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, Health Care 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 and sell 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, I screened my dividend growth stocks database for Consumer Defensive companies with a yield at or above 2.5% and that have increased their dividends for at least 10 consecutive years. The results are presented below:
Wal-Mart Stores Inc. (NYSE:WMT) is the largest retailer in the world, Wal-Mart operates a chain of over 10,000 discount department stores, wholesale clubs, supermarkets and supercenters. The company has paid a cash dividend to shareholders every year since 1973 and has increased its dividend payments for 39 consecutive years. Yield: 2.5%
Target Corp. (NYSE:TGT) operates nearly 1,800 Target, SuperTarget and CityTarget general merchandise stores across the U.S. and expects to open about 125 stores in Canada in 2013. The company has paid a cash dividend to shareholders every year since 1965 and has increased its dividend payments for 46 consecutive years. Yield: 2.7%
PepsiCo Inc. (NYSE:PEP) is a major international producer of branded beverage and snack food products. PEP is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. Yield: 2.8%
The Coca-Cola Company (NYSE:KO) is the world's largest soft drink company, KO also has a sizable fruit juice business. KO is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. Yield: 3.0%
The Procter & Gamble Company (NYSE:PG) is a leading consumer products company that markets household and personal care products in more than 180 countries. The company has paid a cash dividend to shareholders every year since 1891 and has increased its dividend payments for 56 consecutive years. Yield 3.1%
General Mills, Inc. (NYSE:GIS) is a major producer of packaged consumer food products, including Big G cereals and Betty Crocker desserts/baking mixes. The company has paid a cash dividend to shareholders every year since 1898 and has increased its dividend payments for 10 consecutive years. Yield: 3.1%
Kimberly Clark Corp. (NYSE:KMB) is a global consumer products company's producing tissue, personal care and health care products. Its brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex and Scott. The company has paid a cash dividend to shareholders every year since 1935 and has increased its dividend payments for 41 consecutive years. Yield: 3.3%
The Clorox Company (NYSE:CLX) is a diversified producer of household cleaning, grocery and specialty food products is also a leading producer of natural personal care products. The Clorox Company is a diversified producer of household cleaning, grocery and specialty food products is also a leading producer of natural personal care products. Yield: 3.4%
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 230+ 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 WMT, PEP, KO, PG, KMB in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.
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