P/E ratio of 13.02. The company offers a forward annual dividend of 2.6% with a quarterly rate of $0.38. The company maintains a low payout ratio of 30% and has been raising its dividend since 1964.
Johnson & Johnson (JNJ)
Johnson & Johnson has also operated as a business for 126 years, having been founded in 1886. The company has come to be known as a comprehensive global leader in its numerous healthcare businesses. The company engages in the research and development, manufacture, and sale of its various products, which address segments such as consumer products, pharmaceutical products, and medical devices. Some of the company's well known brands include Neutrogena, Johnsons, Tylenol, Zyrtec and Pepcid AC. The company currently supports a market capitalization of $189.13 billion and a discounted forward P/E ratio of 12.56. The company offers a forward annual dividend of 3.6% with a quarterly rate of $0.61. The company maintains an above-average payout ratio of 74% and has been raising its dividend since 1963.
The Coca-Cola Company (KO)
The Coca-Cola Company engages in the manufacturing, marketing and selling of nonalcoholic beverages around the world. The company's popular brands include names such as Coca-Cola, Sprite, Fanta, Minute Maid, Powerade, and vitaminwater. The company now employs 146,200 employees around the world, offers over 3,500 beverage products, sells in over 200 countries, and has operated for over 126 years as a business. The Coca-Cola Company currently supports a market capitalization of $171.66 billion and a reasonable forward P/E ratio of 17.33. The company offers a forward annual dividend of 2.7% with a quarterly rate of $0.255. The company maintains a respectable payout ratio of 52% and has been raising its dividend since 1963.
Target Corporation (TGT)
Target Corporation was founded in 1902 and remains based in Minneapolis, Minnesota. The company remains the second-largest discount retailer in the United States and operates in two reportable segments found in Retail and Credit Cards. As of October 2012, the company operated 1,772 general merchandise stores across the nation. The company has also continued to offer its own branded credit cards under the labels of Target Visa Credit Card and the Target Credit Card. Target currently supports a market capitalization of $40.48 billion and a below-average P/E ratio of 12.64. The company offers a forward annual dividend of 2.3% with a quarterly rate of $0.36. The company maintains a low payout ratio of 28% and has been raising its dividend since 1968.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.