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There are blue-chip dividend stocks, and then there are the true dividend aristrocrats – stocks that have been paying, and raising, dividends for decades. It is a true testament to any great business if a company can return any money to shareholders.
However, when you reach the point where they can do so reliably, and do so in a manner where the dividend gets lifted each year, you are truly dealing with the greatest of all time.
These three companies are, as of last week, the three highest yielding stocks with the longest streak of raising dividends.
AT&T (NYSE: T) tops the list, with a yield presently at 5.7%, and consistent raising of dividends for 30 years. AT&T is a bit of an odd duck at this point. On the down side, it operates in an incredibly competitive field. Just today, I cancelled my Internet service, and the company still gave me a $6 monthly credit on my phone service to keep me as a customer.
That’s one of the reasons behind the company’s buyout of DIRECTV (NYSE: DTV). Besides the obvious synergies, AT&T needs new revenue streams. The merger will offer a lot of leverage for AT&T to offer DIRECTV service, and a host of other telecom offerings.
The company doesn’t have the prettiest balance sheet, with only about $2.5 billion in cash and $70 billion in debt that will rise to about $92 billion after the merger. However, the key to paying dividends is cash flow. Despite all of its travails, the company generates about $14 billion annually, and only pays out about 55% of it as dividends.
You may have heard of Old Republic International Corp. (NYSE: ORI), but you probably didn’t know that it pays a 5.2% yield and has been raising dividends for 33 years. What kind of company could manage to do this? Insurance, of course. The beauty of insurance companies is that, if they underwrite properly, they can become the single most consistent cash flow generator of any business, which is why Warren Buffett’s entire corporation core is centered around GEICO.
Old Republic Internationaldoes it all. It offers automobile extended warranty, aviation, commercial automobile, commercial multi-peril, general liability, home warranty, inland marine, travel accident, and workers’ compensation insurance products. How’s that for complete? Oh, and there’s also specialty lines like financial indemnity products, fidelity, guaranteed asset protection, and surety. It stretches into institutional insurance as well as governmental and education, and even into weird things like forest products.
With that kind of coverage, no pun intended, Old Republic International’s lengthy history of dividend increases makes perfect sense.
Ever heard of Universal Corp. (NYSE: UVV)? Probably not, because the headlines in its industry get grabbed by Philip Morris International (NYSE: PM). That’s right, Universal is a 127-year-old company that purchases, processes, and sells tobacco, and e-cigarettes and, oddly, produces dehydrated and juiced fruit and vegetable products.
Thus, Universal has quietly made tons of money and raised dividends for 44 years running. That yield is presently at 5.2%.
Tobacco has struggled globally over the past few years, what with smoking bans, tobacco taxes going up, and people trying to get healthier. Even though the lastest results showed a huge 30% YOY revenue decline, and a 50% decline in net income, the company raised its dividend again.
Unlike AT&T, the company has very little debt ($230 million) and very little cash ($30 million), but continues to generate enough cash flow to pay that dividend.
Dividends for Every Month of the Year
If you’re looking for just one dividend stock to round out your income stream, consider a little-known company that pays out dividends 12 months of the year. Click here to see the full details of this company in my Dividend Calendar…