Stockpickr: The Top Dividend 'Aristocrats'

Jim Cramer recently featured the S&P Dividend Aristocrats on his "Mad Money" TV show. This Stockpickr portfolio consists of S&P 500 companies that have increased their dividends every year for the past 25 years.

These names offer investors big rewards, because what starts off, perhaps, as a 1% yield when you first buy the stock could end up becoming a yield of 20% or more when compared with your initial purchase costs.

The fact that these companies have increased their dividends every year for the past 25 years gives you a significant margin of safety.

Of course there are no guarantees, but chances are these are well-managed companies with increasing cash flows and reason to believe they'll increase those dividends in the future.

There are three portfolios worth looking at:

• The S&P Dividend Aristocrats portfolio.
• Cramer's Aristocrats, his top three picks from the above list.
• Cheap Aristocrats, a list compiled by a Stockpickr user that contains his own version of those Aristocrats he considers to be cheap values.

Let's take a look at the stocks that appear to have the most margin of safety in terms of their balance sheets, their historical growth, their yield, etc.

First up, there's Automatic Data Processing(ADP Quote). This company is a rock. (Of course, in the interest of full disclosure, I should mention that I temped at ADP for a week in 1987, making about $8 an hour. I accidentally put the wrong checks in the wrong envelopes, and after a week they had had enough of me.)

ADP processes payroll and benefits packages for thousands of companies. If you hire ADP to handle your payroll, chances are you're never going to take on that task in-house again.

ADP has $1.5 billion in the bank and no debt. It has $2.2 billion in EBITDA and trades at only 10 times EBITDA. My only concern here -- especially if I were an ADP employee -- is that the company can easily get taken over by raiders who leverage up, buy the company and live off the massive cash flows.

Is the company still growing? Last year it generated earnings of $1.49 a share. This year, analysts expect EPS of $1.83, and $2.16 next year. It also has a 2% yield.