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5 Aristocrats for Stable Income

02/12/2019 5:00 am EST

Focus: DIVIDEND

Tim Plaehn

Investment Research Analyst, Investors Alley

In this era of increased stock market volatility, a dividend focused approach can give peace of mind and likely a better chance at above average returns, suggests income expert Tim Plaehn, editor of The Dividend Hunter.

The group of stocks called Dividend Aristocrats provide a good starting place from which to build and income focused stock portfolio.

The Aristocrats are companies that have increased their dividend rates for at least 25 consecutive years. This type of track record keeps Boards of Directors motivated to keep increasing dividends to not fall off the Dividend Aristocrats list.

Dividend focused investing lets you employ one or more out of a handful of different strategies, such focusing on dividend growth or dividend safety. in this review, I want to highlight the highest yield stocks on the Dividend Aristocrats list.

High yields produce attractive real cash flow that can be used as income or to reinvest for more dividend growth. Here are the current highest yielding five stocks from the group.

Cardinal Health Inc. (CAH) is distributor of pharmaceutical and medical products to the health care industry. This company announces higher dividends in May, with the new rate starting with the July dividend payment. The shares yield 3.9%, and while the dividend increased by 3% last year, the five year average growth rate is 10%.

Integrated energy producer Chevron Corp. (CVX) currently carries a yield right at 4.0%. The company should announce a new, higher dividend at the end of January for payment in March. Average dividend growth from CVX has been about 3% per year.

ExxonMobil (XOM) is another integrated energy company that makes the top five yields of Dividend Aristocrats. Current yield is 4.6%. Exxon announces a new dividend rate in April each year, with the payment coming in June. Average dividend growth for the last five years has been 5.6% per year.

Large cap drug developer and producer AbbVie (ABBV) currently yields 4.8%. The company declares a new dividend rate in December for the February payment. The next dividend will be 11.5% higher than the rate paid in 2018. Historical average five year dividend growth rate is 18%.

Telecommunications services provider AT&T (T) currently yields 6.6%. This is the highest yield in the Aristocrats list. The company increases its dividend each year in December, with the new rate starting in February of the following year. You can expect dividend growth of about 2% per year.

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