Dividends should form the bedrock of any investment portfolio.
After all, these payouts not only represent a tangible return on your investment but also provide you with a stream of passive income that you choose to either spend or save.
That said, it is important to search for businesses with a long track record of dividend payments.
This characteristic tells you that the business is on a firm footing and can likely survive tough times.
It is a bonus if the company has raised its dividend without fail over years or even decades.
By buying into such stocks, you can obtain reasonable assurance that this payout can continue, thereby giving you peace of mind.
The US stock market has its fair share of stocks that have increased their payouts without interruption for many years.
Here are five that you can consider for your income-focused buy watchlist.
Lennox International (NYSE: LII)
Lennox deals with energy-efficient climate-control solutions and leads the sector with innovations in cooling, heating, indoor air quality, and refrigeration systems.
The company reported an encouraging set of results for 2023’s first half (1H 2023) ending 30 June 2023.
Sales inched up 3.4% year on year to US$2.5 billion while operating profit jumped 23.5% year on year to US$418.4 million.
Net profit improved by 20.9% year on year to US$315.2 million.
Lennox recently increased its quarterly dividend to US$1.10 per share, which continues an unbroken track record of dividend increases since 2006.
The business also generated a positive free cash flow of US$31.4 million, reversing the negative free cash flow in 1H 2022.
Lennox expects its core revenue to grow by 2% to 4% for 2023 and to generate a positive free cash flow of between US$300 million to US$500 million for the year.
The company is on a transformation track where it intends to expand its distribution network and commercial service by 2026.
Kimberly-Clark (NYSE: KMB)
Kimberly-Clark is a consumer goods giant that manufactures and distributes products such as tissue paper, napkins, diapers, and sanitary pads under famous brands Huggies, Kleenex, Scott, and Kotex.
The company reported a mixed set of results for 1H 2023.
Sales edged up 2% year on year to US$10.3 billion but operating profit fell by 32% year on year to US$900 million.
Profit was impacted by a US$658 million impairment of intangible assets.
Stripping this out, operating profit would have improved by 18.6% year on year while net profit would have climbed 38.1% year on year to US$1.3 billion.
Kimberly-Clark also continued its track record of free cash flow generation with 1H 2023 seeing a positive free cash inflow of US$1 billion.
A quarterly dividend of US$1.18 was declared and will be paid on 3 October, making this the 51st consecutive year that the consumer goods behemoth has raised its dividend.
Colgate-Palmolive (NYSE: CL)
Colgate-Palmolive focuses on oral, personal, and home care and sells its products in more than 200 countries under brands such as Colgate, Palmolive, Protex, and Sanex.
The consumer goods company reported a mixed set of results for 1H 2023 as sales grew 8% year on year to US$9.6 billion.
Operating profit increased by 6.1% year on year to US$1.9 billion but net profit tumbled by 24.8% year on year to US$874 million on the back of higher post-retirement costs and taxes
The company’s free cash flow, however, soared by 80.8% year on year to US$1.1 billion for 1H 2023.
The business has declared a quarterly dividend of US$0.48 per share, making this the 60th consecutive dividend increase.
Colgate-Palmolive expects to record a 5% to 8% net sales growth for 2023 along with gross margin improvements.
Stanley Black & Decker (NYSE: SWK)
Stanley, Black and Decker, or SBD, is a global leader in tools, storage, lifestyle and outdoor products.
The company owns iconic brands such as Black+Decker, Stanley, Hustler, and Troy-Bilt.
The company reported a downbeat set of earnings for 1H 2023 as sales shrank by 8.5% year on year to US$8.1 billion.
With gross margin contracting from 28.4% to 21.8%, the business reported a net loss of US$10.8 million for the period.
SBD’s dividend track record, however, has been exemplary.
The business has paid out a dividend for 147 consecutive years, of which 56 of those years have seen an uninterrupted dividend increase (since 1968).
The company is initiating a global cost reduction plan that should see approximately US$2 billion in annualised cost savings by 2025.
Leggett & Platt (NYSE: LEG)
Leggett & Platt is a diversified manufacturer that produces and designs a wide range of engineered components.
The company employs around 20,000 staff and has 35 manufacturing facilities located in 18 countries.
For 1H 2023, sales declined by 8% year on year to US$2.4 billion.
An increase in cost of sales pushed down gross profit by 18% year on year while net profit plunged by 42% year on year to US$107.7 million.
Despite the weaker results, Leggett & Platt generated a positive free cash flow of US$139 million for 1H 2023, up from US$88 million a year ago.
The company also declared a quarterly dividend of US$0.46, an increase of 4.5% year on year.
Annual dividends have increased without a pause for 52 consecutive years.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
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