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Wed. Feb. 11, 2009

The Best Dividend Stocks In The World *

I couldn’t begin to estimate how many different stocks are traded around the world on the various exchanges. Like everything else, there are many participants, but few players. Though the population of stocks may be large, there are only a precious few that are worthy dividend stocks. When spending my time looking for worthy investments, there are four primary places I look:

I. S&P 500 Dividend Aristocrats

These stocks are the best of the best – the blue blood stocks. S&P maintains the list. Here is a description from their site:

S&P 500 Dividend Aristocrats is designed to measure the performance of S&P 500 index constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. This index is a member of the S&P Dividend Aristocrats index series.

Index constituents exhibit the following characteristics:

  • Underlying Indices – S&P 500
  • Weighting – Equally weighted; Constituents re-weighted quarterly
  • Reconstitution – Reviewed annually in December

Members may be deleted during the December rebalance if calendar-year dividends did not increase from the previous year, or intra-year if the stock is removed from the underlying S&P 500.

Among others, Dividend Aristocrats include these highly recognizable names:

  • Clorox Co (CLX)
  • Coca-Cola Co (KO)
  • Exxon Mobil (XOM)
  • Johnson & Johnson (JNJ)
  • McDonald’s Corp (MCD)
  • Procter & Gamble (PG)
  • Wal-Mart Stores (WMT)

II. US Broad Dividend Achievers™ Index

This index is maintained by Idxis. Here is the description from their website:

The Broad Dividend Achievers™ Index is comprised of companies incorporated in the United States or its territories, trade on the NYSE, NASDAQ or AMEX, and have increased their annual regular dividend payments for the last ten or more consecutive years. In addition, Indxis requires that a stock’s average daily cash volume exceed $500,000 per day in the November and December prior to the annual reconstitution date on the last trading date in January. The Index is calculated using a modified market capitalization weighting methodology and has been published by the American Stock Exchange under the ticker symbol DAA since December 5, 2003.

Select US companies with at least ten consecutive years of increasing regular dividends. US companies must be listed on the NYSE, AMEX or NASDAQ. US Companies must have a minimum average daily cash volume of US$500,000 per day for the November and December prior to each Annual Reconstitution Date.

Here are several prominent companies that are Dividend Achievers:

  • Chevron Corporation (CVX)
  • Donaldson Company (DCI)
  • McCormick & Co. (MKC)
  • Wells Fargo & Co. (WFC)

III. International Dividend Achievers™ Index

This index is maintained by Idxis. Here is the description from their website:

The International Dividend Achievers™ Index is designed to track the performance of dividend paying American Depositary Receipts and foreign common stocks trading on major US exchanges. To become eligible for inclusion in the International Dividend Achievers Index a stock must be incorporated outside the United States, trade on the NYSE, NASDAQ or AMEX, and have increased its annual regular dividend payments for the last five or more consecutive years. In addition, Indxis requires that a stock’s average daily cash volume exceed $500,000 per day in November and December prior to each annual reconstitution in January. The Index is calculated using a dividend yield weighting methodology and is calculated by American Stock Exchange under the symbol DAT since August 1, 2005.

To become eligible for inclusion, a company must be incorporated outside of the United States. The companies must be have an American Depository Receipt or common stock trading on NYSE, NASDAQ or AMEX. Companies must have paid increasing regular annual dividends for five or more consecutive years. The average daily cash volume must exceed $500,000 in US$ in the November and December prior to reconstitution.

The International Dividend Achievers are filled with companies that touch our lives on a daily basis including:

  • Toyota Motor Corp. (TM)
  • Panasonic Corp (PC)
  • Nokia Corp. (NOK)
  • BP p.l.c. (BP)
  • Canadian National Railway Company (CNI)

IV. The U.S. Dividend Champions

This list is maintained by Dave Fish of MoneyPaper is regularly updated and located at the The Drip Investing Resource Center. Here is a description from the spreadsheet:

The initial goal was to identify companies that had increased their dividend for at least 25 consecutive years, but, as explained below, the definition was broadened to include additional companies that had paid higher dividends without having increased the quarterly payout in every calendar year. I also decided to follow companies that had increased their dividend for 20-24 straight years, since they are likely to join the 25-year “Champions” soon. It was also necessary to resolve discrepancies between the streak claimed by the company and information from outside sources, which is why the “(Per Company)” sub-title is included.

