Towards the end of last year, we saw people sell their dividend-paying stocks in anticipation of higher capital gains taxes, but for the longer-term, we still like dividend-paying stocks in our portfolios. Yes, for some people there was an increase in the capital gains taxes this year, but even with the recent jump in taxes, the yields that we are able to realize with dividend stocks is still far greater than what you can expect to find from other fixed-income investments.
Let's take a look at four solid dividend-paying stocks that every investor should consider:
McDonald's: McDonald's (MCD) is the king of fast food and its 3.3% dividend yield makes it very attractive to investors. There has been a push in recent years away from fast food in favor of healthier menu options, but McDonald's has been able to do a good job adjusting its menu to keep up with the changing appetites of its consumers. Granted, there are still much healthier options available, but McDonald's has come a long way in the past few years. It has also improved its breakfast menu and found great success in putting more focus and attention to its coffee offerings.
McDonald's has raised its dividend every year going back to 1977. Its last dividend hike of 10% occurred in September. The company is currently paying an annual dividend of $3.08. If the company were to continue its streak of annual dividend hikes for the next 10 years, and if we use the 10% increase from September as a guide, its dividend could be $7.98, assuming that the stock does not split in that time frame. MCD stock has not split since 1999, but with the strength we have seen in the past two years in the stock a split in the next year of so is definitely not out of the question.
Chart courtesy of stockcharts.com