Stockpickr: The Top Dividend 'Aristocrats'

Another company that has increased dividends for the past 25 years and is cheap relative to its historical valuation right now is Sigma-Aldrich(SIAL Quote). The company makes and distributes chemicals and kits for genomic research, biotech research and pharmaceutical development.

Sigma-Aldrich offers an excellent, indirect way to play the aging baby boomer trend. Because of the size of that generation, you can expect more research, more drugs and more development in the biotech/pharma space over the next 50 years.

Sigma-Aldrich has a rock-solid balance sheet with $173 million in cash, about $500 million of debt, but with $509 million in EBITDA and growing. Again, at 11 times cash flows, the only thing that worries me is that the company can get acquired too quickly to enjoy the next 25 years of dividend increases.

Sigma-Aldrich is also listed in the Claymore/Sabrient Insider ETF, an exchange-traded fund that tracks companies where there's been heavy insider buying and analysts recently have increased estimates.

In fact, about 90 days ago, analysts had expected, on average, Sigma-Aldrich to hit $2.15 in EPS for 2007. Now they expect $2.20. And recently, several officers of the company have bought Sigma-Aldrich shares on the open market. Other stocks on the Claymore/Sabrient Insider ETF include MGM Mirage(MGM Quote) and DirecTV(DTV Quote).

One of Jim Cramer's favorites on the Aristocrats list is drugstore chain Walgreen(WAG Quote). For the past 20 years, Wal-Mart has haunted Walgreen investors. There's always the fear that Wal-Mart can infringe on Walgreen's business.

That said, however, Walgreen has a lot of cushion, with about $1 billion cash in the bank, no debt and EBITDA of $3.8 billion on an enterprise value of $45 billion, giving it an enterprise value over EBITDA of just 12.

Walgreen's 22-year chart offers a not-so-bad picture either:

Walgreen (WAG)

Here are some of my other favorite dividend portfolios:

• Top 100 Highest-Yielding Stocks That Pay Monthly Dividends.
• Microcaps With Dividends.
• Dividends Are Important, a list of stocks that pay dividends and also have very low payout ratios -- suggesting they can handle a decline in revenue before having to cut their dividends.
• European Banks With Dividends, names that offer diversification out of the U.S. dollar.
• Closed-End Funds Paying Hefty Dividends.
• Income Deposit Securities, a list of stocks that are hybrid stocks/bonds and that pay high yields.
• High-Yield Tobacco Stocks.
• Morgan Stanley: A Yen for Yield, a list of stocks compiled from the Jan. 22 issue of Barron's, which stated: Morgan Stanley's chief U.S. investment strategist, Henry McVey, says the Pension Protection Act of 2006 "adds legs" to his research team's Brave New World thesis -- that as retiring baby boomers start positioning their individual retirement accounts and 401(k)s for income, rather than asset accumulation, they'll boost demand for "equity securities that provide both healthy yield and solid earnings growth." To that end, he came up with 45 possible candidates. The accompanying table lists the top 25, based on yield.