3 Dividend Stocks to Start Your Portfolio
Sep 10th 2013 7:03PM
Updated Sep 10th 2013 7:04PM
So, you want to invest money but don't have hours on end to research stocks? Consider combining two investing strategies that have long created value for investors: buying what you know and buying high-quality dividend stocks.
Here are three ideas that will get any portfolio started off on the right foot.
Whether you love McDonald's or hate it, you can't deny that the company has found a way to grow even as it's reached new international markets and faced changing tastes domestically. The Big Mac is a foundation of its menu, but branching out into salads, chicken, fruits, and even more exotic options internationally shows a willingness to adapt to customer desires.
Add to that the massive distribution reach and the fact that its franchisees are a cash cow, and you have a company that will be relevant and profitable for decades to come. When it comes to its dividend, McDonald's has paid investors back with cash since 1976 and currently yields 3.2% annually. Even with a small investment, that's enough for a few Big Macs every year.
3M may not have the same brand recognition as as McDonald's, but you probably use its products even more often. The screen you're reading this article on probably has a 3M film in it, there may be Post-it Notes on your desk, and there are 3M products in your car and on the roads you drive on. 3M is simply everywhere.
For investors, that creates an investment that's very well diversified and can weather any economic storm and keep ticking. 3M's days of high growth are in its past, but a 2.2% dividend yield isn't bad, and considering that the payout has grown for 55 straight years, the dividend alone is enough reason to own the stock.
What's more necessary for every person in the U.S. than waste disposal? Whether you're an individual or a business getting rid of garbage or recycling, Waste Management has services for you. Waste Management has more than 21 million customers, and 80% of its current commercial and industrial customers are on at least three-year contracts. That keeps a solid revenue base from which to draw from.
Like 3M, this isn't really a growth company anymore, growing just 1.9% in the first quarter, but it provides services that consumers and municipalities will need for the foreseeable future. I think the 3.7% dividend yield will continue to grow in years to come, and this is a stock you can buy today and not worry about leaving in your portfolio for a decade.
Dividends from companies you use every day
McDonald's, 3M, and Waste Management are three companies that provide vital goods and services, make products that are easy to evaluate and understand, and pay solid dividends that should grow for years to come. That's a great formula for starting a portfolio, and you should keep these stocks at the top of your list.
9 more dividends to consider
These three stocks are just the start of a great portfolio. If you want more stocks that will pay you back for years to come the check out the stocks our analysts think are the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.
The article 3 Dividend Stocks to Start Your Portfolio originally appeared on Fool.com.Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends 3M, McDonald's, and Waste Management and owns shares of McDonald's and Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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