For dividend stocks, consistency matters. That's why Standard & Poor's tracks a special group of companies that have raised dividends annually for at least 20 years. They're the so-called Dividend Aristocrats, and that elite club is populated with stalwarts like Coca-Cola, which has topped up its dividend every year for 50 years straight.
But consistency can cut both ways. Close to the other end of the spectrum we have pharmaceuticals giant Merck , which kept its shareholders waiting for seven years between dividend boosts. Merck finally broke that streak in 2011. And last week the company pitched an extra penny into its dividend pool, raising the payout to $0.43 a share. That's Merck's second annual raise in a row, suggesting management isn't keen to challenge its dubious seven-year record anytime soon.
There are more than a few dividend payers who are stingy with their raises, holding payouts steady over prolonged periods. You could call them the anti-aristocrats.
Here are few dividend stocks with a payout that hasn't budged in ages, paired with what I think make better options for income-seeking investors.
MetLifeThis insurance conglomerate's payout has clocked in at the same $0.74 per share since 2007. The company had good reason to suspend its dividend hikes when the recession hit in 2008. And MetLife has also had to deal with writedowns, most recently in the form of a $1.6 billion goodwill impairment charge. But the company's business has recovered. Revenue, for example, climbed to $70 billion this year from a recent low of $40 billion in 2010. Yet even after it nearly doubled its sales, the company's dividend payout hasn't budged.
Meanwhile, fellow insurer Aflac has taken a very different dividend path. Despite being hit with writedowns related to European debt investments, the company steadily boosted its own dividend by more than 50% since 2007. Aflac's payout sat at $0.80 per share that year and clocked in at $1.23 a share in 2011. Better still, the company is on pace to pay out $1.32 to shareholders for all of 2012, corresponding to a solid yield that's north of 2.5%.
Abercrombie & FitchClothing retailer Abercrombie has for years held its dividend at $0.70 a share, which is about $61 million paid directly to shareholders. The clothing industry can be volatile, so it often makes sense for companies to keep a big rainy-day fund. But Abercrombie isn't keeping a lid on dividends due to liquidity concerns. After all, the company ramped up spending on share repurchases over the past two years. Abercrombie spent $76 million to buy back stock in 2010 and nearly $200 million last year.
For a more consistent dividend-hiker in the industry, consider Nike .The venerable shoe brand has pumped up its payout from $0.88 a share to now $1.39, representing an almost 60% rise in just five years. Nike's premium valuation has held the yield on its shares to below 2%. But the quick march higher of payouts has lessened the sting for dividend investors. And with nearly $2 billion in annual cash flow, the company has plenty of room to fund future boosts.
Cooper Cooper, on the other hand, hasn't budged from its $0.06 annual dividend despite earnings that have steadily risen from a $0.30 loss in 2007 to a gain of $3.63 per share last year. This medical device company's revenue is up big lately, rising to nearly $1.5 billion. And yet its dividend commitment has stayed still at less than $3 million in total payout to shareholders.
Compare that skimpy dividend record with competitor Johnson & Johnson's . This Dividend Aristocrat raised its payout for the 49th consecutive year last year, and shelled out over $6 billion to shareholders in the form of its regular quarterly dividend. Johnson & Johnson currently pays out $0.61 a share and sports a tantalizing 3.5% yield.
Foolish bottom line
Dividend investors don't need to settle for flat dividend payouts quarter after quarter. Corporate profits have been surging over the past five years, with many companies notching record earnings growth. And if you aren't getting income growth that's keeping up with those profit boosts, consider expanding your income search to companies that consistently hike their dividend payouts.
More expert advice from The Motley Fool
For nearly 100 years, Merck's cutting-edge research has led to a number of medical breakthroughs. Today, however, this pharma stalwart is staring down a steep patent cliff and facing generic competition for its top-selling drug. Will Merck crumble under its own weight, or will it continue to pay dividends to investors for another century? To find out if this pharma giant has the stamina to keep its Bunsen burners alight, grab your copy of our brand new premium research report today. Our senior biotech analyst Brian Orelli, Ph.D., walks you through both the opportunities and threats facing Merck, and the report comes with a full 12 months of updates. Claim your copy now by clicking here.
The article 3 Dividends That Are Going Nowhere originally appeared on Fool.com.
Fool contributor Demitrios Kalogeropoulos owns shares of Nike and Aflac. The Motley Fool owns shares of Johnson & Johnson and Nike. Motley Fool newsletter services recommend Aflac, Johnson & Johnson, and Nike. 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.