Having a segment of your portfolio to rely on for a steady, reliable dividend can be both a good way to supplement your income as well as a strategy to fund the purchase of more shares in growing companies over time.
Three of the most consistent dividend payers over the last five years include Telstra Corporation Ltd (ASX: TLS), Abacus Property Group (ASX: ABP) and insurer Insurance Australia Group Limited (ASX: IAG).
Telstra (ASX: TLS)
Telstra certainly falls into the 'steady and reliable' category. Over the past five years Telstra has paid out a consistent dividend of 28 cents per share (cps). Although earnings have only grown marginally over this time, a strong uptake of the company's mobile services and 4G network helped to spur first-half 2014 earnings per share up 8.7%, allowing for a 3.6% increase in dividend.
Going forward Telstra looks likely to maintain its leading position as a mobile provider, supported by a heavy investment in mobile infrastructure and growth in 4G customers, a positive sign for maintaining payouts to shareholders.
Abacus Property Group (ASX: ABP)
The stability of Abacus Property Group is underscored by the relatively stable and reoccurring nature of the commercial property industry. Abacus has 97 properties in its investment portfolio valued at $1.33 billion which has supported a dividend of 16.5cps since 2011.
It may not be as exciting or fast growing as other companies, but the consistent and sturdy cash flows are perfect to support a regular dividend. At a current share price of $2.33 the company yields just over 7%.
Insurance Australia Group (ASX: IAG)
At 6.8% IAG offers a dividend yield slightly lower than Abacus. However unlike the property company, IAG has grown its dividend from 10cps in 2009 to 36cps for the full year in 2013. This is likely to fall slightly after IAG issued $200 million of additional shares to fund the purchase of Wesfarmers Ltd's (ASX: WES) insurance division, but over time the acquisition should help to grow earnings and distributions to shareholders.
Foolish takeaway
Although there can be no guarantees around future company performance, the relatively stable cash flows produced by Telstra, Abacus Property and IAG currently support solid, regular dividends. The options that these dividends open up can help you grow your portfolio, or use the income to have fun of your own.
