Editor’s Note: This article initially mentions Pfizer (NYSE:PFE)’s ” consistent increasing dividends.” In light of the fact that Pfizer cut their dividend in half during 2009, we have removed that passage. Motley Fool apologizes for the error.
As the stock market has kept going up, many investors have thought about the possibility of another crash like 2008. Psychologically, the more I hear about it, the more I believe that it would not be another crash soon. I only worry about the market bubble when most people are certain the market has no way to go but up.
However, everything should be looked at from a fundamental viewpoint. Jack Bogle, the founder of Vanguard Group, expected a total annual return of around 7%, including 2% dividend yield and 5% earnings growth in the next ten years. In any market environment, long-term investors should stick to good, sustainable businesses that have consistently paid dividends in the past ten years. Thus I am searching for those stocks to hold in a long run with several following criteria: (1) market cap is larger than $10 billion, (2) uninterrupted dividend in the past ten years, (3) dividend yield is higher than 3%, and (4) debt/equity is at a max of 1.
Kimberly Clark Corp (NYSE:KMB)
Kimberly Clark Corp (NYSE:KMB), founded in 1928, is the world leader in the personal care business, operating in four main business segments: Personal Care, Consumer Tissue, K-C Professional and Healthcare. The majority of its operating profit, $1.66 billion, or 61.8% of the total operating profit, was generated from the Personal Care segment. The Consumer Tissue segment ranked second with $887 million in operating profit, while the operating profits of the K-C Professional and Healthcare segments were $545 million and $229 million, respectively.
In the past ten years, Kimberly Clark Corp (NYSE:KMB) has paid uninterrupted increasing dividends, from $1.36 per share in 2003 to $2.96 per share in 2012. The company is trading at around $96.70 per share, with the total market cap of $37.20 billion. The market values Kimberly Clark Corp (NYSE:KMB) at 10.34 times EV/EBITDA. The company uses reasonable leverage in its operations. Its debt/equity ratio is around 1. Income investors might like Kimberly Clark Corp (NYSE:KMB), not only because it has a terrific dividend payment record, but also the dividend yield is quite juicy at about 3.3%.
McDonald’s Corporation (NYSE:MCD)
Another dividend-paying business that income investors should pay attention to is McDonald’s Corporation (NYSE:MCD). McDonald’s is considered to be the largest quick service restaurant in the world, operating around 34,565 restaurants in 119 countries, including 27,970 franchised restaurants. McDonald’s Corporation (NYSE:MCD) generated most of its profits, $3.75 billion, or 43.6% of its total profits, in the U.S., while Europe ranked second with nearly $3.2 billion in operating income in 2012.
With the health issues relating to its fast food, McDonald’s Corporation (NYSE:MCD) has been trying to seek for new tastes for its customers. Interestingly, the company has announced a strategic partnership with the global leader in pasta, Barilla, on the new food item creations. It is really a revolution, as it is the first time that McDonald’s restaurants in Italy will serve pastas. McDonald’s Italy CEO Roberto Masi feels excited about the partnership: “For McDonald’s Corporation (NYSE:MCD), the launch of the pasta salad represents a crucial step in its drive to get closer to Italian tastes, flavors and habits.”
