McDonald’s Corporation (MCD), Colgate-Palmolive Company (CL) & 7 “Safe” Dividend Stocks for Long-Term Income

U.S. Treasury securities have long been considered risk-free investment instruments. However, the Standard and Poor’s downgrade of the U.S. sovereign credit rating back in 2011 has dented the Treasuries’ “risk-free” luster. The credit downgrade has generally increased the cost of credit insurance of U.S. debt against default or other credit event.

This, in turn, has raised to prominence several corporate credit issuers, whose debt is considered to have a lower risk of default or other adverse credit event than U.S. debt. Thus, due to sound financial standing and prudence of a select group of U.S. corporate credit issuers, it now costs less to insure debt of these large corporations than to insure debt of the U.S. government, as measured by the credit default swap (CDS) spreads.

For prudent dividend investors, particularly interesting are dividend-paying companies with sound financial standing, consistent earnings power, and years of dividend growth. Among the reputed S&P Dividend Aristocrats, representing stocks of companies that have raised dividends for at least 25 consecutive years, there is a small group of firms that are considered less risky than the U.S. government, from the point of CDS spreads.

While the stocks of those companies do not necessarily have the highest yields or dividend growth, they can be considered “safe” dividend investments for long-term income investors.