I know of only one sure strategy for accumulating wealth over time, and that is to hold stocks with a consistent track record of dividend
growth. The reason this strategy works is because dividend increases can be predicted in a way that share price gains cannot.
For example, I can come up with many reasons why Coco-Cola (NYSE: KO) or General Mills (NYSE: GIS) will increase earnings next year, but I can't guarantee that either company will post share-price gains. But by looking at the dividend history, payout ratio and earnings growth expectations for both companies, I can estimate next year's dividend increase with fairly good accuracy. A modest 6% dividend increase on a portfolio of stocks generating $10,000 in annual income would boost your income to $10,600 next year -- without requiring any additional investment. If you reinvest these (growing) dividends, then your returns and eventual dividends are amplified even more, thanks to the magic of compounding. And if dividends predictably rise year in and year out, then share-price gains should eventually follow.
There are at least 10 blue-chip names that not only have uninterrupted histories of paying dividends for 100 years or more, but have also increased dividend payments for at least 25 years in a row. This is a good place for investors to start. This list includes well-known companies such as Coca Cola, General Mills, Colgate Palmolive (NYSE: CL), PepsiCo (NYSE: PEP) and the following five higher-yielding blue-chip stocks.
1. Procter & Gamble Co. (NYSE: PG)
Procter & Gamble is a leading consumer goods manufacturer in more than 180 countries. The company owns 24 brands-- from Eukanuba pet foods, to Gillette shaving products and Tide detergents -- each generating more than $1 billion in annual sales. Procter & Gamble has also been good to shareholders.