Wednesday, April 8, 2009

* Dividend Stocks: Confident and Secure

Are you confident and secure in your investing process? It appears many people are not. From the famed Canadian dividend investor Derek Foster who sold all his dividend investments in February to co-workers who have moved to the sidelines waiting on the bottom, many investors are abandoning their process.

I have read that most investors will lose money in the stock market over their lifetime. It is not that the market is a bad place to invest your money, but left unchecked the psychology of the market will lead you to do just the opposite of what you should to be doing. The great investors know this. Consider Warren Buffett's famous quote, 'We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful'. How do we overcome our natural instincts to sell when we should be buying?

First, we must follow a process we are 100% confident in. Doubt is the gateway to destructive behavior. Many approaches have proven successful over time. I have chosen income investing, primarily through individual dividend stocks. How do we become so confident in a process that we are willing to trust our life's savings to as the world crumbles around us?

Confidence comes from knowledge and experience. We must study our approach and understand the process that it is following. It is easy for me to watch stock prices crater knowing that it is not only providing an excellent entry point for future capital appreciation, but also higher current yields that will grow each year as the companies continue to raise their dividends. Knowing how it works is good, but comfort in the process comes from having been there before and experiencing the gains after coming out of a downturn.

Finally, the most important step is selecting great investments. For me, those are good solid dividend companies that have a proven track record of increasing their dividends and the financial ability to continue doing so in the future. Here are seven companies that have increased dividends for more than 30 consecutive years for your consideration:
  • McDonald’s Corp (MCD) - 32 Years - Yield: 3.61%
  • Wal-Mart Stores Inc. (WMT) - 35 Years - Yield: 2.08%
  • PepsiCo Inc. (PEP) - 36 Years - Yield: 3.25%
  • Sysco Corp. (SYY) - 38 Years - Yield: 4.30%
  • Johnson & Johnson (JNJ) - 47 Years - Yield: 3.58%
  • 3M Company (MMM) - 51 Years - Yield: 4.02%
  • Procter & Gamble Co. (PG) - 52 Years - Yield: 3.29%
Each of the above companies has a proven business model that has not only got them though the good times, but more importantly seen them through tough economic times. Sure, some companies that have been cornerstones for decades may slip, that's part of investing, but there are always great companies ready to step in and fill the void. It is easy to be confident and secure when you invest in the best dividend stocks in the world!

Full Disclosure: Long MCD,WMT, PEP, SYY, JNJ, MMM, PG

Tags: [JNJ] [MCD] [MMM] [PEP] [PG] [SYY] [WMT]