3 Top Dividend Aristocrats To Own Forever

Few stocks deserve consideration as "own forever" investments. However, the Dividend Aristocrats list of companies which are S&P 500 components, and have increased their regular dividend every year for 25 straight years, has more than a few stocks that investors could own for their entire lives.

But just because a company is on the list now, doesn't guarantee that it will either stay there. Nor that its long-term dividend growth will make it worth owning forever. So we asked three of our contributing investors to offer up a current Dividend Aristocrat which they think are worth owning forever. They came up with Dover Corp (NYSE: DOV), W W Grainger Inc (NYSE: GWW), and Nucor Corporation (NYSE: NUE).

Keep reading to learn why these companies, which have all been able to sustain decades of dividend growth, have what it takes to keep rewarding shareholders for many more years to come.

Coming soon: 62nd straight year of dividend growth

Neha Chamaria (Dover): Dover may not be a popular name among investors, but the stock's unbeatable dividend record could put the hottest industrials companies to shame.

Dover has not just paid, but increased its dividends every year for 61 consecutive years now, making it to an elite list of six companies which have raised their dividends yearly for more than six decades. Dover's record can largely be attributed to two factors: A diversified product portfolio and disciplined capital allocation.

Dover's equipment and solutions serve several industries, including oil & gas, manufacturing, automotive, chemicals, consumer goods, and food equipment to name among others. It's not surprising then, that the company has been able to navigate downturns successfully by offsetting weakness in one or more end markets with strength in another. For example, the plunge in oil prices hit Dover's sales, but not its dividend streak, in part because of management's goals of converting 10%-11% of revenues to free cash flows.

Just days ago, Dover reported a 39% year-over-year jump in second-quarter net income and raised its full-year revenue and EPS guidance for the second time this year. With its 62nd dividend increase due in a couple of weeks and the stock yielding a decent 2.1% at recent prices, Dover is one Dividend Aristocrat that you'd want to own forever.

Not just any retailer

Reuben Gregg Brewer (WW Grainger): Retailers are getting killed today, with one-time giants like Sears succumbing to internet upstarts like Amazon.com (NASDAQ: AMZN). That's part of the reason Grainger has been under pressure lately, pushing its yield up to 3.1% -- at the high end of its historical range. (The dividend has been increased for 46 years.) At its core, Grainger is a retailer of industrial products, but there's so much more to understand.  

For starters, Grainger doesn't sell to retail customers who often care more about price than anything else. It's in the business-to-business market, where relationships and dependability matter. Many of the products it sells are critical parts that you can't just order online and wait to get; they are needed as soon as possible from a distributor that's proven reliable over time. For parts that aren't that critical, Grainger often ends up working closely with customers to ensure proper inventory levels are always maintained, making it more of a partner than a generic supplier. This is a very different business than selling books or bubble gum.

That isn't to suggest that Grainger doesn't face challenges. For example, it's been slow to adapt its contract pricing model to the more transparent internet world. It's an important shift: In fiscal 2016 it saw low double-digit declines in spot purchases (the sub-segment of its business most exposed to internet competition) from its large and mid-sized customers. As it's adjusted its pricing it has trimmed declines in the large customer segment to the low single digit range and actually nudged the mid-size business into positive territory. In other words, Grainger is adjusting to the internet world and seeing positive results.  

While the market is worried about any and all retailers being destroyed by the internet, now is the time to do a deep-dive on Grainger. You could catch a nice yield from a dividend aristocrat before other investors realize that it's not a typical retailer and, equally important, is successfully changing to deal with the internet threat it does face.

A "steel" of a deal for this dividend stalwart

Jason Hall (Nucor Corporation): Not only is Nucor a stock I personally own and intend to hold forever, but it's one of the few steelmakers I would even consider buying at all. After all, no other U.S. steelmaker has demonstrated Nucor's wherewithal when it comes to operating profitably across the steel cycle, allocating capital to profitable growth, and managing a very solid balance sheet.

This is why Nucor has been able to pay and increase its regular dividend every year since 1974, while few other steelmakers have even been able to pay a dividend at all in recent years. As a matter of fact, many of its peers have had trouble even making money in recent years, while Nucor just had its most-profitable first half in nearly a decade.

Yet the market has run from Nucor recently, with shares down almost 15% from its one-year high on fears that imports will drive down steel prices and take market share. And while there's some risk of this happening in the short-term, trade actions against importers taking illegal subsidies from their countries of origin over the past couple of years have already started restoring some competitive balance to the market, and the Trump Administration is primed to continue fighting against illegal dumping.

But the bottom line is, Nucor today is bigger and more profit-capable than at any time in its history, and trades for less than 16 times trailing earnings and less than 14 times 2017 estimates. Factor in a 2.7% yield and a 45-year track record of dividend growth, and Nucor is certainly worth considering as an "own forever" stock.

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Jason Hall owns shares of Amazon and Nucor. Neha Chamaria has no position in any stocks mentioned. Reuben Brewer owns shares of Nucor. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Nucor. The Motley Fool has a disclosure policy.