CHECKING IN ON THE KIPLINGER DIVIDEND 15

Our favorite dividend payers have had a good year on average, beating the market and yielding twice as much.

- BY DAVID MILSTEAD

DIVIDEND stocks have been in and out of fashion lately, depending on the path of interest rates and market sentiment overall. But for income-oriented stock investors, or those looking for a little defense in a frothy market, they're never really out of style.

The prospects for lower rates could provide a tailwind for dividend stocks in general to emerge from their holding pattern, as yields on competing investments shrink. But for the Kiplinger Dividend 15, the list of our favorite dividend-paying stocks (now in its ninth year), the past 12 months have already been largely rewarding. The Dividend 15 gained 19.0% on average over the past 12 months, topping the 17.6% total return in the S&P 500 index. Broadcom led with a 92.6% gain, and four others beat the broad market—McKesson, Walmart, Emerson Electric and AbbVie. Another six posted double-digit returns.

We divide our favorites into three categories. The stalwarts are steady payers that have racked up decades of consistent dividend hikes. The dividend growers boast sizable increases every year and are typically increasing their rate of dividend growth. Members of our high-yield list are high-quality stocks that offer big payouts.

Our 15 members increased their dividend 7.8% on average over the past 12 months compared with the previous year. The dividend growth rate in the S&P 500 has averaged 5% over the past five years.

Tweaks to the roster. This year, we're making a couple of changes. We're removing AbbVie and Blackstone from the Dividend 15, replacing them with health insurer Cigna Group and U.S. Bancorp.

AbbVie was in our growth category, but the pace of its dividend gains has slowed to the point that we believe there are better options.