While investment strategies differ with specific portfolio targets, all investors should identify a few of the best long-term dividend stocks to build the core of their investment portfolio strategy, suggests Ned Piplovic, income expert and editor of DividendInvestor.
An easy way to pick stocks with long records of rising dividends is to pick a few companies from the Dividend Aristocrats group, or the Dividend Kings subset. These are S&P 500 stocks whose individual market capitalization exceeds $3 billion and that have boosted their annual dividend consecutively for at least the past 25 or 50 years, respectively.
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Using our Dividend Screener tool, the seven equities on the list below are companies with the highest yields that also have a market capitalization of at least $1 billion, have delivered positive total returns over the trailing 12 months and have records of at least 10 years of consecutive annual dividend hikes.
Exxon Mobil Corporation (XOM)
Dividend Yield: 4.00%
Exxon Mobil has enhanced its annual dividend payout amount every year for the past 36 consecutive years. Just over the past two decades, Exxon Mobil nearly quadrupled its annual dividend payout, which is equivalent to a 7.1% average annual growth rate. T
he company’s current $0.82 quarterly dividend amount corresponds to a $3.28 annualized payout and a 4% dividend yield. This current dividend yield is 8% higher than the company’s own 8.1% average yield over the past five years and is in line with the 3.98% average yield of the overall Basic Materials sector.
The current yield is also 23% higher than the 3.25% average yield of the Major Integrated Oil & Gas industry segment. In addition to the strong dividend income, Exxon Mobil also delivered rising asset appreciation.
While the company delivered a 0.3% total loss over the five-year period, the three-year total return was nearly 10%. Furthermore, the company’s total return over the past 12 months exceeded 14%.
Verizon Communications (VZ)
Dividend Yield: 4.08%
Verizon Communications’ current $0.6025 dividend is 2.1% higher than the $0.59 quarterly payout from the same period last year and equivalent to a $2.41 annualized payout, which yields 4.08%.
This current yield is more than quadruple the 0.98% average yield of the overall Technology sector. Also, Verizon’s current yield nearly 90% higher than the simple average yield of Verizon’s peers in the Telecommunications industry segment.
Verizon’s rising dividend income distributions combined with the company’s capital gains of nearly 25% since May 2018 to reward its shareholders with a 28% total return over the past 12 months.
A share price pullback of nearly 20% in the first half of 2017 suppressed the total return over the past three years to only 21.3%. However, a more positive share price trend prior to the 2017 share price pullback helped to deliver a total return of 47% over the past five years.
The Southern Company (SO)
Dividend Yield: 4.65%
The Southern Company’s current quarterly dividend of $0.60 is 3.6% higher than the $0.28 quarterly dividend from the same period last year.
This current dividend converts to a $2.40 annualized dividend payout and a 4.65% dividend yield. Its yield is nearly 120% above the simple average yield of the entire Utilities sector, as well as 110% higher than the average yield of all the companies in the Electric utilities segment.
The Southern Company has been paying dividends since 1946 and has rewarded investors with annual dividend boosts for the past 18 consecutive years.
Over that period, the company enhanced its annual dividend payout amount nearly 80%, which is equivalent to an average growth rate of 3.3% per year. The combined benefits of rising dividends and capital growth rewarded shareholders with a 20% total return over the past 12 months and a total return of nearly 44% over the past five years.
Dominion Energy (D)
Dividend Yield: 4.74%
Dominion Energy’s current $0.9175 quarterly dividend payout is 10% higher than the 0.835 payout from the same period last year. This new quarterly payout’s annualized value of $3.67 yields 4.4%, which is 20% higher than the company’s own 3.95% average yield over the past five years.
Furthermore, the company’s current 4.7% yield is approximately 120% higher than the 2.1% average yields of the overall Utilities sector and the Electric Utilities industry segment.
Additionally, Dominion Energy’s current yield also outperformed the 3.55% average yield of the Electric Utilities segment’s only dividend-paying companies by 33.5%. Over the past 16 years of consecutive dividend hikes, the company nearly tripled it total annual dividend payout, which corresponds to an average growth rate of nearly 7%.
Short-term investors enjoyed a total return of 20% over the trailing 12 months, which exceeded the three-year total return of 19%. However, investors that held a long position over the past five years enjoyed a total return of more than 32%.
Dividend Yield: 4.88%
ONEOK’s current $0.86 quarterly dividend is 0.6% above the $0.855 payout from the previous period and more than 11% higher than the $0.77 quarterly payout from the same period last year.
The new quarterly amount corresponds to a $3.44 annualized distribution and yields 4.88%. The company’s current yield is approximately 135% above the 2.07% average yield of the overall Utilities sector.
Additionally, the current yield is nearly 80% above the 2.74% simple average of the Gas Utilities industry segment and in line with the 4.9% average yield of the segment’s only dividend-paying companies.
After 15 consecutive annual hikes, the company’s total annual dividend payout amount is 10-fold higher than it was in 2002. This level of growth corresponds to an average growth rate of more than 14.6% per year.
The share price dropped nearly 75% and recovered fully by mid-2018 but suffered another selloff of 25% at the end of 2018. However, the share price has been rising and returned to within 2% of its all-time high by early April 2019. The 75% price decline in 2015 kept the five-year total return of 41% above the 29% total return over the past 12 months. However, the three-year total return was nearly 180%.
PPL Corporation (PPL)
Dividend Yield: 5.13%
Over the past two decades, the PPL Corporation has enhanced its total annual dividend payout amount 230%. That advancement corresponds to an average growth rate of 6.2% per year.
PPL Corporation’s current quarterly dividend of $0.4125 converts to a $1.65 annualized payout and yields 5.13%, which is 8.2% higher than the PPL’s own 4.74% dividend average over the past five years.
A share price decline of nearly 38% in the second half of 2017 delivered a total loss of approximately 1% over the past three years. However, the share price performed substantially better more recently and combined with strong dividend distributions to deliver a 21% total return over the past 12 months. Additionally, the company delivered a total return of more than 31% over the past five years.
Omega Healthcare Investors (OHI)
Dividend Yield: 7.05%
After cutting its annual dividend nearly 65% in 2000, Omega Healthcare Investors, Inc. resumed annual dividend hikes in 2003. Since 2003, the REIT has enhanced its total annual distribution amount 340%, which corresponds to an average growth rate of 10.4% per year.
The current quarterly distribution of $0.66 corresponds to a $2.64 annualized payout and a 7.05% forward dividend yield. Omega’s share price declined more than 45% between its all-time high in early 2015 and April 2018. However, the price had recovered all those losses by the beginning of November 2018.
After recovering fully, the price continued to rise and gained more than 45% above the April 2018 low by the beginning of April 2018.
The unit price decline limited the three-year total returns to just slightly over 30% and the total return over the past five years was 48%. However, the robust unit price recovery and the 7%-plus income distribution combined to deliver a total return of nearly 52% over the past 12 months.
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