Currently my portfolio consists of 40 dividend growth stocks leaving 10 spots open before I stop. At this point I'm fully allocated (by number of positions) to three sectors: consumer staples, financials, and telecoms. I will not be adding additional positions to those sectors though I will obviously add new shares to the holdings I already have.
This list is not in any particular order, I like them all.
❶ Genuine Parts Company (GPC) Consumer Discretionary Sector
2.7% yield, 52% payout ratio, 58 year streak
I've been meaning to add this company for years but never did manage to get a buy in. GPC is the epitome of a dividend growth stock with a streak approaching 6 decades. That represents the sixth longest streak in the world. I plan to add one more holding from the consumer discretionary sector and feel Genuine Parts is the right company for the slot.
❷ Aqua America, Inc. (WTR) Utilities Sector
2.4% yield, 49% payout ratio, 22 year streak
I'm looking to add another utility for diversification purposes and am extremely interested in WTR. I currently own a couple utilities (AVA, SO) and feel they are appropriate stocks for achieving my goals, but I think a water utility will be my next move in this sector. Anyways this company has great management, a plan for future growth, and happens to sell a product that will never go away as long as the human race roams this earth. If WTR happens to drop around $23 it would be a top candidate for new capital.
❸ Bemis Company, Inc. (BMS) Materials Sector
2.8% yield, 53% payout ratio, 31 year streak
Bemis runs a boring packaging business. It manufactures plastic packaging for products such as cheese, hand cream, lawn fertilizer, and medical syringes... yawn. I think I might have fallen asleep while researching this company, but it's as steady of a business as any and continually innovates bringing new products to market. Companies like this are right up my alley, the only thing I don't like is BMS's low dividend growth. Dividend growth has only grown about 3.4%/yr the past 5 years. I might consider a different company from the materials sector if I can find something better.
❹ Medtronic, Inc. (MDT) Healthcare Sector
1.9% yield, 32% payout ratio, 36 year streak
Great company in a great sector. Not much to dislike about Medtronic except that it currently offers a very low yield. As we all know, stocks prices move around a lot. It would only take a dividend increase and a market correction to get MDT back on my radar. If that happens I plan to jump on this stock, but I'll have to seek other opportunities for now. I also very much like BDX from the sector, and would be happy with that one instead of MDT.
❺ Automatic Data Processing, Inc. (ADP) Technology Sector
2.5% yield, 66% payout ratio, 39 year streak
I currently own zero tech stocks and will be looking to ADP to get back into technology. ADP is one of only four companies that can claim a AAA credit rating. That's a better rating than the US government! Very steady performer here and it has an outstanding track record of above average dividend growth. I almost added shares a few years ago when it was trading in the 50's, but in the end I failed to actually click the buy button. This one kind of got away from me as the share price rose considerably. It has a 2.5% yield which isn't bad at all, but the payout ratio is kind of high and the share price seems to always be over valued. Perhaps it will trade at better valuations at some point down the road? Probably not, I might have to just click "buy" and get it over with.
❻ Harris Corporation (HRS) Technology Sector
2.3% yield, 45% payout ratio, 12 year streak
Harris manufactures communications equipment primarily for the US government (military). I'm a satellite technician in the US Army and use HRS equipment all the time. I typically shun the tech sector because I have a hard time understanding rapidly changing businesses, but I understand Harris quite well. Anyways the uniformed services need to periodically upgrade systems and I feel HRS ought to do well over the years. I know of new projects in the works plus I'm sure the maintenance & training contracts work to HRS's advantage. Unfortunately the stock seems a bit pricey these days the same as the rest of the market. No plans to get in this one just yet.
❼ BP PLC (BP) Energy Sector
4.8% yield, 31% payout ratio, 3 year streak
BP has a very nice yield, a low payout ratio, and a reasonable stock price. This will be my final oil stock. It has a short dividend growth streak which can be attributed to the Gulf disaster a few years ago. BP is back to raising dividends again. I think it's time to look past the Gulf spill and focus on the future. It still looks fairly cheap.
❽ General Electric Company (GE) Industrial Sector
3.5% yield, 70% payout ratio, 4 year streak
A few years I wouldn't have considered GE, but I must say I really like the direction this company is heading. After the well publicized dividend cut during the great recession GE came back strong. It currently plans to spinoff part of its consumer finance business and focus more on the industrial side of the house. Music to my ears! I'd prefer to wait till after the spinoff before starting a position (I'd sell the spinoff shares anyways), but would consider a purchase now if the value is attractive enough. It's getting close to my buy price as it creeps down towards $25. Hmm...
❾ 3M Company (MMM) Industrial Sector
2.6% yield, 51% payout ratio, 56 year streak
Another high quality dividend champion that has so far eluded my portfolio. 3M is a well diversified conglomerate that has hands in a variety of industries. This company has a long term focus and is extremely well run. A few months ago it raised its dividend by a hefty 35%, although single digits might be a more realistic expectation for the years ahead. I imagine that when the board of directors meet to discuss the dividend, a raise is almost automatic for 3M at this point. The only question left is how much. That's the sort of mentality I'm looking for. I came close to purchasing shares last month when MMM was trading around $124. Hopefully the market provides another chance soon.
❿ Open Position
Ideally another healthcare or industrial stock, but I'm leaving one spot open for now.