3 Dividend Stocks as Reliable as Death and Taxes

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Lisa Springer

NEW YORK (TheStreet) -- "The only certainties in life are death and taxes." Everyone's familiar with this old adage. Given the uncertainty of this economic recovery, wouldn't it be nice to have an investment just as reliable?

The good news is income investors can come pretty close to this and lock in predictable returns by owning stocks of companies that operate in these fields -- death and taxes.

As the death rate rises to a projected 9.7 deaths per 1,000 Americans in the next 20 years, companies in the death-care industries -- such as Hillenbrand and Stonemor Partners -- can make good investments.

It may sound morbid, but death is a growing business. The U.S. Census Bureau estimates that roughly 2.5 million Americans die each year, and the aging population of baby boomers means the mortality rate is likely to rise in the coming years. At present, the annual death rate should hover near 8.3 deaths for every 1,000 Americans, but the progressive aging of the U.S. population will trigger steady growth of the death rate to about 9.7 deaths per 1,000 Americans in the next 20 years.

Taxes might not be quite as morbid as death, but it's still unpleasant. And between that and the fact that our tax code is overwhelmingly complicated, people need help getting their affairs in order when Uncle Sam comes knocking.

Here are two death-care stocks and a tax-services stock that pay rich dividends.

1. Hillenbrand (HI)
Yield: 4%
Hillenbrand is a major player in the death-care industry. The company's subsidiary, Bateville Casket, is the world's largest maker of caskets, holding a nearly 50% share of the market. Hillenbrand re-invests reliable cash flow generated by its casket segment in its fast-growing process-equipment businesses. This includes K-Tron, which makes conveyer equipment; Rotex, a maker of sifters and separation equipment; and the Size Reduction Group, which makes crushers that process 75% of all the coal produced in the United States.

Hillenbrand was spun off from its former parent Hill-Rom (HRC) in 2008, so it has a short history as a public company, though Batesville has been making caskets for more than 100 years. In the past five years, Hillenbrand has grown sales by 9% a year and increased earnings at a 5% annual rate.

Last year, the company easily beat analyst estimates by delivering $883.4 million in revenue, an 18% increase from 2010. Its $106.1 million in earnings was a 15% improvement from the year-ago period. Hillenbrand expects 13% to 17% revenue growth this year, which will likely be fueled by double-digit growth in the process-equipment segment. Earnings growth is expected to be flat this year due to the absence of one-time items that boosted the company's income statement last year.

1 2 Next › Last »