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Michael Sivy Commentary:
Sivy on Stocks by Michael Sivy Column archive
6 dividend all-stars
Companies that keep increasing their dividends typically provide superior total returns.
By Michael Sivy, Money Magazine editor-at-large

NEW YORK (MONEY) -- One of the most reliable ways for investors to build their wealth is to focus on companies with long track records of increasing dividends.

Over the long-term, rising dividends not only provide generous income. When dividends keep climbing steadily, share prices tend to move up as well. That's especially true if a company increases its payout every year.

Regular dividend hikes are one of the signs of a solid, seasoned management that is committed to rewarding shareholders. Consistency counts more than current yield.

Investors who need income may want to focus on the highest-yielding stocks. But shares that pay as little as 1 percent initially can still be winners if their dividends go up rapidly.

I've screened the Sivy 70 list, looking for companies that have raised their dividends 30 years in a row. Then I've pared down that list based on financial strength and the current level of analyst support for the stock.

In addition, I've looked for a potential total return averaging more than 12 percent a year, based on a combination of projected earnings growth over the next five years and current yield.

The table below shows six companies that meet those tests. You can find more such stocks in a number of conservative investing guides. This list is based on information drawn from "America's Finest Companies," available from the Staton Institute (statoninstitute.com).  Top of page

Consistency Counts: Six to watch
These stocks from the Sivy 70 list have raised their dividends at least 30 years in a row and also offer total return potential of 12% or more, based on projected earnings growth and dividend yields.
Company Price
(8/31/06)
P/E
(next year)
Earnings growth
(next 5 years)
Dividend
Yield
General Electric (GE) 34.06 15.1 10% 2.9%
Illinois Tool Works (ITW) 43.90 12.9 12% 1.9%
Johnson Controls (JCI) 71.93 11.9 12% 1.6%
Pepsico (PEP) 65.28 19.8 11% 1.8%
Procter & Gamble (PG) 61.90 20.6 12% 2.0%
Sysco (SYY) 31.39 19.8 13% 2.2%
P/E and dividend information from Thomson/Baseline

Sivy 70: America's Best Stocks

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