3 Extraordinary Dividend Aristocrats

Exceptional Dividend Aristocrats

Dividend aristocrats are companies that have proven their fundamental soundness over time by increasing dividends over 25 consecutive years or more.

Coca-Cola, Procter & Gamble, and Colgate-Palmolive go considerably beyond that, as the three companies have raised their dividends for more than 50 uninterrupted years.

Coca-Cola

Source: Coca-Cola

Fundamental StrengthsUnparalleled brand power: Coca-Cola and Diet Coke are

the two most consumed soda brands in the world. The company owns 17 brands each making over $1 billion in global sales, in addition to 20 other brands generating between $0.5 billion and $1 billion in revenues.

Wide global reach thanks to its gigantic distribution network

Abundant financial resources to invest in areas like product development and marketing

Challenges

The trend towards healthier food and drinks is hurting soda consumption around the world, especially in developed markets.

Big and mature markets such as the U.S. are highly saturated, and sales volumes have been stagnant over the last decade.

Unfavorable currency movements in emerging markets are dragging on performance lately.

Opportunities

Coca-Cola owns a portfolio of 11 billion-dollar brands in the non-carbonated category which are performing strongly. This includes names such as Minute Maid, Powerade, and Dasani.

Short-term currency volatility aside, sales volume is remarkably strong in key emerging markets like China and Brazil.

Nearly 800 million global consumers will enter into the middle class by the end of this decade, and personal expenditure per capita is expected to grow 70% by 2020. This bodes especially well in terms of long-term demand growth.

Sparkling Dividends

Dividend yield: 3%

Payout ratio near 58% of average earnings estimates for 2014

52 consecutive years increasing dividends, including a 9% hike announced in February

Procter & Gamble

Source: Procter & Gamble

Fundamental Strengths

25 brands generating more than $1 billion in global sales

Serves nearly 4.8 billion customers in more than 180 countries

Leadership position in several defensive product categories, which provides reliability and stability to the company's cash flows

Challenges

As a huge player in a mature industry, it´s hard for Procter & Gamble to generate sales growth.

Competitor Unilever (NYSE:UL) is successfully expanding in emerging markets.

OpportunitiesFormer CEO A.G. Lafley retook the reins in 2013, and he

has an impressive track record at the company. Under Lafley's previous tenure as CEO, from 2000 to 2009, the company more than doubled sales and grew its portfolio of billion-dollar brands from 10 to 23.

Procter & Gamble is planning to reinvigorate product innovation as a major growth driver in the years ahead.

The company intends to reduce expenses by approximately $10 billion via productivity enhancements over the next several years.

Spotlessly Clean Dividends

Dividend yield: 3.2%

Sustainable payout ratio near 60% of earnings

The company has paid uninterrupted dividends for 124 years, and it has raised distributions for 58 years in a row.

Colgate-Palmolive

Source: Colgate-Palmolive

Fundamental Strengths

Undisputed leader in oral care: The company owns a global market share of 44.8% in toothpastes, 32.9% in manual toothbrushes, and 38.8% in mouthwashes.

Operations in nearly 225 countries; makes approximately 80% of sales from international markets.

ChallengesConsiderable exposure to foreign

currency volatility, which has been a negative factor lately.

Colgate has operations in several different product categories, but oral care accounts for the lion's share of the business. Product concentration can be a source of vulnerability.

OpportunitiesBig presence in emerging markets means

abundant room for growth.

Solid relationships with dental care professionals to increase brand awareness and outgrow the competition.

Strong pricing power and scale advantages have allowed Colgate-Palmolive to increase profit margins over the years.

Colgate-Palmolive Makes Investors Smile

Dividend yield: 2.1%

Comfortably low payout ratio, in the area of 48% of average earnings estimates for 2014.

Colgate-Palmolive has increased its dividends over 51 consecutive years.

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