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5 Long-Term Dividend All Stars to Consider Today

These five companies boast top dividend yields and payment histories. In this article, I analyze each company and compare it to an industry competitor to determine which stocks seem likely produce the income long-term investors are seeking.

AFLAC Incorporated (AFL) – This provider of life and supplemental health insurance is currently trading near $42 a share, which is toward the middle of its 52-week range of $31.25 to $59.54. Ten years ago, it was trading near $21 a share. Its market capitalization is over $19 billion. Earnings per share are $3.94, and its price to earnings ratio is very reasonable at 10.57. Its dividend yield is 3.10 percent or $1.31, and its payout ratio is 30 percent. Operating cash flow is $9.61 billion. AFL has increased its dividend every year for the past 28 years, and it has paid a dividend since 1973.

Its larger-cap industry peer American International Group Inc. (AIG) is currently trading near $23 a share. It has shown a little more price volatility than AFL with a 52-week trading range of $19.18 to $62.87. Its market capitalization is over $43 billion. Earnings per share are $4.41, and its price to earnings ratio is low at 5.16. AIG does not currently pay a dividend, as required by its credit agreement with the Federal Reserve. AIG, which was heavily involved in the trading of derivatives, paid dividends regularly since 1969 until nearly collapsing in the 2008 financial crisis. The credit agreement provided AIG with the liquidity it needed to continue operating.

At a time when many financial sector stocks are struggling, AFL is holding up well. It is reasonably priced, pays an attractive dividend, and shows gains and stability over time. Its performance and dividend payments are also sustainable, since the company generates significant cash from its operations. AFL is a nice addition to income investors looking for reliable and sustainable dividends as well as to buy-and-hold investors looking for compounded gains in retirement accounts.

Bemis Company (BMS) – This maker of packaging products is currently trading near $29 a share. It has shown relative price stability over the past 52 weeks, ranging from a low of $27.21 to a high of $34.40. Ten years ago, it was trading near $19 a share. Its market capitalization is almost $3 billion. Earnings per share are $1.99, and its price to earnings ratio is 14.48. BMS’s dividend yield is 3.30 percent or $0.96, and its payout ratio is 48 percent. The company’s operating cash flow is $364.81 million. BMS boasts 19 consecutive years of dividend increases. The company began making payments to shareholders in 1922. A direct stock purchase/dividend reinvestment plan is available.

Its competitor Avery Dennison Corporation (AVY) is currently trading near $27. With a 52-week trading range of $23.52 to $43.52, it is showing more price volatility. Ten years ago, AVY was trading near $40. Its market capitalization is near $3 billion. Earnings per share are $2.64, and price to earnings ratio is 10.25. Its dividend yield of 3.60 percent or $1 is higher than BMS’s. Its payout ratio is 36 percent. Its operating cash flow is $323.10 million. In 2009, AVY reduced its dividend from $0.41 a quarter to $0.20. In February of this year, management increased it to $0.25 a quarter. AVY offers a direct purchase/dividend reinvestment program.

BMS boasts a stable, reasonable price, an attractive dividend and payment history, and a nice ten-year gain in price. Its performance is also sustainable, and income and longer-term investors will find this stock attractive and relatively low risk.

Consolidated Edison Inc. (ED) This northeastern U.S. electric utility is currently trading near $59 a share. It has ranged from $48.55 to $59.89 over the past 52 weeks. Ten years ago it was trading near $22 a share. ED’s market capitalization is over $17 billion. Earnings per share are $3.71, and its price to earnings ratio is 15.90. ED’s dividend yield is very attractive at 4.10 percent or $2.40 a share. Its payout ratio is 65 percent, and it operating cash flow is $3.57 billion. ED has increased its dividend for the past 36 consecutive years and has paid them since 1885. The company offers a direct stock/dividend reinvestment plan.

Its competitor American Electric Power Co. (AEP) is currently trading near $39 a share. It has ranged from $33.09 to $40.08 over the past 52 weeks. Ten years ago, AEP closed near $26. Its market capitalization is almost $19 billion. Earnings per share are $3.76, and price to earnings ratio is 10.44. Its dividend yield of 4.80 percent or $1.88 is higher than ED’s. AEP’s payout ratio is 49 perent, and its operating cash flow is $4.30 billion. Although AEP has paid dividends since 1909, management reduces payments from time to time. The company offers a direct stock purchase/dividend reinvestment plan.

Both companies are solid and stable performers. Both show dedication to shareholders through lengthy dividend histories, and both show the cash flows to sustain payments. ED is more consistent, though investors will pay for this in terms of a higher price to earnings ratio and a lower yield. Investors considering either of these companies may choose to consider both.

McDonald’s Corp. MCD – This fast food chain is currently trading near $97 a share. It has ranged from $72.14 to $98.95 over the past 52 weeks. Ten years ago, it closed near $21. Its market capitalization is almost $100 billion. Earnings per share are $5.10, and the company’s price to earnings ratio is 19.10. Its dividend yield is 2.80 percent or $2.80, and its payout ratio is 48 percent. Its operating cash flow is $7.09 billion. MCD has paid dividends since 1976 and has increased its payments for the past 34 consecutive years. The company offers a direct stock purchase/dividend reinvestment plan.

Its competitor Yum! Brands, Inc. (YUM) is currently trading near $58 a share. It has ranged from $46.27 to $59.17 over the past 52 weeks. Ten years ago, it was trading near $11, adjusted for dividends and splits. Its market capitalization is over $26 billion. Earnings per share are $2.55, and its price to earnings ratio is 22.57. Its dividend yield is 1.90 percent or $1.14. The company’s payout ratio is 39 percent. Its operating cash flow is only $2.17 billion. YUM has paid dividends since 2004, and management has increased payments for the past six consecutive years. It does not offer a direct stock purchase plan.

MCD boasts an outstanding dividend payment history. Its expanding global reach and consistent performance point to future growth and success. It is a little pricey, but its performance is strong. YUM is a strong company, too, but it lacks its competitor’s track record.

Wal-Mart Stores Inc. (WMT) – This discount retail giant is currently trading near $58 a share. It has ranged from $48.31 to $59.40 over the past 52 weeks. Ten years ago, it was trading near $46.20. Its market capitalization is over $198 billion.

WMT’s dividend yield is 2.50 percent or $1.46, and its payout ratio is 30 percent. Its operating cash flow is $24.49 billion. The company’s dividend payment history dates to 1973. It has increased its payment for the past 35 consecutive years. WMT offers a direct stock purchase/dividend reinvestment plan.

Its competitor Target Corporation (TGT) is currently trading near $53 a share. It has ranged from $45.28 to $60.97 over the past 52 weeks. Ten years ago, it closed near $33 a share. Its market capitalization is over $35 billion. Earnings per share are $4.30, and its price to earnings ratio is 12.27. TGT’s dividend yield is 2.20 percent or $1.20, and it payout ratio is 25 percent. Operating cash flow is $5.39 billion. TGT, which has increased its dividend payment for the past 39 consecutive years, boasts a payment history that dates to 1965. It also offers a direct stock purchase/dividend reinvestment plan.

Both of these companies make nice additions to income and long-term portfolios. Both show stability and a commitment to shareholders while operating in an industry that maintains its outlook even in the face of adverse economic conditions.

About the author:

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