There is a lot of volatility in the market right now. Dividends can offer protection to your portfolio when the swings of the market are treating your portfolio like a yo-yo. Companies that have a history of growing their dividends over time provide protection from inflation as well as evidence that their business model is working to ensure long-term earnings growth. These companies can give your portfolio some stability as well as growth through their consistently increasing returns to shareholders. These high cash flow companies have the ability to reward their shareholders through increasing dividends.
As you can see in the graphs below, these companies have provided price appreciation combined with increasing dividend payouts to enrich shareholders with market beating returns over the last 5 years:
McDonald's Corporation (NYSE:MCD)
McDonald's Corporation (NYSE:MCD) is the world's leading fast food chain. They have approximately 34,000 locations across the world, and serve 69 million people each day. McDonald's is currently trading at 18 times trailing earnings. Their dividend currently yields 3.18%, and they have raised their dividend annually for 36 years running. They have grown their dividend at an average of 13.9% over the last 5 years. Shareholders have seen their yearly income from each share increasing well above the rate of inflation. The dividend also has plenty of room to grow as their current dividend is only 45% of their cash flow per share. I generally would feel safe with any payout under 60%. Furthermore with a beta of 0.37, your investment in McDonald's Corporation (NYSE:MCD) should stay nice and consistent even as the market bounces around on each new television headline.
source: Yahoo Finance
Wal-Mart Stores, Inc. (NYSE:WMT) is the biggest retailer in the United States. Walmart is currently trading at 14.4 times earnings. They have also recently approved a new $15 billion share repurchase program at the recently held annual shareholders meeting. This huge buyback program will reduce the shares outstanding by roughly 6% and give a nice boost to the earnings per share. Their ability to grow earnings is further aided by the pricing advantage they hold over their competition. Their scale of size enables them to achieve low costs and thus offer the lowest prices to their customers. Wal-Mart Stores, Inc. (NYSE:WMT) shares offer a dividend yield of 2.57%. They have grown their dividend by 13.5% annually over the last 5 years, and have increased their dividend for 39 years. With dividends consuming only 24% of their cash flow per share - an investor can smile as the dividends continue to grow and pile up.Their beta of 0.34 will help stabilize your investment in Wal-Mart Stores, Inc. (NYSE:WMT) from the ups and downs of the market.