Legendary investor George Soros has said that, in the short term, financial markets are “chaotic.” This turbulence can lead to long-term gains for savvy investors who buy promising stocks when the prices are down due to market conditions.
Long-term investing like that is especially appealing for publicly traded companies that have paid and increased dividends for over 50 consecutive years. That includes Coca-Cola (NYSE: KO), Colgate Palmolive (NYSE: CL), Genuine Parts (NYSE: GPC), 3M (NYSE: MMM), and Northwest Natural Gas (NYSE: NWN), among others.
There’s a lot more to like about a business entity that has increased its dividend annually for more than 50 consecutive years other than just getting a check in the mail every quarter (or electronic debit to your account).
Paying a dividend shows that the company is generating enough cash to finance all operations and still have funds to reward shareholders. Increasing it annually for more than 50 years demonstrates that the business model and management are admirable for the ability to adapt to evolving economic conditions and prosper. In terms of executive management, paying a dividend shows that all who own the stock, even just one share, are treated equally and with respect when it comes to sharing the proceeds from operations.
It is noteworthy that Coca-Cola, Colgate Palmolive, Genuine Parts, 3M, and Northwest Natural Gas all deal directly with the consumer.
Perhaps drug lord Walter White from “Breaking Bad” put it best when he intimidated a rival by declaring his product was so superior that it was the Coca-Cola of that sector, then taunting him with, “Do you want to live in a world without Coca-Cola?”
There are few around the world that have not used the consumer goods of Colgate Palmolive or 3M. For Northwest Natural Gas, more than a half-century of dividend growth emanates from providing service in Oregon and Southwestern Washington to about 62000 residential, 65,000 commercial and 1,000 industrial customers. Even though the American automobile industry was bankrupt in one form or another during The Great Recession, providing parts for motor vehicles allowed for Genuine Parts to keep increasing its dividend, as it has every year since 1957.
The chart below shows how superior the dividend structure is for each of these companies:
|Company||Dividend Yield||Years of Consecutive Dividend Growth||Dividend Growth Rate||Years for Dividend Amount to Double||Institutional Ownership||Beta||Short Float*|
|Coca-Cola||2.84%||53||8.4%||Less than 9||62.20%||0.47||0.94%|
|Colgate Palmolive||2.10%||52||9.4%||Less than 8||73%||0.44||0.47%|
|Genuine Parts||2.27%||59||8.10%||Less than 9||73.40%||0.74||3.42%|
|3M||2.12%||57||5.70%||Less than 14||69.60%||1.11||1.55%|
|Northwest Natural Gas||3.77%||60||3.30%||Less than 23||59.50%||0.53||7.93%|
Source: Finviz;*a short float of 5% is considered to be troubling for a security.
At present, the average dividend yield for a member of the Standard & Poor’s 500 Index (NYSE: SPY) is just under 1.9%. All of these 50-year dividend growers exceed that yield. The institutional ownership level is high for all, too. That is a bullish sign to have so much of the stock owned by institutional investors such as mutual funds and pension groups. Those investors have superior resources and generally buy assets for the long term. That contributes to the beta being below average for almost all, too. Only Northwest Natural Gas Co. has a short float that could be considered troubling.
These stocks have all done well in the present bull market, like so many others.
But very few stocks have increased the dividend amount annually for more than 50 years. No matter what has happened for over a half century, the dividend has been paid and raised annually. That history offers long-term investors some security for the future in financial markets that are “chaotic” in the short term.
This Dividend Has Grown Ten-Times Bigger in Ten Years
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