10 other dividend growth investments.
How many times have you read that JNJ/PG/KO/MCD/MO are good dividend growth investing stocks? Coca Cola is a global maker of soft drinks, beverages…Duh! I love dividend growth investing but I can do without the robo articles. Those stocks are obvious but what are some other options a dividend growth investor can use to diversify? Since you probably want to own more than a handful of stocks here are 10 other ideas.
Colgate-Palmolive - Border line obvious pick with 49 years in a row of dividend increases. Maker of tooth paste, hand sanitizers, shampoos, and deodorants always seems to play second fiddle among dividend growth investors to Proctor and Gamble. Colgate has a lower dividend yield but a faster 10 year dividend growth rate than PG.
Church and Dwight – 16 years of constantly rising dividends supported by very strong earnings growth. Consumer brands including Arm & Hammer, Trojan and Oxi Clean. Annual dividend was 10.33 cents 10 years ago and has grown to $1.12 currently. The lower dividend yield but faster growth could favor young DGI investors with longer term horizons.
McCormick & Co – King of spice. Not really a 1A Dividend Growth stock in terms of popularity but probably a 1B dividend growth investing stock. 27 years of consistently rising dividends.
Clorox – It’s more than just Bleach! Clorox also makes BRITA water filters – a perfect razer/blade business. Other brands include Glad trash bags/ cling wrap, Hidden Valley Ranch and Kingsford charcoal. Company has increased dividends for 35 straight years. Dividend yield is above 3%. They are a small cap stock that has been in the take over cross hairs before.
Target – A lot of people prefer shopping at this “middle class Wal-Mart”. Wal-Mart gets a lot of love from dividend growth investors but Target has raised dividends 45 years in a row compared to Wal-Mart’s 38 years of increases. Target & Wal-Mart have nearly identical dividend yields and payout ratios yet Target has a much faster 5 year annual dividend growth rate of 20.5% to 13.5%.
IBM – 17 years in a row of growing dividends. Low payout ratio of 23.59% but high annual dividend growth rate over the last 10 years of 18.8%. EPS doubled over the last 5 years. IBM could be more favorable to younger DGI investors with longer time horizons. Warren Buffet broke his no tech rule to purchase this company.
Microsoft – Why do we like dividend growth investing? Because it is shareholder friendly. Microsoft has a proven track record of their commitment to shareholders including a one time dividend of $3.08 in 2004 along with 10 years of growing dividends.
Nestle – A foreign dividend growth investment but not really. Nestle is the dominant global food player that includes brands like; Stouffers, Hot Pockets, Lean Cuisine, Buitoni, Gerber baby food, Poland Spring water, Haagen-Dazs ice cream, Purina One, Alpo, Dog Chow, Power Bar, Butter Fingers, Kit Kat, Nestle Crunch and many more. Nestle has increased its dividend 12 years in a row. I am somewhat surprised Nestle isn’t more popular as a dividend growth option.
Novo Nordisk – Another European company. Some DG investors seek a minimum initial dividend yield of between 2.5% to 3%. NVO has a yield of only 1.35% but absolute explosive earnings growth. Earnings per share was $1.71 in 2006 but is projected to be $8.27 this year. The 10 year annual dividend growth rate is just under 30% per year. That translates to a yearly dividend just under 16 cents in 2001 to $2.49 per year now. Powerful stuff and I unfortunately believe diabetes care and global obesity will continue to rise.
Nike – Not all of your dividend growth stocks have to have increased dividends for 50 years in a row. Nike has 10 years of dividend increases and it wouldn’t shock me if they make it to the 25+ year Champions list. They have strong brand loyalty and a great business model.
Disclosure: Author is long JNJ, PG, KO, MCD, CLX, IBM, MSFT.