6 Long-Term Dividend Stocks At Attractive Prices

When building a dividend-growth portfolio, finding high-quality companies that will continue paying larger and larger dividends for decades rather than just the next few years is important. The longer you can hold onto shares of a company, the lower your trading costs and taxes will be compared to if you trade often. But this is only a good strategy if the companies you hold onto continue growing shareholder value.

So the key is to look for companies that, among other things:
a) Have a large and sustainable competitive advantage.
b) Are in an industry that is timeless, or nearly so.
c) Are in a solid financial position.

Here are six sample companies. There’s no guarantee that they’ll remain good investments for the long-term, but all of them are at least well-positioned for solid performance.

Johnson and Johnson (JNJ)

Johnson and Johnson, the health care juggernaut, has had some bad publicity lately, and for good reason. For investors, this has meant lackluster stock performance. But for those seeking long-term dividend growth and stock performance from a blue chip with a huge moat, JNJ offers a viable option. The company has consecutively grown dividends for decades, offers a huge set of products in several different segments including medicine, medical devices, and consumer health and well-being products.
Full JNJ Analysis

Dividend Yield: 3.55%
P/E: 12.7
Latest Dividend Increase: 10%
Moat: patent shield, scale, brand strength
LT Debt/Equity: 0.16
Market Cap: $166 billion

Lowe’s (LOW)

Lowe’s is one of the top home improvement retailers in the world. It has competition from the larger Home Depot, but both of these companies have strong moats and are positioned for success for the foreseeable future. Other, more general retailers don’t have the resources to offer this collection of quality home improvement products and knowledgeable sales staff. Their relationship with manufacturers leads to manufacturers competing to get products on Lowe’s shelves. The yield is a bit low, and the P/E is a bit high, but the forward P/E is rather appealing.
Full LOW Analysis

Dividend Yield: 1.71%
P/E: 18.2
Latest Dividend Increase: 22%
Moat: scale, brand strength
LT Debt/Equity: 0.29
Market Cap: $35 billion

McDonald’s (MCD)

McDonald’s has been extremely successful in spreading around the entire world. Their margins are significantly better than their competitors, and the company is much larger. With a streamlined business and shareholder friendly corporate culture, McDonald’s offers investors a good long-term option. Their business is highly scalable, meaning that even as they grow larger and larger, their growing cash flow allows them to open more and more locations around the world.
Full MCD Analysis

Dividend Yield: 3.27%
P/E: 16.3
Latest Dividend Increase: 11%
Moat: scale, brand strength
LT Debt/Equity: 0.79
Market Cap: $78 billion

Walmart (WMT)

Walmart, the titan of retail, has scale that extends far beyond its competitors. Being so large means it is able to lock in extremely good prices on products it buys from manufacturers, and therefore undercut its competition. The company has a lot of saturation in the US market, but is beginning to utilize smaller store designs to reach locations they haven’t before, and they’re experiencing quick international expansion as well. The company continually buys back some of its attractively priced shares, and so combined with organic growth and growth from acquisitions, offers investors EPS that grows almost like clockwork.
Full WMT Analysis

Dividend Yield: 2.33%
P/E: 12.4
Latest Dividend Increase: 11%
Moat: scale
LT Debt/Equity: 0.62
Market Cap: $185 billion

Medtronic (MDT)

Medtronic, a top maker of medical devices, has seen its stock beaten down lately due to uncertainty regarding regulation. But the company makes products that are perpetually necessary, has demonstrated strong international growth, and pays a growing dividend. The balance sheet is mediocre, with a bit more goodwill than I like to see, but overall it’s a solid company.
Full MDT Analysis

Dividend Yield: 2.34%
P/E: 12.8
Latest Dividend Increase: 10%
Moat: patent shield, scale
LT Debt/Equity: 0.48
Market Cap: $41 billion

Chevron (CVX)

Chevron is one of the largest oil majors, has one of the strongest balance sheets among them, and is trading at a discount. The company is vulnerable to changes in oil prices, but for decades the company has grown its dividend, grown its EPS, grown its book value, grown its sales, and so forth, even as it experiences setbacks from time to time. Chevron has also shown a willingness to devote resources to alternative energy. The vast majority of their assets are involved with fossil fuels, but compared to other oil majors, Chevron has shown a willingness to face change, and so their ability to survive for decades in the face of changing energy conditions is solid. Chevron isn’t nearly as cheap as it was several months ago, but continuing to dollar-cost-average into the company at current prices should yield reasonable results.
Full CVX Analysis

Dividend Yield: 2.78%
P/E: 11
Latest Dividend Increase: 6%
Moat: scale
LT Debt/Equity: 0.10
Market Cap: $208 billion

Disclosure: At the time of this writing, I own shares of JNJ, MDT, and CVX.
You can see my full list of individual holdings here.