As the market becomes increasingly volatile amid a historic drop in oil prices and uncertainty following the Fed's decision to raise interest rates last year, investors could definitely use a sure thing.
While one may be inclined to follow Robert Burns' advice that there is no such uncertainty as a sure thing, these four stocks have been so consistent in their dividend payouts over the last 25 years that they can almost be considered a sure thing.
So if you're looking for successful investment ideas ¿ and aren't we all ¿ here is an idea. You can start with a fundamental filter and maybe overlay some technical studies to produce a short list of companies that have increased their dividend payments for at least 25 consecutive years and have positive charts and indicators to warrant accumulation now. Sound good?
We culled out four names that meet the bill for your consideration: Genuine Parts (GPC), Procter & Gamble (PG), Action Alerts PLUS holding Stanley Black & Decker (SWK) and PepsiCo (PEP).
We used commentary from equity research analyst Brian Bollinger as well as Real Money chartist Bruce Kamich for this report.
(Read TheStreet's full list of the 10 best dividend stocks.)
Genuine Parts Company -
Genuine Parts has increased its dividend for more than 50 years consecutively. The stable nature of the automotive replacement parts industry and the company's cash flow growth both make this stock one of our surest bets.
"The company's size also allows it to hold roughly $3 billion worth of merchandise to give customers the broadest assortment of products to pick from. The combined size of Genuine Parts' auto and industrial markets is approximately $170 billion, and the company's market share is less than 8%, providing plenty of room for growth as it continues on its path of consolidation," wrote TheStreet contributor Brian Bollinger.
"Yes GPC made a new low for the move down in January, but the selling was not long sustained and prices eventually rallied instead of starting a new leg lower," said TheStreet chartist Bruce Kamich. "This longer-term chart, above, shows GPC above the 40-week moving average. Another positive is that the OBV line has only made a shallow decline on this time frame."
Proctor & Gamble -
Procter & Gamble is in the midst of selling its beauty business to Coty (COTY) for about $12.5 billion. Procter & Gamble shareholders will own 52% of the company while Coty's shareholders will own the rest of the company.
"Procter & Gamble has grown its dividend at a 9.7% compound annual growth rate over the last decade, but its dividend growth has slowed to a 6.7% annualized rate over the last three years. Expect dividend growth to remain in the low- to mid-single digits as the company transitions its brand portfolio and positions itself for more sustainable earnings growth," wrote Bollinger.
"The August/September decline that hit PG and many other stocks appears to be over. Prices have been rising for the past five months.... Also note that there was a golden cross in January as the 50-day moving average crossed the 200-day average," commented Kamich.
Stanley Black & Decker -
Stanley Black & Decker is the top name in power tools, bar none. The company has over 13,000 active global patents and introduces roughly 1,000 new products each year.
"The company has increased its dividend at a 5% compound annual growth rate over the last five years and has reliably raised its dividend for nearly 50 straight years. With a 40% payout ratio and excellent free cash flow generation, we believe Stanley Black & Decker can continue increasing its dividend at a mid-single digit rate for years to come," wrote Bollinger.
"Also note that there was a golden cross in January as the 50-day moving average crossed the 200-day average," said Kamich. "This longer-term chart of SWK, above, is mixed. Prices are below the declining 40-week moving average and the MACD oscillator is bearish, but the weakness in the OBV line on this time frame is shallow and the $90 area looks to be key support."
PepsiCo, which is in the Action Alerts PLUS bullpen, is not afraid to spend money to secure shelf space for its myriad of snack and beverage brands. It invested over $35 billion last year in sales incentives to maintain its shelf space, maintain in-store displays, and distribute its products to stay in front of consumers.
"PepsiCo's unique positioning as a dominant provider of snacks and beverages also makes it a key vendor for its retail customers because it can serve as more of a one-stop shop. In North America, PepsiCo is roughly two times as large as the next-largest supplier in the food and beverage market," wrote Bollinger.
"PEP has been doing "its own thing" the past twelve months - going sideways when most stocks are weakening. PEP has traded back and forth, above and below the 50-day and 200-day averages," said Kamich. "Moving from a daily chart to a weekly chart on PEP, see above, changes to the technical picture are for the better. Prices are above the 40-week average."