With interest rates likely to remain low for a long time, what is an income investor to do?
One option is dividend stocks.
Kiplinger has combed through the Dow Jones Industrial Average to select top dividend plays.
The publication based its choices on "a strong track record of dividend increases plus a business outlook healthy enough to support continued dividend generosity and long-term stock price growth." The companies were ranked by the rate of dividend increase in the past five years.
The winners include:
- UnitedHealth Group, dividend yield: 1.6 percent. This health insurer is the largest managed-care firm in the United States. It has raised its dividend at a higher rate than any other company in the Dow in the past five years, at 119 percent.
- Microsoft, dividend yield: 2.7 percent. The company announced an 11 percent dividend increase in September, "demonstrating that executives understand the importance of a growing cash payout even as the share price rebounds," according to Kiplinger.
- Home Depot, dividend yield: 1.9 percent. The company has raised its dividend by an average of 16 percent a year for the last five years. That's thanks to "a major business makeover engineered by recently retired CEO Frank Blake."
- Nike, dividend yield: 1.0 percent. "Although many apparel businesses are forever at the mercy of consumers' fashion whims, Nike has come to define high-performance athletic shoes and clothing."
- 3M, dividend yield: 2.3 percent. The company rewards its investors by increasing its dividend, which has increased 11 percent in the past five years. "More impressive, 3M has boosted its dividend for 56 consecutive years."
- ExxonMobil, dividend yield: 2.9 percent. "Exxon has a reputation for being picky about its spending on energy exploration and development," Kiplinger notes.
- United Technologies, dividend yield: 2.2 percent. While the global economy is weak, the firm has two growth sweet spots: aircraft parts and systems, and commercial building.
Meanwhile,
Morningstar dividend specialist Josh Peters recommends five dividend energy stocks that you might consider in the wake of recent price declines in the sector.
The list includes two integrated oil producers: Chevron and Royal Dutch Shell. And it includes three master limited partnerships: Magellan Midstream Partners, Spectra Energy Partners and AmeriGas Partners.
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