The durability of a company's distribution is measured by its historical endurance over the course of the company's existence. In a similar fashion, the strength of a company is often measured by its capacity to consistently return value to its shareholders through such dividends. For shareholders, it therefore remains a positive indication when enterprises annually raise their dividend rates as an expression of their corporate health. Such companies confirm their commitment to their investors and often project a unique form of consistency so often lacking on the market as a whole. The following four companies have raised their dividend rates consecutively for four decades or more.
In addition to their enduring legacy as dividend growth investments, the following companies have continued to average a dividend yield either equal to or in excess of the market average. The S&P 500 (NYSEARCA:SPY) is a stock index which follows the common stock prices of 500 publicly traded American companies, as determined by the S&P. It has often been used as a benchmark measure of the market itself. The following companies all currently offer yields in excess of 2.09%, which is the current yield of the S&P 500 as seen in the graphic below. All values were believed to be accurate as of November 5, 2012.
Sysco Corporation (SYY)
Founded in 1969, Sysco Corporation has grown to become the world's largest diversified food distributor with over 400,000 clients throughout its many subsidiaries and fields of operation. The company operates 170 facilities throughout the United States & Canada and caters to restaurants, healthcare facilities, hotels, and other hospitality businesses. The company engages in the marketing and distribution of food products, related dining products, and food services. The company currently supports a market capitalization of $18.06 billion and an average forward price-to-earnings ratio of 14.25. The company offers a forward annual dividend of 3.4% with a quarterly rate of $0.27. The company maintains an average payout ratio of 42% and has been raising its dividend since 1971.
Procter & Gamble Co. (PG)
Procter & Gamble was founded in 1837 and offers investors a 175-year history. Together with its subsidiaries, the company is a leading diversified supplier in the consumer packaged good space. The company operates out of five segments which include Beauty, Grooming, Health Care, Fabric & Home Care, and Baby & Family Care. In 2012, these segments evenly accounted for 22%, 16%, 17%, 26%, and 19% of net earnings respectively. The company currently supports a market capitalization of $187.76 billion and an above average forward price-to-earnings ratio of 15.97. The company offers a forward annual dividend of 3.2% with a quarterly rate of $0.562. The company maintains a typical payout ratio of 58% and has been raising its dividend since 1957.
Becton, Dickinson and Company (BDX)
Becton, Dickinson and Company was founded in 1897. The company manufactures and sells medical devices, instrument systems, and reagents. With operations in over 50 countries, the company's caters primarily to healthcare institutions and clinical laboratories but also addresses industry and the general public as well. The company sells needles, catheters, and syringes among its many products. It also offers diagnostic systems and tools to facilitate in research. The company currently supports a market capitalization of $15.28 billion and an average forward price-to-earnings ratio of 13.21. The company offers a forward annual dividend of 2.4% with a quarterly rate of $0.45. The company maintains a relatively low payout ratio of 32% and has been raising its dividend since 1972.
Johnson & Johnson (JNJ)
Johnson & Johnson has been in 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 $195.17 billion and a below average forward price-to-earnings ratio of 12.89. The company offers a forward annual dividend of 3.4% with a quarterly rate of $0.61. The company maintains an above-average payout ratio of 77% and has been raising its dividend since 1963.
Stability remains an important factor to consider for an income investor. For stocks, the statistic of Beta describes the correlated volatility of the investment to the benchmark of the overall market. A beta of 1 typically indicates that the security's price will move with the market. On the other hand, a beta less than 1 means that the price will be less volatile than the market. The aforementioned companies carry the following beta values:
|Johnson & Johnson||0.46|
|Procter & Gamble Co.||0.27|
|Becton, Dickinson and Company||0.81|
As a result of their steady business models and continued dividend growth, these companies have been able to reflect their overall stability through their respective stock prices. A look at the 1-year stock price performance found above helps to illustrate the ideal consistency investors seek through the relatively horizontal price movement. Such stability remains a positive attribute for investors looking to replace their income with limited risk to their invested principal. Overall, four decades of consistently improving performance for investors provide adequate justification to make these companies ideal income plays worthy of consideration.
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.