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The Dividend Aristocrat list of stocks that have paid rising annual dividends for 25 years in a row or longer has always been a popular starting point for investors seeking income from their portfolios. Yet even among this elite group of dividend stocks, there are some choices that are better than others. Below, you'll discover three members of the Dividend Aristocrats that have what it takes to distinguish themselves from their peers. Look closely at them and see how they could make a huge difference in your returns going forward.
An attractive defensive dividend stock to consider
Neha Chamaria: Consolidated Edison's (ED 1.08%) last quarterly report wasn't among its best, but as a regulated utility that provides essentials like electricity and gas to millions, Con Ed's earnings aren't volatile. Its decoupled rates -- where revenues don't depend on sales volumes -- further insulate Con Ed's top and bottom lines from wild swings. That perhaps explains why Con Ed reiterated its full-year guidance despite a muted second quarter. A steady stream of income is also why the company has been able to increase its dividend every year for 42 years now.
Con Ed's commitment to expanding its core power transmission business while increasing investments in renewable energy to keep up with stricter regulatory norms is evident in its latest projects. For example, Con Ed invested $1.6 billion to upgrade its electricity network in the New York region for this summer. At the same time, the company has pumped $1.8 billion into renewable energy projects, including solar and wind, since last year. The latest feather in Con Ed's cap is its joint venture with Crestwood Equity Partners to develop natural gas infrastructure.
Long story short, Con Ed is leaving no stone unturned to stay ahead in a competitive market and grow its earnings at a clip good enough to keep its dividend streak running in the years to come. The stock offers an attractive dividend yield of 3.5% today, but has lost some steam in the past one month – it's down about 6%. I believe this drop offers a good entry point for dividend investors today.
Go long with an impressive dividend streak
Dan Caplinger: Many of the stocks on the prestigious Dividend Aristocrats list are well-known giants of their industries, but some of them fly below the radar of mainstream American consumers. One little-known Dividend Aristocrat is Dover Corp. (DOV 1.48%), which sells a variety of different types of machinery and equipment. Dover serves a wide range of services to different industries, including energy processing and services, engineered systems for general industrial users, and refrigeration and food equipment for the commercial restaurant and food-services industry.
In August, Dover continued its tradition of raising its dividend, giving shareholders a boost of 5%. The move marked the 61st straight year of annual dividend increases for Dover, which puts it at the top of the Dividend Aristocrats in terms of the length of its streak. Admittedly, with a dividend yield of 2.4%, Dover doesn't come close to leading the group in terms of the amount of income it pays to shareholders. Yet with the energy industry finally starting to bounce back, Dover has regained a substantial portion of its share-price declines since 2014. For income investors looking for a proven track record of success, Dover is nearly unparalleled in the dividend stock universe.
Add some spice to your portfolio
Daniel Miller: When looking for a Dividend Aristocrat to invest in, the name of the game is consistent growth. No matter the metric, one name that fits the bill is easily McCormick and Co. (MKC 0.69%) -- just look at the graph below.
MKC Revenue (Quarterly) data by YCharts.
You're most likely familiar with McCormick from the spice aisle in your local grocery, but its brands translate to more than 140 countries and territories around the world. The company has a broad range of flavors and even creates custom flavor solutions for nine of the top 10 food and beverage companies and each of the top 10 foodservice restaurant chains.
All in all, McCormick is by far the leading player in the spices and seasonings space and it leverages its scale to generate healthy operating margins, all while cutting costs when applicable. McCormick's focus will be trimming $400 million in costs over the next few years.
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When it comes to growth, McCormick has a couple of tricks up its sleeve. Its acquisition of Garden Gourmet, a global leader in chilled convenient packaged herbs, will give the company another avenue to expanding its shelf space within stores.
And while it already generates a little less than half of its total sales outside of the U.S., it will continue to expand globally by focusing on faster-growing markets; it expects to generate 20% of sales from these emerging markets over the next few years, which is roughly three times the level in 2006, according to Morningstar.com.
McCormick's sales are well balanced globally, with growth remaining, it has consistently raised its dividend and the stock price has rewarded shareholders since it went public. It's definitely worth considering if you're buying stocks in September.
