With the wrangling in Washington sending more a signal of concern than comfort, the concept of safety is getting turned on its head notes the Dividend Growth Investor at InvestorPlace.com.
Over the past few weeks, financial markets have gotten concerned about the possibility that Congress would not raise the debt ceiling on US government debt. The implications range from credit downgrades on US Treasuries, to de facto default by the US government if it chooses to delay payment of Social Security benefits.
Currently, US Treasuries are rated AAA, and are regarded as the safest investment instrument in the world. As a result, institutions and foreign governments hold trillions of dollars of this highly liquid and safe investment.
However, the high budget deficits, as well as the high level of US government debt have some experts doubting whether the status quo of US Treasuries as “safe investments” will change.
So if investors doubt the safety of an instrument rated AAA by credit agencies, what alternatives do investors looking for AAA-safe investments currently have? I did a little research, and found several dividend growth stocks with global operations that currently sport AAA ratings.
- Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health-care field worldwide. The company has increased dividends for 49 years in a row. Over the past decade, Johnson & Johnson has raised annual distributions at 13% per year. Yield: 3.40%
- Exxon Mobil (XOM) engages in the exploration and production of crude oil and natural gas, the manufacturing of petroleum products, as well as transportation and the sale of crude oil, natural gas, and petroleum products. This dividend aristocrat has increased dividends for 29 years in a row. Over the past decade, Exxon Mobil has raised annual distributions at 7.10% per year. Yield: 2.30%
- Automatic Data Processing, Inc. (ADP) provides technology-based outsourcing solutions to employers, vehicle retailers, and manufacturers worldwide. The company has increased dividends for 36 years in a row. Over the past decade, ADP has raised annual distributions at 14.50% per year. Yield: 2.70%
- Microsoft Corporation (MSFT) develops, manufactures, licenses, and supports a range of software products and services for various computing devices worldwide. The company has increased dividends for six years in a row. Over the past five years, Microsoft has raised annual distributions at 11.40% per year. Yield: 2.40%
Generally, purchasing stock in any of these four companies would likely provide investors with greater total returns over the next five, ten or 30 years. In addition, three of these companies have a history of growing dividends for several decades.
As a result, investors in these companies can expect a rising dividend income stream that would exceed inflation over time.
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