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NewAlchemist (80.69)

10 other dividend growth investments.

Recs

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February 27, 2013 – Comments (2) | RELATED TICKERS: CLX , NSRGY , NVO

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.

2 Comments – Post Your Own

#1) On May 09, 2013 at 3:25 PM, JohnCLeven (76.01) wrote:

Opinions on any of the following for dividend growth?

CSX, NSC, CHRW, UPS

PM, LO

BDX, WAG

MMM

 

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#2) On May 10, 2013 at 3:03 PM, NewAlchemist (80.69) wrote:

I own a good stake in LO.

I am interested in BDX, WAG and PM.

I'd be more interested in the rails if the economy was in a trough, like when I bought BNSF right before WEB did.

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