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8 Stocks That Have Paid Dividends for More Than 123 Years

New York University finance professor Aswath Damodaran has a great story comparing old-school dividends with stock buybacks.

While driving in the car with his family, Aswath’s daughter asks to listen to one of the new dance radio stations. During the break between songs, the DJ uses the term ‘hooking up’.

“To show how disconnected you get after 20 years of marriage, I ask, ‘What are they talking about?’.” Aswath explains, “Then my seven year old daughter in the back seat starts to describe what ‘hooking up’ is.”

“Part of me is in complete shock.” he says, “But another part of me says this is a great way to explain dividend policy.”

“Dividends are like getting married; stock buybacks are like hooking up.

That’s it!

Dividends, like marriage, are a long-term commitment to shareholders. They require consistency and discipline from management.

And that’s exactly how they’re treated. Companies loath to cut dividends out of fear that it will cause investors to abandon their stock. Because divorces are expensive, neither party wants the marriage to end.

But why are dividends so important? Sure, it’s nice to receive a tangible reward for owning a stock. But when management has to send out cold, hard cash each quarter, there’s no room to squander shareholder money on unprofitable projects.

This may explain why dividend payers consistently beat the market. According to a study by RBC Capital Markets, dividend-paying stocks delivered a 10.3% compounded annual return between 1986 and 2013. By contrast, their non-dividend paying peers returned exactly 0% during the same period.

No, that zero figure is not a typo. This is why I love businesses that show a commitment to investors through dividends. As a shareholder, you can feel secure knowing that dividend-paying companies are better-disciplined stewards of your capital.

Take BCE Inc (TSX: BCE)(NYSE: BCE), Canada’s largest telecom company, for example. Management has shown a marriage-like commitment to its shareholders, paying out an uninterrupted dividend since 1881. And while you might think of BCE as a stodgy company, investors have earned triple-digit returns over the past decade.

Dividend stocks for the next 100 years

Of course, nothing is guaranteed. But in my experience, it’s not the exotic mining companies or sexy technology startups that make investors the most money. Rather, it’s the boring, dividend stocks like Bell that are the most profitable to own over the long haul.

However, BCE’s remarkable dividend streak is more common than I first thought. Consider that the eight stocks listed below have all been paying distributions since before Alberta was a province. And as you can see, this commitment is correlated with market-beating returns.

Company

Paid Dividends Since

Number of Years

10-Year Return

Bank of Montreal

1829

185

70%

Bank of Nova Scotia

1832

182

105%

Toronto-Dominion Bank

1857

157

150%

Canadian Imperial Bank of Commerce

1868

146

76%

Royal Bank of Canada

1870

144

181%

Laurentian Bank of Canada

1871

143

117%

BCE Inc.

1881

133

119%

Imperial Oil Limited

1891

123

138%

Source: Toronto Stock Exchange and Yahoo! Finance

If you’re searching for dividend stocks that will allow you to sleep easy, this list is a great place to start. When you own companies like these, you don’t have to worry much about recessions, bear markets, or rising interest rates. If history is any indication, you can just sit back and collect steady dividends year after year.

Of course, you can’t buy past performance. These dividend payments may not continue for another 100 years. But it shows that when you buy companies that are married to their shareholders through dividends, you own a stock that can withstand nearly anything.

Who else wants more dividend income?

Of course, these aren't the only companies that generate reliable income. Check out my special FREE report: “3 Dividend Stocks to Buy and Hold Forever”. These firms have paid distributions to shareholders for decades (and even centuries!). Click here now to get the full story!

Fool contributor Robert Baillieul has no position in any stocks mentioned.

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