All the U.S. Dividend Champions names may not be as familiar, but it includes some smaller companies not found on the other lists such as:

  • Florida Public Utilities (FPU)
  • Bowl America (BWL.A)
  • Middlesex Water Co. (MSEX)
  • Telephone & Data Sys. (TDS)
  • Weyco Group Inc. (WEYS)

Bringing It All Together

The above four lists contain a significant number of companies, and unfortunately a great deal of duplication. I am in the process of building a single list that eliminates the multiple entries for the same company. It is my goal to eventually have a minimum amount of analysis on each company. To that end, I have posted an aggregated list as Stock Ideas under the Analysis section. It is still very rough around the edges, but keep checking in, it will get better as time passes.

Not every stock listed is a great dividend investment, but virtually all great dividend investments are on the list.

Full Disclosure: Long BP, CLX, CNI, CVX, JNJ, KO, MCD, PG, WMT

(Photo: ilker)


19 Responses to “The Best Dividend Stocks In The World *”

  1. Brian says:

    These lists are a good start for anyone looking to add to their portfolio. Thanks!

  2. VLT says:

    GREAT POST!!!

  3. Monevator says:

    This would be a great time to be a US investor looking to put money into the UK, thanks to the exchange rate.

    I know it’s not your stock specific approach, but perhaps have a look at London-listed IUKD.

    It’s an ETF tracking dividend shares from a yield-based perspective. It was very exposed to retail, property and banking in the good times and has come off terribly. But some point it will rebound I’m sure.

    It’s currently yielding over 10%, but maybe wait til March to be sure of the new yield post-’rebalancing’.

  4. Monevator: I am wanting to increase my international exposure and the UK is one place I am focusing on. I already hold BP’s ADR and I am looking at some other UK ADRs.

    Best Wishes,
    D4L

  5. Dave Fish says:

    Please note that Wilmington Trust (WL) just cut its dividend in half. (1/29 announcement)

  6. Dave: Thanks for the info. I have updated the Stock Ideas page.

    Best Wishes,
    D4L

  7. Dude says:

    Nokia (NOK) did cut their dividend:(

  8. That’s a nice starting list to get your dividend screening process started. I also own most of the stocks mentioned here.

  9. I don’t know… I still think, regardless of the dividend, that you need to enter upon a new uptrend break. You’ll make a lot more if you buy the stock right and ride the trend. Right?

  10. Tony: Wat you say is correct, but If you plan to hold the stock for 20-30 years. Small movements today have little effect on the long term return. My goal is to buy great companies, with rising dividends that I can hold forever. It doesn’t always work that way, but that is the goal.

    Best Wishes,
    D4L

  11. Joana says:

    A big fish in a small pond, where I live, Hawaiian Electric Co., currently paying $.31 a share per quarter, for a dividend at current price of over 6%.

  12. Ken Borgie says:

    WFC CUT THEIR DIVIDEND BY 85% ON MARCH 6TH 2009 – FROM .34 CENTS TO .05 CENTS. I AM ASSUMING THE FEDS MADE THEM DO THIS WHEN THEY TOOK THE TARP MONEY, BUT I DON’T KNOW. I KNOW THESE BANKS ARE ROTTEN – GETTING FREE MONEY AND CHARGING 4-5 X WHAT IT COSTS THEM. THE POOR PEOPLE ARE PAYING ALL THE BANK FEES AND LATE FEES.

    IT IS JUST A SUCKER’S GAME FOR SMALL INVESTORS LIKE ME. I’VE HAD THIS STOCK BEFORE THEY WERE WFC WHEN THEY WERE NORWEST BANK OF MPLS.

    I SURE WOULD LIKE TO HAVE ADVICE WHETHER OR NOT TO KEEP THESE SHARES OR SELL THEM. FORBES SAYS TO SHORT THEM.

  13. Ken: I am not licensed to provide individuals investing advice. However, I can tell you what I do. Whenever, one of my individual stocks that I hold as an income investment cuts its dividend, I immediately sell it.

    Best Wishes,
    D4L

  14. DanF says:

    how do you keep track of which stocks are cutting dividends? Do you read any one source daily or just keep combing through multiple sources? What do you read anyway…WSJ, IBD? Just curious. Thanks for the good writing.

  15. D4L says:

    DanF: As I do my analysis each week, one of the items I check for changes is current dividend.

    Best Wishes,
    D4L

  16. MB says:

    Hi,

    I suspect it goes hand in hand right? A strong company like JNJ should not cut its dividends correct? It should be a big red flag in which the markets would probably price itself in. But what if it does plow back into the company? Would you still sell?

    But for tech companies that are subject to dividend/cash payout scrutiny, would you necessarily do the same?

    EX: INTC, MSFT ?

    Thanks
    Happy Holidays.

  17. D4L says:

    MB: If JNJ cut its dividend, I would sell it.

    Best Wishes,
    D4L

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