In the southern U.S. where I live, there has been some controversy over harvesting forests of hardwoods and reseeding them with pines. Valuable hardwood trees such as white and red oaks, cherry, ash, yellow poplar and black walnut require decades to reach financial maturity. The southern pine reaches financial maturity in a fraction of the time, but will not yield the same price as hardwoods. Growing hardwoods is very similar to
investing in dividend stocks.
What you plant or invest in today will not yield much for years to come. That is not to say progress is not seen. It is just slow and deliberate. To grow hardwoods it takes great foresight and commitment to the process. The small investments we make in quality dividend stocks each month won't yield large payments in the near-term. It will take time for the payments to grow and compound, but they will.
Consider what these six "hardwood" dividend stocks have done over the last 10 years, assuming a buy at 1999's high:
Wal-Mart Stores, Inc. (WMT) – Analysis
Wal-Mart Stores, Inc. is the largest retailer in North America. The company operates retail stores in various formats worldwide. It operates through three segments: Wal-Mart Stores, Sam's Club, and International.
- 1999 Yield on Cost: 0.3%
- 2008 Yield on 1999 Cost: 1.40%
- Yield on Cost Growth: 4.8 times
- Years of Consecutive Dividend Increases: 35
AFLAC Inc. (AFL) – Analysis
Aflac Incorporated engages in the marketing and sale of supplemental health and life insurance plans in the United States and Japan.
- 1999 Yield on Cost: 0.5%
- 2008 Yield on 1999 Cost: 3.4%
- Yield on Cost Growth: 6.6 times
- Years of Consecutive Dividend Increases: 27
McDonald's Corp. (MCD) – Analysis
McDonald's Corporation is the largest fast-food restaurant company in the world.
