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Three 'Heirloom' Stocks to Buy

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There's a lot to like about solid companies with years of increasing dividends.

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Even though the Dow Jones Industrial Average (INDEXDJX:.DJI) has reached record highs, investing hasn't got any easier.

When the markets make a major move higher, investors always run the risk of buying at the top. It's called chasing momentum, and it can be damaging to your portfolio.

But the truth is, you don't have to chase the market. There is a safer-and in the long run, more lucrative approach.

The stocks to buy are what I call "heirloom stocks." These are stocks you buy, hold, and watch them grow-steady earners you can rely on to fund a growing prosperity in retirement, or leave to your grandchildren, knowing that the expenses of their lives will be safely covered.

Heirloom stocks are from a select group of 82 stocks listed on the NYSE or Nasdaq. Their key characteristic is that they have not only paid dividends for 20 years or more, but that they have increased their dividends in every single one of those years.

The longest of these has a history of dividend increases that extends back 59 years, to 1954. But all 82 of them have track records that go back to at least 1993. Surprisingly, there aren't a lot of borderline cases, either. Only two stocks have track records of between 20 and 29 years.

These are the stocks that should be an important base of any portfolio, especially one used for retirement purposes. Here are three heirloom stocks to add to your portfolio:

Procter & Gamble (NYSE:PG), the consumer products company, has increased its dividend every year since 1954. It yields around 3% and its P/E is 17.5 times. The company's dividend has increased 820% since 1993, and its return on equity is 17.5%. As heirloom stocks go, PG is top quality.

Emerson Electric (NYSE:EMR) provides electrical engineering products and services. It has increased its dividend every year since 1957. Its yield is 2.9% and its P/E is 20.4. The company's dividend has increased 460% since 1993, and its return on equity is 20.1%. Again, top quality, albeit a little expensive at the moment.

3M (NYSE:MMM) has increased its dividend every year since 1959. It has a yield of 2.5% and a P/E of 16.4. It has enjoyed a less exciting 290% dividend increase since 1993, but the Consumer Price Index is up only 62% in that period. However, its return on equity is a stellar 26.6%. It may not be rapidly growing, but still makes for an excellent long-term investment.

All of these are stocks you can buy now-even in these high-flying markets. In a time and place in the not too distant future, you'll be glad you did.

Editor's Note: This article was written by Martin Hutchinson of Money Morning.

Below, find some more great investing and trading content from MoneyShow:

Dividends Get No Respect

Are Dividends Still Cool?

Dividends Are Only Part of the Story

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No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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