Among the best dividend stocks that money can buy, dividend kings represent an elite group of companies that have been consistently paying out dividends for at least 50 years. A company must have a very stable business to ensure dividend payments for such a long time and it’s not surprising that more conservative investors like Warren Buffett are fond of these companies. While the returns from investing in a dividend king might not be as rewarding as investing in a hot technology or biotech company, they are much less risky and over the long term they can still provide solid returns. With this in mind, we have selected five dividend kings which the investors from our database like the most. Unsurprisingly, Warren Buffett held shares of three of these companies.
Why are we interested in the picks of a select group of investors? The reason is simple: we believe that by imitating some of their ideas, we can generate returns that can beat the broader market. Our strategy involves imitating the 15 most popular small-cap stocks among over 700 hedge funds and other investors and it has returned 102% since August 2012, beating the S&P 500 ETF (SPY) by some 53 percentage points (see more details here).
Let’s start with 3M Co (NYSE:MMM), in which 40 funds from our database held positions equal to 2.10% of its outstanding stock at the end of June. Even though the stock fell by 7% during the third quarter amid a broader market sell-off, it is still 5% in the green year-to-date. 3M’s latest financial results were solid, with EPS of $2.05, beating estimates by $0.05, although its revenue came in lower than expected. Amid a global economic slowdown and a stronger dollar that affected 3M Co (NYSE:MMM)’s top and bottom lines, the company has announced plans to cut around 1,500 employees as it expects a similar environment at least for the next year. This year, 3M raised its quarterly dividend to $1.02 from $0.86 and its stock currently sports a dividend yield of 2.63%. Meanwhile, Edgar Wachenheim‘s Greenhaven Associates increased its stake in 3M Co (NYSE:MMM) by 12% during the third quarter, reporting ownership of some 2.25 million shares in its latest 13F filing.