Dynamic Dozen: Dividend Machines

04/11/2014 8:00 am EST

Focus: STOCKS

Ideal investments for those approaching retirement are stocks that will increase income each and every year during retirement, suggests Ingrid Hendershot, money manager and editor of Hendershot Investments.

In addition, ideal investments will increase income at a higher rate than inflation, so that retirees may comfortably maintain their standard of living during retirement.

Where is the best place to find these investments? Below, we feature a diversified dozen of high quality companies which have increased their latest dividend at dazzling double-digit rates.

Abbott Labs (ABT) yields 2.3% and has raised its dividend for 42 years.

Automatic Data Processing (ADP) yields 2.5% and has raised its dividend for 39 years.

Becton Dickinson (BDX) yields 1.9% and has raised its dividend for 42 years.

Brown-Forman (BF-B) yields 1.6% and has raised its dividend for 30 years.

Clorox (CLX) yields 3.3% and has raised its dividend for 36 years.

Hormel Foods (HRL) yields 1.7% and has raised its dividend for 48 years.

Microsoft (MSFT) yields 2.9% and has raised its dividend for ten years.

3M (MMM) yields 2.6% and has raised its dividend for 56 years.

PepsiCo (PEP) yields 2.9% and has raised its dividend for 42 years.

The TJX Cos. (TJX) yields 1.0% and has raised its dividend for 18 years.

T. Rowe Price Group (TROW) yields 2.2% and has raised its dividend for 28 years.

Walgreen (WAG) yields 1.9% and has raised its dividend for 38 years.

On average, the dynamic dozen increased their latest dividend 20%! Who wouldn’t like to receive a 20% pay increase, especially in a low inflation environment?

These lean, mean dividend-paying machines have, on average, increased their dividends for 36 consecutive years, enough years to last a retirement lifetime.

As baby boomers increasingly clamor for paycheck replacements, we expect to witness a reversal of this payout trend as companies begin to substantially increase their dividend payouts.

With corporate balance sheets flush with record amounts of cash, it makes sense for dividend payouts to expand from historically low levels to accommodate shareholders’ income needs. As long-term investors search for reliable and growing income streams, they should focus on lean, mean dividend-paying machines.

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