It’s a common stock market adage that “past performance is not indicative of future results,” but I find it funny that past performance is how we often decide if an investment is worth our time and money.
And although there is some truth in that saying - remember, everything requires nuance - I still believe that dividend stocks with strong operational histories and a track record of rewarding shareholders offer some of the best long-term investments we can find.
So, today, I’m taking a look at some of the best dividend (and dividend growth) stocks available right now, with the fun little twist of only including the companies that have operated for more than a century.
How I Came Up With The Following Stocks
To get today's list, I used Barchart’s Stock Screener to find stocks that pay dividends and have the following current attributes:
- Dividend Payout Ratio: 25% to 60%. The portion of the company’s earnings that is used to pay out dividends. The medium range (25% to 60%) is neither too high to stifle the company’s reinvestment plans nor too low for the dividends not to be considered “too small.”
- Market Cap: $100 billion and above. Bigger companies (especially if they’ve been big for a long time) have more longevity - and likely have better chances of surviving economic shocks.
- 5-year Dividend Growth Rate: 50% or more. A 50% growth rate is considered extremely high, but some companies want to keep their shareholders happy.
- Number of Analysts and Current Analyst Rating: 12 or more, Strong Buy only. This filters the list to top-shelf companies that Wall Street likes currently.
- Annual Dividend Yield: Left blank.
With these filters set, I ran the screen and got 11 companies:
I then arranged the results from highest to lowest dividend yield and selected the top three. Then, I checked if the companies had been in operation for more than 100 years (including mergers), and they have.
So, let’s start with number one:
ConocoPhillips (COP)
ConocoPhillips is one of the world’s largest independent exploration and production companies. The company focuses on discovering and producing oil, natural gas, and natural gas liquids across six global regions: the contiguous United States (Lower 48), Europe, the Middle East & North Africa, Alaska, Canada, and other international locations.
ConocoPhillips can trace its origins back to 1875 with the founding of the Continental Oil and Transportation Company, so it’s fair to say that it has endured a great deal to remain operational today. Good news for dividend investors, too, as the company has paid quarterly dividends regularly since 2002. The current forward annual payout is $3.12, which translates to a ~3.43% yield. This strong yield is supported by a relatively low payout ratio (39.86%) and the highest 5-year dividend growth ratio (132.84%) on this list. And while we’re at it, I should also mention that it has the highest average analyst rating at 4.58.
Bank of America (BAC)
Bank of America is one of the largest financial institutions in the world, offering a comprehensive range of services that include personal banking, small business lending, wealth management, corporate lending, and investment banking. The company operates in 35 countries, serves over 69 million clients in the U.S. alone, and manages $4.2 trillion in its wealth management business. Like with ConocoPhillips, Bank of America’s roots date back over a hundred years to 1904, when it was first established as Bank of Italy (in California).
Today, Bank of America pays $1.04 per share, per year, reflecting around a 2.19% yield. Of the three on this list, BAC has the lowest payout ratio at 28.04% and the lowest 5-year dividend growth at 51.52%. However, a 50% dividend growth rate is already exceptional, and the low payout ratio simply gives BAC more room to increase its dividends in the future.
Abbott Laboratories (ABT)
Last but certainly not least on this list is Abbott Laboratories, the global healthcare juggernaut that operates in over 160 countries and territories. Abbott frequently comes up in many of my “best dividend stocks” lists over the years - and for good reason. It has been recognized as the most profitable healthcare stock in the U.S. and is both a Dividend Aristocrat and a Dividend King, with 53 consecutive years of dividend increases. A quick look at the price graph above supports these claims nicely.
Unlike the other two companies, Abbott was named Abbott Alkaloidal Company right from the get-go in 1888 and had not undergone any significant mergers that changed its identity or formed a new entity in any way.
Abbott currently pays 59 cents quarterly, which translates to a $2.36 per year on a forward basis and translates to around a 1.89% yield. It also maintains a healthy payout ratio of 46.38% and has increased dividends by 71.88% over the last five years.
Final Thoughts
Sometimes, it pays to research a company’s history to see if it’s a good fit for your investment thesis. These long-term, long-living choices may just be what you’re looking for to add to your retirement portfolio.
