The bull market is now five years old. As a result, many are calling for investors to take profits and pull back. But there is much to be said for staying invested through “Dividend Aristocrat” stocks such as Coca-Cola (NYSE: KO), ExxonMobil (NYSE: XOM), and Wal-Mart (NYSE: WMT) for the long term, no matter what the market conditions.
A “Dividend Aristocrat” is a stock that has increased the amount of its divided annually for over the past 25 years.
That means that the shareholder gets paid to be the owner. The longer the shareholder owns the stock, the more is earned in dividend income. When the stock is a “Dividend Aristocrat,” the shareholder gets a raise every year for owning it!
In addition to increasing the dividend amount, Coca-Cola, ExxonMobil, and Wal-Mart have above average dividend yields.
At present, the average dividend yield for a member of the Standard & Poor’s 500 Index is under 2 percent. That is still better than what will be earned for a back account. Coca-Cola, ExxonMobil, and Wal-Mart all have better dividend yields. In addition, being a Dividend Aristocrat, each has a history of increasing the yield.
Too often the role of the dividend is overlooked.
Legendary investor John Bogle claims that more than 45 percent of the historic return of a stock is from the dividend yield. Based on that, investors need to own stocks that pay dividends to collect. That means staying invested in the stock market at all times.
Coca-Cola, ExxonMobil, and Wal-Mart are great publicly traded companies.
That is why each can afford to have such a great dividend framework. For long term investors, there is much to be said for owning stocks like Coca-Cola, ExxonMobil, and Wal-Mart. Legendary investor Warren Buffett has large positions in all three. That alone makes each attractive. The high and growing dividends from Coca-Cola, ExxonMobil, and Wal-Mart makes all even more alluring.