It appears that my time in the gym has yielded yet another investing lesson. I recently started a new strength training routine called "Big but Boring." I'll spare you the specifics, but basically on every training day, I select one of the big lifts -- today it was deadlifts -- crank out an unreasonable quantity of reps, and then crawl home.
The program is every bit as dull as it sounds, but has proven time and time again that those who stick with it see results. I, of course, really enjoy it. In addition to increasing the circumference of my biceps, the workout plan has given me a handy metaphor for my investment strategy.
It's no big secret that I love dividends. Specifically, I love dividends from big, boring companies. They may not be the most exciting investments in the market, but if you stick with them, and reinvest those dividends, they'll grow into a sizable pile of money. With that in mind, let's take a look at five big-but-boring companies worth sticking with.
The definition of economic moat
I really should write about Coca-Cola (NYS: KO) more often, but recommending the company almost feels like cheating. In addition to paying a respectable 2.8% dividend, the company owns the world's most valuable brand and maintains an insurmountable economic moat. Moreover, its distribution network reaches into over 200 countries, granting the company the global diversity and growth opportunities in emerging markets that I like to see in my dividend stocks. All of this suggests that Coca-Cola will continue its 49-year streak of dividend increases for years to come.
Think of the children
OK, depending on how you look at it, Mattel (NAS: MAT) might not qualify as boring. With a brand portfolio that includes Barbie, Hot Wheels, and Uno -- a game in which I will school you anytime, anywhere -- the company specializes in selling fun. However, it's also a well-established, large company poised for slow growth. Because as Fool Analyst Jason Moser recently wrote, toys are a timeless industry; Mattel will always have a market. This means it's the kind of company you can probably hold for years while collecting a generous 3.1% dividend.
One man's trash
Fellow Fool Chuck Saletta has named the trash hauler Waste Management (NYS: WM) a core stock for your portfolio, and I whole-heartedly agree. In the realm of traditional disposal, the company's 271 landfills and 294 transfer stations are a formidable advantage. Having a trash pile nearby helps the company save on transportation costs, making it difficult for competitors to move into the area.
The company also appears to be preparing for the day when burying our trash ceases to be an option. It's already one of the largest recyclers in North America, and uses converted landfill gas to generate enough energy to power over 440,000 homes. Combine these efforts with its strategic investments in cutting-edge green start-ups, and it looks like Waste Management should continue to reward investors with its 3.9% yield for quite some time.
The biggest and the boring-est
Of course no discussion of big, boring dividends would be complete without mentioning utilities. In this case, I've got two for you. The first is a candidate from my own portfolio, National Grid (NYS: NGG) . The company runs electricity and gas transmission systems in the U.S. and U.K. The systems operate like energy toll roads: Whenever power or gas moves through its infrastructure, National Grid gets paid. This generates a fairly hefty -- and more important, steady -- stream of cash which the company returns to shareholders in the form of a 6% dividend yield.
The second utility pick, Exelon (NYS: EXC) , is a more traditional utility. The company operates the United States' largest fleet of nuclear power plants, which makes up 93% of its power output. Low natural gas prices have helped push down the stock price, which makes the company and its 5.3% dividend a bargain.
Looking for more?
Any of these companies would make an excellent addition to your portfolio, but if you would like even more ideas, take a look at this special report: "Secure Your Future With 11 Rock-Solid Dividend Stocks." It's completely free, so click here to download it today.
At the time thisarticle was published The Motley Fool owns shares of Waste Management and Coca-Cola. Motley Fool newsletter services have recommended buying shares of Coca-Cola, Waste Management, Exelon, National Grid, and Mattel., as well as writing a covered strangle positions on Exelon and Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Fool contributor Patrick Martin owns shares of National Grid and Waste Management. You can follow him on twitter @TMFpcmart03. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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