When it comes to investing in Dividend Growth Stocks, certain sectors have been more favorable to investors than others. Historically, the sectors most popular with dividend investors include financial services, healthcare and consumer defensive. Each has provided good yields and growth over the years.
Financial services has provided above-average yields with dividend growth. This sector is not nearly as popular with dividend growth investors as it once was due to the 2008 financial meltdown. Understandably, there is an air of skepticism with these stocks and their management teams.
Healthcare, primarily pharmaceuticals, also has provided above-average yields with dividend growth. The downside to pharmaceuticals is that drugs eventually go off patent so the companies must constantly innovate and keep new products in the pipeline.
However, the most steady performer over the years for both yield and growth is the consumer defensive sector. This sector includes companies that make products such as soap, detergent, deodorant, toothpaste, etc. These are products that we need, or are willing to purchase, no matter what the economy is doing. They are relatively inexpensive, so in an economic downturn consumers continue to purchase them with no lifestyle changes.
This week week, I screened my dividend growth stocks database for Consumer Defensive companies with a yield at or above 3.25% and that have increased their dividends for at least eight consecutive years. The results are presented below:
Pepsico Inc. (NYSE:PEP)
Yield: 3.4% | Years of Dividend Growth: 39
PepsiCo, Inc. is a major international producer of branded beverage and snack food products.
Procter & Gamble (NYSE:PG)
Yield: 3.4% | Years of Dividend Growth: 55
The Procter & Gamble Company is a leading consumer products company that markets household and personal care products in more than 180 countries.
The Clorox Company (NYSE:CLX)
Yield: 3.6% | Years of Dividend Growth: 36
The Clorox Company is a diversified producer of household cleaning, grocery and specialty food products and is also a leading producer of natural personal care products.
H.J. Heinz Company (HNZ)
Yield: 3.8% | Years of Dividend Growth: 8
The H.J. Heinz Company produces a wide variety of food products worldwide, primarily condiments, convenience meals and snacks.
Sysco Corporation (NYSE:SYY)
Yield: 3.9% | Years of Dividend Growth: 41
Sysco Corporation is a large distributor of food and related products, primarily to the food-service or food-away-from-home industry.
Kimberly-Clark Co. (NYSE:KMB)
Yield: 4.2% | Years of Dividend Growth: 39
Kimberly Clark Corp. is a global consumer products company that produces tissue, personal care and health care. Its brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott and Kimberly-Clark.
As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 210+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long PEP, PG, CLX, SYY, KMB. See a list of all my dividend growth holdings here.
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