Top Dividend Paying Stocks That Keep On Climbing

| August 3, 2015 | 0 Comments

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Wondering how to find the top dividend stocks that will keep on climbing?

Want to find the best dividend paying stocks where the actual dividend will grow along with the price of the stock itself?

Isn’t that too much to ask for?  Kind of like Joe DiMaggio expecting Marilyn Monroe to cook?  (She couldn’t.  Their marriage lasted 3 years.)

History shows us that you can have it both ways.

You actually can find dividend stocks to buy that will increase in value and keep the dividend growing.

One way is to find companies that grow their earnings year after year.

This is why dividend investors have had a longstanding love affair with utility stocks.

Even when earnings growth is modest, consistent growth provides a nice payoff.

What you give up with a utility stock is capital appreciation… the stock price tends to stay steady.  And share price volatility tends to stay low.

But when earnings grow, the cash flow stays healthy, and the dividend grows, even by just a little bit each year…

It doesn’t take long for the profits of the top dividend paying stocks to start steamrolling.

What To Look For In Top Dividend Paying Stocks

When you look at any company, big or small, whether it’s an upstart newcomer or a long-time performer, try to get a feel for the future.

Some of these young companies that pay dividends probably shouldn’t be.  It would be more prudent to pay off debt or sink profits back into growing the business.

Look at Apple $AAPL.

It dumped its dividend in 2005, the year the stock split, then brought it back in 2012.  Since then, the dividend has been growing.  Dividend growth was 15% in 2013 and 8% in 2014.

Apple is a great example of a company that’s made the transition from Young Turk, growth-oriented upstart to mature company.

In a way, Apple is still one of the best dividend growth stocks even though the days of growing pains are in the past.

Is Apple one of the top dividend paying stocks you should look at?  Sure, and here’s why.

The dividend is growing, the dividend payout ratio is a poster child at 23%, and the yield isn’t bad at 1.6%.

Why would I say, “The yield isn’t bad” when it’s down below 2%?

Dividend growth.  Apple has plenty of money, and plenty of opportunity to grow the dividend.  This is the combo you want to look for when you’re sizing up the top dividend paying stocks.

But let’s face it.

A lot of investors believe that when Apple stumbles and a new product launch falls short of expectations, the stock will take a hit… perhaps a terrible hit.

If Apple doesn’t sell one of its new watches to everyone you know, is this viewed as a tragic failure?

It could be.  The market is irrational.  Punishments are doled out without reason.

This irrational market behavior is something you can never forget when you’re investing in the top dividend stocks… or any stocks.

So the smartest investors use this to their advantage.

A Lesson From Warren Buffet’s Mentor

Benjamin Graham was Warren Buffet’s first boss, and had more to do with shaping Buffet’s investment approach than anyone.

Graham was always comfortable chalking market movement up to reasons that didn’t make any sense.

He knew better than most that emotions and feelings were a big part of how stocks were priced, and how the market’s overall direction was set.

Graham said…

“The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator’s primary interest lies in anticipating and profiting from market fluctuations. The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell.”

I love Graham’s phrase, “…acquiring and holding suitable securities at suitable prices.”

That’s what it’s all about, isn’t it?  (Unless you’re out to make a fast buck.)

So when it comes to the best dividend stocks, we should figure out what’s “suitable.”

First, what’s suitable for you might not be suitable for me.  You might be looking to pump some extra income into an existing portfolio with some high yield stocks.

Or you might be looking to add some stability with one of the S&P 500 Dividend Aristocrats.

Whatever kind of yield you’ve got in mind, and if you’re looking for a stock that will keep on climbing, think long-term.

The Top Dividend Paying Stocks Perform Over The Long Haul

The top dividend paying stocks will reward you two ways… with growing dividends and a growing share price.

Over time, the two add up, even when the share price doesn’t do much.

Since 1926, according to Ibbotson Associates, more than 40% of the market’s total return has come from the dividends.

This is why I’m not gung ho on high yields or soaring prices.

One place you can look for dividend stocks like this is on the lineup of the NASDAQ Dividend Achievers.  There are more than 200 of these stocks and these days, most of them are pretty expensive.

That’s what happens when you’ve got a bull market that’s been on a six-year tear.

There’s a good case to be made for the market running out of steam, and for sitting back, waiting for a correction.

Well, that’s good thinking… but only if you’re thinking about buying a broad market index ETF like the SPDR S&P 500 ETF Trust $SPY.

It’s not good thinking when you look at different industries, where a lot of stocks have been beat up badly, and are actually cheaper than they were a year ago.

One of the industries that’s been beaten to a pulp is energy.

Check out Chevron $CVX and Exxon Mobil $XOM, two S&P 500 Dividend Aristocrats.

And if you like the idea of prowling through the oil patch to discover some of the top paying dividend stocks that aren’t in the limelight, let me give you an example.

Helmerich & Payne $HP is an Oklahoma outfit that pays a 4.59% dividend.  It’s in the contract drilling business and sinks wells in South America, Africa, and the Middle East.

You can buy it cheap.  The P/E Ratio is 9.2.  Not bad, about half of what the overall market goes for.

The hitch… the dividend payout ratio is high… 94.2%.  But the Helmerich & Payne track record is impeccable… these guys know how to ride out a storm.  The stock has been paying a growing dividend for 42 years.

But talk about a stock that’s out of favor… take a look at what Helmerich & Payne was trading for just last summer…

Dividend Stock Chart Helmerich & Payne $HP

An uptick in oil prices, an upsurge in exploration and drilling, and a company like Helmerich & Payne is on fire.

Sure, the yield will go down as the share price goes up.  But for folks who pick it up now, it’s got everything you need for an income flamethrower.

The Smart Choice For Dividend Paying Stocks

Growing dividends and a growing share price.  Too much to ask for?

Dividend stocks that keep raising dividends are out there.  You just want to dodge the temptations of the overpriced market and go find them.

And while you’re avoiding expensive stocks, steer clear of high yields that will be tough for companies to keep paying.

Look for good companies like Helmerich & Payne that are out of favor.  That’s how to get the most from your dividend stocks.


Paul Duke

Note:  Paul Duke writes and edits  Sign up for our free dividend reports and dividend newsletter at  We’ll show you how to create regular income by investing in dividend stocks, easily, step-by-step.

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Category: Best Dividend Stocks

About the Author ()

Paul “Dividend” Duke is a veteran investor with a longstanding interest in dividend stocks. He brings a balance of both technical and fundamental analysis to his work, and focuses on opportunities that provide safety, capital appreciation, and income.

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