“A stock dividend is something tangible — it’s not an earnings projection; it’s something solid, in hand. A stock dividend is a true return on the investment. Everything else is hope and speculation.” — Richard Russell

I am sure that many parents and grandparents have difficulty deciding what to give their children or grandchildren for birthdays, Christmas and graduations. Most gifts satisfy for a short time and cost a lot of money. Why not start with a monetary gift that will grow and see tangible returns? Before you know it, they will be ready for college or university. If the money spent on gifts over the last 10 or fifteen years were wisely invested it would come in handy for their higher education.

From the young professional who may be cautious about investing for the first time, the executive who may be willing to take more risk or persons preparing for retirement who will need additional income, dividend stocks should be in your investment portfolio.

For persons not familiar with the term “dividends” it simply means payments made to shareholders (part-owner) by a company from distribution of their profits. Dividends may be payable monthly, quarterly, semi-annually or annually. Dividends are most often quoted in terms of the dollar amount each share receives (dividends per share). It can also be quoted in terms of a per cent of the current market price, referred to as dividend yield.

With the devaluation of the Jamaican dollar (JMD) from $86.00/US1.00 in January 2012 to approximately $113.00/US$1.00 in September 2014, some investors hedged against currency loss by diversifying their holdings into global investments. Once such investment is The Coca-Cola Company (NYSE:KO) offering a dividend yield of 2.92 per cent. The company has paid a quarterly dividend since 1920 and has increased dividends in each of the last 50 years. Coca-Cola is the world’s largest non-alcoholic beverage company, and markets more than 500 non-alcoholic beverage brands.

The Bank of Nova Scotia (NYSE:BNS) or (TSE:BNS) is a diversified financial institution that needs no introduction to Jamaicans. It is one of North America’s premier financial institutions and Canada’s most international bank. Their dividend increased from US$0.49 cents on October 2 2009 to US$0.64 cents per share on June 30, 2014. Their dividend yield as at September 5, 2014 is approximately 3.64 per cent. In addition to the dividend payments the stock price increased from US$41.29 in early September 2009 to US$66.31 as at September 5, 2014, a gain of US$25.02 per share. Shareholders also received a two-for-one stock split on April 29, 2004. This stock can be purchased in Canadian currency to further diversify your portfolio.

Diageo Plc (NYSE:DEO) is a multinational branded food and drinks company. Diageo has an enviable portfolio of world-famous food and drink brands which includes Smirnoff, Johnnie Walker, J&B, Baileys and Guinness, to name a few. Their brands have broad consumer appeal across geographies, and while each of them has a rich heritage, they all continue to innovate and expand to meet new and emerging consumer trends. DEO pays semi-annual dividends with its current dividend being US$2.16 and yield of 2.86 per cent. The 52- week high and low for DEO is US$134.08 and US$114.51. Closing price as at September 5, 2014 was US$120.94.

Johnson & Johnson (NYSE:JNJ) is a long-standing company with brands that are highly recognisable. For example, their famous line of baby products and their Band Aids, and for contact lens wearers, Acuvue contact lenses. It’s very likely that almost everyone has used a Johnson & Johnson product at some point. Interestingly, over a period of 10 years their dividend payment grew from US$0.28 cents per share in November 2004 to US$0.70 in May 2014. This company pays quarterly dividends; for example, if you owned 50 shares at the current dividend of 0.70 cents per share you would reap US$140.00 annually. Share price on November 12, 2004 was US$58.52 and the stock price as at September 5, 2014 was US$104.42. This represents a US$45.90 gain on each share.

Another famous company is AT&T Inc (NYSE:T) It provides telecommunications services to consumers and businesses in the United States and internationally. Its Wireless segment offers various wireless voice, data, text, and other services, including local wireless communications. AT&T has a dividend of US$0.46 cents and a yield of 5.23% as at September 5, 2014. The company is cash-rich and is more than capable of sustaining their increased quarterly dividend payments which on October 6, 2004 was paying US$0.25 per share.

The companies mentioned in this article are just a few examples of well-managed corporations that have increased their dividend payments through the years.

Your accumulated dividend payments can be reinvested over time to increase the number of shares held in the same company. While enjoying consistent and increasing dividend payments over several years, you also benefit from capital gains which is simply the price you purchased the shares for and its current market value. Always remember that there is risk associated with any investment and stock prices fluctuate daily. For further information on starting your investment, your financial advisor will be happy to structure a portfolio suited to your needs. The best investor is an informed one.

Deborah Vieira is a wealth advisor at Stocks & Securities Ltd. Contact: dvieira@sslinvest.com