There are thousands of publicly traded companies, but the stock market is anchored by large, established businesses. They can anchor your portfolio, too. Many of these jobs have reliable sources of revenue and do not exert control over the factors within reach. That allows them to return value to shareholders through short-term stock buybacks or long-term dividend streams.
We recently asked three Motley Fool contributors for a dividend Aristocrat on their radars. Ecolab and spice and flavor house McCormick (NYSE: MKC) .
Maxx Chatsko (Air Products & Chemicals): They're easy to overlook, but they are doing their part in science and technology. Extracting, processing, compressing, and shipping all of these gases – whether or not exotic gases like xenon and krypton – takes a special kind of expertise. Air Products & Chemicals is too happy to serve that.
The $ 50 billion supplier of gas and equipment has been on an impressive streak lately. In the fiscal third quarter of 2019, the business delivered record adjusted earnings per share. In the nine months ended June 30, it reported flat revenue versus the year-ago period, but managed to grow operating income over 7% to $ 1.54 billion in that span. It enjoyed a significant boost to large margin and managed to slash selling and administrative costs. In fact, profits have not been higher for $ 54 million in one-time costs related to a facility closure and cost reductions.
While currency headwinds and a. dollars have been weighed on the business periodically in recent years, investors have been pleased with the overall trajectory. It has aggressively pursued and won new contracts without jeopardizing its long-term financial targets, benefiting from the on-going global helium shortage, and bringing in new capacity to meet customer needs.
the last year. It's also an aggressive pursuit of hydrogen infrastructure for refueling ground transportation vehicles.
Most important of all, investors will find comfort in the company's long track record of beating the returns of the S & P 500 when dividends are included. Shares of Air Products & Chemicals has yielded just 2%, but as a dividend Aristocrat, it has raised its payout annually for over 25 consecutive years. Investors with a long-term mindset
So how can Ecolab keep these trends intact?
First, the company has a long history of investing in research and development to help launch new products. Second, business uses its financial strength to buy. Third, Ecolab pushes through modest price increases. Fourth, operational wrms out operational efficiencies to improve margins. Finally, steady stock buybacks help to lower the share over time.
Wall Street believes that these low-risk strategies will enable profitable growth in excess of 13% annually over the next five years.That's an impressive figure for a mature business , The net income growth should allow it to continue its long history of raising its dividend, too. The payout has grown each year since 1986, which easily qualifies as a dividend aristocrat.
I think that Ecolab
Spicy and stable
Demitri Kalogeropoulos (McCormick): Thanks to a long period of rising incomes, Americans are now spending more on food than they are prepare at home. That long-term trend has hurt many packaged-food specialists, but not the spice and flavorings giant McCormick.
Sure, most of those gains came from McCormick's recent acquisition of new brands like French's condiments and Frank's hot sauces. But the dividend giant, which owns dozens of spices, herbs, seasonings, and flavorings franchises, is still outgrowing the industry with its core brands.
McCormick aims for organic sales growth of around 5% each year, and is on track to modestly underperforming on that goal in 2019. Yet executives are predicting faster gains thanks in part to aggressive marketing spending this year.
Meanwhile McCormick's Rising Profit Margins and Its Falling Debt Burden. Those financial wins set the company up for many more dividend boosts ahead beyond 2018, which marked this dividend Aristocrat's 33rd consecutive year of annual raises.