A key part of any retirement plan should be to ensure that income lasts during the golden years.
One of the strategies in that regard is to find companies that consistently grow dividends over time.
A good place to look is on the list of Dividend Aristocrats, the group of just 51 businesses that have increased payouts every year for the last 25. Some have done it for over 50 consecutive years!
I currently own six of the Aristocrats, and they have performed well for me.
One of them is the low-cost retailer Wal-Mart Stores, Inc. (NYSE:WMT)
, which has grown the dividend at a compounded rate of more than 20% per year since 1988, easily keeping up with inflation. The stock now yields 2.5%.
The share price has also soared over the last 25 years, sporting more than a 20-fold gain.
The company has been able to do this via a systematic process of growing and expanding the business over the years, including creating Superstores that combine food and normal retail items under one large roof, smaller “neighborhood” grocery stores and an online ordering process.
I could add to my positions in one or more of my existing stocks or I could diversify a bit more and buy one or two others.
I have had my eye on two sectors, consumer staples and energy, in order to find other dividend growing stocks.
Consumer staples are those items that the typical shopper buys on a regular basis. Even during a recession most people will need prescription drugs, deodorant, food and beverages, diapers, and cleaning suppliers, among other things.
I am sure most people have used products from The Clorox Company (NYSE:CLX)
, including the namesake bleach, Liquid-Plumber, Pine-Sol wood cleaner, S.O.S pads, and Glad sandwich bags.
The company has a solid record of returning value to its shareholders. The dividend has been increased every year since 1978 at a compounded annual rate of about 20%. The current payment is $0.64 per share and results in a yield of 2.9%, handily beating Treasuries and interest from the typical money market account.
And lately the stock price itself has performed well. Shares have appreciated more than 50% since March of 2009.