Dividend Investing Ideas Center
Have you ever wished for the safety of bonds, but the return potential...
UPDATED: August 22, 2019
Dividend Reinvestment Plans (DRIPs) provide investors with a rare opportunity to enjoy compounding interest automatically at little or no cost. Under such a program, incoming dividend payments are used to purchase more shares of the issuing company on a cost-average basis. Over time, this can lead to a large nest egg for retirement.
Although DRIPs vary, investors who are enrolled in them do not receive dividend payouts in the form of cash. Instead, these dividends will be used to purchase additional shares of the company automatically. At last check, there are more than 1,000 companies and closed-end funds that have developed their own DRIPs.
To entice investors to use DRIPs, issuing companies typically offer very low fees to participate in the program. In fact, hundreds of leading stocks offer no-fee DRIPs. As the name implies, these companies do not charge fees for investing or reinvesting dividends to buy additional shares.
In the following, we look at 10 of the leading dividend stocks that offer no-fee DRIPs. A large portion of these companies were drawn from the list of 25-Year Dividend Increasing Stocks.
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Dow blue-chip 3M Co has been a dividend grower for the past 60 years. Its diversified business line has allowed it to offer steady yields throughout the decades. It currently yields 3.57% and has a payout ratio of 56.1%.
Major drug manufacturer AbbVie is another top dividend-paying stock that offers no-fee DRIPs. The company yields 6.32%, which is well above the healthcare average of 0.56%. It has enjoyed dividend growth since 1973.
Sherwin Williams is another perennial dividend grower. The diversified chemicals company has a much smaller yield than the industry average, but this is offset by steady earnings and a proven track record of dividend growth.
With a yield of 3.6%, Kellogg is a strong dividend payer, especially when compared with other consumer goods companies. The company also has a payout ratio of 50.4%, and has boosted its dividend in each of the last 14 years.
Honeywell is a leading aerospace-defense contractor that also offers no-fee DRIPs. The company not only yields higher than the industrial average, it has seen steady dividend growth in each of the past 8 years.
Check out our guide on Dividend Reinvestment Plans here.
ExxonMobil is another Dow blue-chip that has made it onto our list. The company yields a solid 4.99%, having consistently grown its payout for 36 years.
Insurer Aflac has emerged as one of the financial industry’s most consistent dividend payers. The company yields 2.20%, having grown its payouts in each of the last 36 years.
Very few companies are as dependable as Johnson & Johnson. The healthcare juggernaut not only yields significantly higher than the industry average, it is among Wall Street’s most dependable dividend payers. JNJ has been increasing its payouts for 56 years and counting.
Investors looking for steady dividend growth will find great comfort in Abbott Labs. The company yields well above the healthcare average, and has steadily increased its payout for 46 years.
The company is very well diversified with multiple business lines, including nutrition, medical devices, diagnostics and pharmaceuticals. These industries are expected to be among the fastest growing as the population continues to age.
Emerson Electric is an industrial equipment and components manufacturer that just so happens to be one of the most established dividend aristocrats on the market. The company has increased its dividend payouts for six consecutive decades. It currently yields 3.35%.
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By enrolling in a DRIP, income investors can grow their retirement income effortlessly. The 10 companies listed above make the process all the more affordable.
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