Earlier this month, I shared two of my favorite dividend stocks with you.
These companies have strong brands. They also have competitive moats, stable cash flows and over a 30-year history of dividend growth.
Large-cap companies like McDonald’s (MCD), Coke (KO), Wal-Mart (WMT) and ExxonMobil (XOM) fit this profile. These companies have market caps in excess of $100 billion.
However, the two companies I highlighted were Diebold (DBD) and Bemis (BMS). They have market caps of less than $5 billion. And these are two of the world’s best dividend-paying stocks.
Diebold is one of the largest suppliers of automatic teller machines (ATMs). It’s also a leading supplier of security products, like bank vaults and safes. It’s a 150-year-old company and pays a huge 3.2% yield.
Bemis is one of the largest packaging companies in the world. Its list of clients includes General Mills (GIS), Kellogg (K), Kraft Heinz (KHC) and Hershey (HSY). The company was founded in 1881 and pays s 2.5% yield. That’s 40% higher than the average company in the S&P 500 index.
I received plenty of e-mails from readers about this essay. Most of you were looking for moresmall-cap elite dividend ideas.
After all, companies like Diebold and Bemis are not just high-income generating names. They are small companies that could easily grow earnings and sales much faster than most large caps.
Over the past few years, I’ve closely followed more than 100 small, dividend-paying stocks. Most appear to be safe companies. And each name has been raising its dividends annually for more than 10 years and has been in business for more than 25 years.
Take Leggett & Platt (LEG) for example. Without this company, everyone would have severe back problems. That’s because they invented bedsprings more than 125 years ago.
Today, LEG employs over 18,000 people who work in 18 countries. And the company has raised its dividend annually for 44 consecutive years. Only about 50 publicly traded companies in the U.S. can say the same. And most are slow-growing blue chips.
LEG is one of the largest manufacturers of mattress bedsprings, bed frames and pocketed coils in the world. It also produces tons of steel each year, which is used to make the specialty wires found in chairs, racks (you can find in almost every retail store) and fitting rooms.
Its stock has sprung 170% higher during the past five years.
LEG has a market cap of just $6 billion. That’s about 1/20th the size of McDonald’s. Plus, the company pays a huge 3% yield, which is 60% higher than the average company in the S&P 500 index.
Another example is specialty chemical company RPM International (RPM). The maker of brands like Rust-Oleum and Nature Seal just raised its dividend for the 42nd consecutive year.
RPM has a market cap of $6.1 billion. And the company pays a 2.5% yield, which is 40% higherthan the average company in the S&P 500 index.
Keep in mind: These stocks aren’t going to soar 100% overnight … but they can form the “core” of a safe retirement account. They’ll allow you to put the power of compounding to work for you, while still giving you plenty of upside.
My suggestion is to scale into these small, elite dividend names over time. Once establishing a full position, be sure to hold for the longer term.
