Stocks to buy

The Dividend Vault: 7 Stocks with Ironclad Payouts for the Long Haul

Among dividend stocks, the “dividend aristocrats” are the cream of the crop. Owning these stocks offers the opportunity for solid long-term total returns because of the steady, increasing payouts.

However, even among the aristocrats, there are some that are more regal than others. This has nothing to do with the amount of years of dividend growth under a particular company’s belt. There are plenty of not only mere “aristocrats,” but “dividend kings” (stocks with over 50 years of consecutive dividend growth) as well as questionable dividend growth prospects.

A prime example is 3M (NYSE:MMM). As I have discussed previously, following the settlement of billions worth of litigation, plus other headwinds like persistent weak growth, a dividend cut may be in its future. With this, the key to steady, growing payouts in the long haul may entail finding the aristocrats with the best chances of maintaining their royal status.

That’s the situation here, with these seven dividend stocks.

Automatic Data Processing (ADP)

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Automatic Data Processing (NASDAQ:ADP), best known for being the world’s leading payroll processing company, is a top choice among blue-chips with dividend quality and growth potential. Not only is the business services firm in the “dividend aristocrats” category.

Over the past five years, dividends for ADP stock have increased by an average of 12.96% annually. While the stock’s 2.19% forward yield may look tiny in a high-interest environment, this payout is likely to grow considerably over time. At least, earnings forecasts for Automatic Data Processing.

These call for the company’s earnings to increase by more than 30% this fiscal year (ending June 2024), and by another 9.52% during the next fiscal year. Besides pointing to higher payouts, steady earnings growth also points to further price appreciation. In turn, leading to strong potential for above-average total returns from buying/holding this stock.

Cincinnati Financial (CINF)

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With a 63-year track record of dividend growth, Cincinnati Financial (NASDAQ:CINF) is up there with 3M, as one of the “kings” among dividend stocks. However, unlike the possibly-threatened dividend of the aforementioned industrial conglomerate, payout growth from this property & casualty insurer is likely sustainable.

Forecasts for CINF stock call for the insurer to report earnings growth in the high single-digit/low-teens range over the next two years. This is in line with Cincinnati Financial’s average annual dividend growth over the past five years (7.19%). Trading for 17.9 times forward earnings, a fair valuation for a property & casualty insurer, CINF may not be in the running to experience much earnings multiple expansion.

That said, shares could still appreciate in value, in tandem with increased earnings. This, coupled with the dividend (currently giving CINF a 2.87% forward yield), could result in satisfactory long-term total returns.

Colgate-Palmolive (CL)

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Colgate-Palmolive (NYSE:CL) is of course not the only consumer staples stock in the “dividend aristocrats” category. Yet while peers such as Clorox (NYSE:CLX) and Procter & Gamble (NYSE:PG) are also popular among long-term dividend investors, shares in this maker of products like its namesake toothpaste, Irish Spring soap, and household cleaner Ajax may be the better buy among the bunch.

Clorox has the highest forward yield among the three (3.14%, versus 2.23% for CL stock and 2.34% for PG). That said, issues like a post-Covid sales slump and the continued impact of last year’s cyber attack call into question Clorox’s dividend growth sustainability.

PG is similar to CL in terms of yield, its payout ratio, as well as in expected earnings growth. However, Colgate-Palmolive (at 24.6 times forward earnings) is slightly cheaper than Procter & Gamble (which trades for 25.1 times forward earnings).

General Dynamics (GD)

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Long-term dividend stocks are usually defensive stocks, but in the case of General Dynamics (NYSE:GD), it’s a defensive stock in the defense industry. General Dynamics has a 29 year dividend growth track record. The current geopolitical environment strongly suggests this streak will continue.

Irrespective of how the global economy fares in 2024, one thing is certain. There’s little end in sight to conflicts in Eastern Europe and the Middle East. New conflicts could emerge in Africa and Asia. Expect continued strong results for General Dynamics in the years ahead, as the U.S. keeps spending heavily on defense in light of this strife.

GD stock has a forward dividend yield of only 1.93%, but payouts have increased by an average of 7.26% per year over the past five years. The forecasts predict earnings will increase by 22% this year and by 12.2% in 2025.

Illinois Tool Works (ITW)

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Illinois Tool Works (NYSE:ITW) is a name I’ve discussed previously, in coverage of the best long-term “buy and hold” stocks. Largely, because of the industrial conglomerate’s dividend growth history. Besides being an “aristocrat,” ITW has increased its payout at a high single-digit clip (8.77% annually on average) over the past five years.

This dividend (2.15% at current prices) provides a steady baseline of returns for ITW stock investors. Some in the sell-side community has soured on Illinois Tool Works as of late. Over the past month, analysts at BofA and Wells Fargo have both downgraded ITW to “underweight.”

Challenges like weak demand and falling margins may persist for now. Even so, as macro factors like inflation and interest rates normalize, ITW could soon get back on track, in terms of earnings growth. Earnings and dividend growth will help drive a move to higher prices for shares.

Lowe’s (LOW)

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With the management of Lowe’s (NYSE:LOW) strongly committed to return-of-capital efforts, it’s no surprise that this is one of the top dividend stocks. A “dividend king,” with 60 years of consecutive dividend growth, the most recent payout increased happened last May.

The company increased its dividend by 5%. Currently paying investors $1.10 per share annually in dividends, LOW stock has a forward yield of 1.89%. There’s a good reason I kicked off discussion about Lowe’s by mentioning “return of capital.” Besides steady, ever-growing dividends, Lowe’s has since late 2022 been buying back stock, as part of a $15 billion share repurchase program.

In terms of company-specific catalysts, factors like a rebound in housing demand may positively affect Lowe’s fiscal performance in the future. JP Morgan’s Christopher Horvers recently noted this in an upgrade of the stock.

Realty Income (O)

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Realty Income (NYSE:O) is one of the few real estate investment trusts that’s in the “dividend aristocrats” category. For 25 years in a row, the self-proclaimed “Monthly Dividend Company” has increased its payout rate, which currently stands at $3.08 per share annually (5.81% forward yield).

Admittedly, cash dividends for O stock have only increased by a low-to-mid single-digit percentage, but over time, these increases have a big impact on long-term returns. In the near-term, there’s a catalyst that could have a major impact on Realty Income’s valuation: the expected lowering of interest rates.

Uncertainty above the Federal Reserve’s so-called “pivot” has weighed on O shares since the start of the year, as I noted earlier this month. However, with lower rates still more of a matter of “when” then “if,” you may want to enter a long-term position ahead of a resurgence in rate cut confidence.

On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Thomas Niel, contributor for, has been writing single-stock analysis for web-based publications since 2016.