The role of dividends has changed substantially since Graham first advised investors to focus on companies with a history paying them out (not least because the rules surrounding buybacks have changed), but it can still be a useful measure of which companies are healthy enough to keep returning value to shareholders year after year. Some companies that struggled during the financial crisis have started boosting their dividends and buybacks again now that the economy is recovering, but Shauna O’Brien at Dividend.com has identified some of the old stalwarts that have a long history of dividend increases.
Coca-Cola has paid dividends continuously since 1920
Some companies have been increasing their dividends every year without missing a beat for literally decades. The Procter & Gamble Company (NYSE:PG) has raised its dividend every year since 1957, an incredible run that beats every other company in the Dow 30, with a dividend yield that’s usually over 3%, while the Coca-Cola Company (NYSE:KO) has paid dividends continuously since 1920 and has raised dividends continuously since 1963, also with dividend yields around 3%.
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Johnson & Johnson (NYSE:JNJ) has raised been raising its dividend payments continuously since 1963, while retail giant Wal-Mart Stores, Inc. (NYSE:WMT) has been raising its dividend since 1975, usually by 10% – 20% per year. Oil and gas companies Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) have raised their dividends every year since 1983 and 1986 respectively, though Chevron has been increasing its dividends at a slightly higher pace over the last five years (9% versus 8%).
Paying dividends during the financial crisis
As impressive as some of those runs are, the real goal is to identify companies that are likely to keep paying dividends (and likely to generate enough cash to pay those dividends) even when times are hard, and any company that managed to keep its payments up throughout the financial crisis certainly qualifies.
Aerospace and defense contractor Lockheed Martin Corporation (NYSE:LMT) has increased its dividend since 2003, with annual increases reaching 20% and dividend yields typically between 3% and 5%, while Microsoft Corporation (NASDAQ:MSFT) has been raising its dividends since 2004 with yields between 2% and 3% and an average 16% increase over the last five years.
And while it may not be as exciting as some of the names on this list, electric producer The Southern Company (NYSE:SO) has been raising dividends since 2002, averaging 4% increase per year with dividend yields also around 4%.