Investors have learned over the years that if they want income from their investment portfolios, dividend stocks are hard to beat. Stocks that pay dividends can pay off in two ways for investors: once through the income they provide, and a second time when fundamental business growth sends their share prices higher.
Long-term dividend investors can appreciate the stocks that have done the best job of rewarding them over the years. Among the best-known companies in the market, 3M (NYSE: MMM) , McDonald's (NYSE: MCD) , and PepsiCo (NASDAQ: PEP) stand out as dividend stalwarts that have reliably paid dividends for decades.
Put a sticky on this stock
Most people might know 3M best for its consumer products, including Post-it Notes and Scotch tape. But the company is one of the largest industrial corporations in the country, and its innovative prowess goes well beyond yellow stickies. The company makes a variety of products for the healthcare, energy, electronics, and industrial sectors, ranging from medical equipment to protective films and coatings. It's also been a dividend workhorse, having amassed a 60-year streak of raising its dividend payments to shareholders every year. The most recent jump came earlier this year, with a 16% boost to make its new quarterly dividend $1.36 per share. That's enough to give 3M a yield of 2.7%.
Image source: 3M.
After the company put in a strong 2017, some investors have worried about 3M recently. The conglomerate's first-quarter earnings report back in April included downgrades to 3M's full-year guidance on a more than 50% plunge in net income. Yet extraordinary one-time items played a major role in the poor performance that 3M suffered. Although the electronics and energy markets have seen growth rates slow, 3M remains confident that its long-term prospects are sound and that investors can continue to rely on a lot more growth in the years to come.
Mining the Golden Arches
McDonald's is also a mainstay among experienced investors, with its fast-food history dating well back into the 20th century. From a dividend perspective, McDonald's has helped satisfy a lot of investors' appetites. The company boasts a 42-year streak of raising its dividends each year, and its 7% boost late last year pushed its per-share quarterly payout above the $1 mark. That's enough to give the fast-food giant a 2.4% yield.
In the wake of strategic moves that have gotten its core customer base excited about its food offerings again, McDonald's has been firing on all cylinders lately . Moves like bringing out the all-day breakfast menu, offering various dollar value items, and looking for ways to appeal to a broader set of consumers across the globe have paid off with stronger comparable-restaurant sales and better traffic numbers. Competition remains fierce in fast food, but McDonald's has long shown an ability to appeal to generations of fans while offering an attractive value proposition to those who can't necessarily afford pricier dining options.
Drink up the dividends
PepsiCo has a reputation for excellence in the snack and beverage industry, and offers a wider array of products than you might realize. In addition to its namesake cola product, the company also owns snack giant Frito-Lay, giving it a diversified presence and taking full advantage of its distribution prowess. Over the years, it's treated shareholders well, dealing out 46 straight years of rising payouts. When you take into account its 15% boost this month to $0.9275 per share on a quarterly basis, PepsiCo carries a yield of 3.7%.
It's also faced controversy because of its presence in the sugary beverage market, with some consumer advocates point to its products as contributing to rising rates of obesity and diabetes in the overall population. PepsiCo, though, has worked hard to promote healthier snacks and beverages, and strategic moves recently have only added to the company's investment in a healthier future. CEO Indra Nooyi and her "Performance with Purpose" vision has resonated with consumers, and that could continue to drive success in years to come.
Get what you need
No dividend stock is perfect, but these three companies have a lot of attractive attributes. If you need dividend income and like the stocks that provide it, odds are good that you'll end up loving PepsiCo, McDonald's, and 3M over the long haul.
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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends 3M. The Motley Fool has a disclosure policy .