10 Stocks to Buy, Hold and Prosper
Betting on companies that are not only profitable but also have a long history of increasing their dividend payments to shareholders is as good a strategy as you'll find for increasing wealth without exposing yourself to outsize risk.
Each of these 10 businesses has been issuing ever-higher checks to their investors for at least half a century, according to the dividend-tracking site The Dynamic Dividend.
1. Diebold (DBD). This maker of safes and other security equipment yields 3% and pays out 50% of its profits as dividends. Management has increased the average payout by 5.4% annually over the past five years.
2. American States Water (AWR). This company pays a 3.1% yield as of this writing, with 45% of profits committed to dividends. This California water utility was founded in 1929 and has increased its average payout by 3.9% annually over the past five years.
3. Dover (DOV). Shares of this industrial machinery supplier yield 2.1% as of this writing, paying out 26% of profits as dividends. Management has increased the average payment to shareholders by 11% annually over the past five years.
4. Northwest Natural Gas (NWN). It pays a 3.9% yield as of this writing, with 73% of profits earmarked for dividends. This Pacific Northwest gas utility celebrated its centennial two years ago and has increased its average payout by 4.7% annually over the past five years.
5. Emerson Electric (EMR). Another member of the 100-plus club, this supplier of industrial electronics yields 3.2% as of this writing. Roughly 46% of earnings are committed to dividends. Management has raised the payout 9.1% annually over the past five years.
6. Genuine Parts Company (GPC). Yielding 3.1% as of this writing, this auto parts wholesaler pays 50% of profits back to shareholders as dividends. Management has increased the payout by 6% annually over the past five years.
7. Procter & Gamble (PG).You already know P&G -- it's one of the world's most popular consumer products companies, maker of such items as Tide detergent and Pampers diapers. What you might have missed is the company's 3.3% yield, paid from 60% of annual earnings. Management has increased its spending on dividends by 11.2% annually over the past five years.
8. 3M (MMM). Originally known as Minnesota Mining and Manufacturing when founded in 1902, 3M -- the creator of Post-It Notes -- yields 2.7% as of this writing. Management pays out 37% of profits as dividends, and 3M has increased the per-share cut by 3.6% annually over the past five years.
9. Vectren (VVC). Founded in 1912, this central U.S. utility funds a 4.9% yield by paying 80% of earnings back to shareholders as dividends. Management has increased the payout by 2.4% annually over the past five years.
10. Cincinnati Financial (CINF). The riskiest bet in the lot, this property casualty insurer pays out more than 150% of its annual profits as dividends. So while the history and current yield -- 4.6% as of this writing -- are no doubt enticing, management may be forced to curtail payments to shareholders in the coming years.
Should you invest in any of these stocks? That depends on whether you have an interest in learning more about the underlying businesses. And again, don't invest with money you'll need in the next five years. Stocks are wonderful at creating long-term wealth, but they're as dangerous as dynamite over the short term.