Despite that, analysts say Hillenbrand could achieve at least 8% earnings growth in each of the next five years.
Dividend growth has averaged a rich 13% a year, but recent dividend hikes have been more modest because Hillenbrand has been more focused on paying down acquisition-related debt. The last increase was a $0.01 hike in December to a 77-cent annual rate. Still, payout is affordable at just 42% of earnings, while the yield is generous at almost 4%. Stronger dividend increases are likely as debt declines.
2. Stonemor Partners
Stonemor Partners is the nation's second-largest owner and operator of funeral homes. The limited partnership operates 272 cemeteries and 69 funeral homes in 28 states and Puerto Rico.
The business grows by acquisitions and is finding ample purchase opportunities. Revenue has grown 15% a year for the past five years. In 2011 alone, revenue improved 16%, to $228 million, as a result of acquisitions that were concluded during the year. While operating profits improved 28%, to $48.6 million, in comparison with 2010, a $9.7 million net loss was recorded due to nonrecurring items and events.Stonmor's distributable cash flow rose 29% last year to, $49.3 million, which readily covered $44.6 million of distributions. Analysts expect Stonemor to deliver 13% income growth in each of the next five years. Dividends have risen each of the past seven years to the current $2.34 annualized rate, giving the shares a generous yield of almost 9%. 3. H&R Block (HRB)
One of the world's largest tax services providers, H&R Block mainly competes with Intuit (INTU) and Jackson Hewitt. H&R Block estimates it prepares one in every seven U.S. tax returns. Aggressive ad spending paid off with a second straight year of client growth in 2011 and a record 22.2 million tax returns prepared -- nearly 1 million more clients than 2010. This steady performer has produced 9% yearly growth for five years, but because it's dealing with higher costs this year, it plans to cut $100 million from spending by closing 200 company-owned stores. No earnings growth is expected in fiscal 2012 (ending in April), but analyst say growth will resume next year and average 12% in each of the next five years. H&R Block has a 35-year dividend history. The last increase was in December, with a huge 33% boost that pushed the yield above 5%. The 48% payout ratio means H&R Block should be able to maintain or even increase dividends going forward. Risks to consider: H&R Block faces sizable legal claims relating to a shuttered subprime mortgage unit. Stonmor's heavy $194 million debt is a concern, since it exceeds $180 million of stockholder equity. The balance sheet is improving, however, and ratings agency Standard & Poor's recently upgraded Stonmor's corporate debt rating from "CCC+" to "B-". Action to take: My top pick overall is Stonmor Partners. If you like generous yields and predictable growth, this limited partnership is hard to beat. Investors who want more diversification and upside potential with their income may prefer Hillenbrand for its fast-growing processing-equipment businesses. H&R Block offers a nice yield and could be a good choice once all the legal claims against its Sand Canyon mortgage subsidiary are finally resolved. But in the long term, all three of these stocks are fit to provide investors with reliable dividend payments. >>To see these stocks in action, visit the 3 Dividend Stocks as Reliable as Death and Taxes portfolio on Stockpickr. ALSO SEE:
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV