When selecting which dividend stocks to invest in, a company's track record should always come into consideration. A stock that's been paying a dividend for decades will have more incentive to keep its streak going than one that only started making dividend payments a few years ago. It also demonstrates to investors how stable the business has been over the very long run.
Eli Lilly (LLY 0.27%), Stanley Black & Decker (SWK 0.25%), and Toronto-Dominion Bank (TD 0.07%) have all been paying dividends to their investors for more than a century. Combined, their streaks total 447 years and their payouts also yield more than the S&P 500 average of 1.3%. And over the past three years, investors would have earned total returns (including dividends) of at least 54% from these investments:
LLY Total Return Level data by YCharts
1. Eli Lilly
Drugmaker Eli Lilly first started paying dividends in 1885 and is one of the best dividend stocks to own in the healthcare industry. And at 137 years, its streak is the shortest one on this list. Although its 1.6% yield isn't the highest available, what makes this a special income stock are two things: its dividend growth and the stock's strong gains over time.
Eli Lilly's current dividend payment of $0.98 has doubled since 2014 when it was paying $0.49 every quarter. That averages out to a compound annual growth rate (CAGR) of 9%. And so while the yield may seem modest today, if you buy and hold the stock, then you'll be earning more than just 1.6% in the future.
The future is also bright for Eli Lilly. The company has nearly 20 phase 3 trials ongoing for various therapeutic areas, including cancer and diabetes. One of its most promising drugs is donanemab, which treats Alzheimer's and could potentially rival Biogen's Aduhelm. Eli Lilly has been growing even amid the pandemic, posting sales of $20.3 billion for the nine-month period ending Sept. 30, 2021, representing a year-over-year increase of 18.8%.
With Eli Lilly, investors are not only getting a top dividend stock, but also an investment that possesses significant growth potential, which can translate into some impressive gains. Over the past five years, shares of Eli Lilly have risen 216% (without factoring in dividends), dwarfing the S&P 500 and its 90% gains over the same period.
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2. Stanley Black & Decker
Known for its popular tools and industrial products, Stanley Black & Decker has a diverse business that makes it a strong dividend stock to own. Its bread and butter is in tools and storage, a segment that accounted for three-quarters of its revenue over the first nine months of 2021. It also contributes 85% of the company's segmented profit.
Stanley Black & Decker has been benefiting from an increase in people doing more repairs around the home during the pandemic as the company's sales during the past three quarters have risen by 26% to $12.8 billion. But even if that demand slows down, the company is still a solid dividend stock to own. In the previous three years, its revenue has consistently been around $14 billion.
The company's dividend-paying streak goes back to 1877, marking 145 years of recurring payments. And like Eli Lilly, it has also been regularly increasing its payouts. But it is the only stock on this list that is also a member of the very exclusive club of Dividend Kings, increasing its dividend payments for more than 50 years in a row. Its current quarterly payment of $0.79 yields 1.8% and has grown 93% over the past decade, averaging a CAGR of 6.8% during that time.
Stanley Black & Decker has a solid business that has consistently generated a profit over the years, and over the trailing 12 months, it has netted a solid profit margin of more than 10%. That, combined with its remarkable dividend consistency, makes this an investment you can buy and forget about.
3. Toronto-Dominion Bank
The highest yield on this list belongs to Toronto-Dominion (TD) Bank. At 3.5%, this bank stock will help maximize investors' money. It also has the longest track record of paying dividends, going back to 1857, putting its streak at 165 years. Due to the financial crisis a decade ago, the company has only been consistently raising dividends since 2011, but it is still a dividend growth stock.
And this is a stock you can definitely count on for a safe and reliable payout. TD has enjoyed strong and consistent profits, with its net margin staying above 26% in any of the past five years. TD is also a leaner, more efficient bank than most, operating at a fairly modest efficiency ratio that is normally in the low 50s; in its most recent quarter, for the period ending Oct. 31, 2021, its ratio was at just 54.4%. Many top banks have higher ratios, including Wells Fargo, which is at over 60% (and that's an improvement from previous quarters).
Its incredibly profitable business, efficient operations, and relatively high dividend yield are three great reasons to buy and hold TD for the long haul.
