You ever wonder why some businesses attract new customers in droves, while others have trouble standing out? It's the same reason why Starbucks (Nasdaq: SBUX) can charge $7 for a cup of coffee, while the diner across the street only gets $2.
The answer lies in brand loyalty and recognition.
Consumers around the world are comfortably acquainted with certain brand names. And that familiarity has been reinforced by billions in advertising dollars. There is a good reason why Lexus has become synonymous with automotive quality, and why we instinctively grab a 12-pack of Corona beer when heading to the beach.
The Big Mac isn't the best hamburger around, yet McDonald's (NYSE: MCD) still sells them by the truckload each day. The golden arches are instantly recognizable in 119 countries worldwide, delivering annual returns of 13.4% to stockholders over the past decade, nearly double the S&P 500.
Entrenched brands also confer pricing power, allowing their owners to pad profit margins by charging higher prices than competitors for similar products. When you walk into a department store and buy a Ralph Lauren (NYSE: RL) shirt, you pay a little extra for that polo label. Ditto for a Hershey (NYSE: HSY) bar over generic chocolate.
And there's nothing magical about the liquid inside those red soft drink cans. It's just fizzy, colored sugar water like so many others. But the Coca-Cola (NYSE: KO) name on the outside means everything. It would be nearly impossible to erode the dominance of this global brand.
Warren Buffett (a fervent Cherry Coke drinker) famously said that if you gave him $100 billion dollars and the best marketing team on Earth, he couldn't replicate the Coca-Cola brand. That's perhaps the biggest single reason why he invested $1 billion in the stock back in 1988. Today, that stake generates $590 million in annual dividend payments alone -- a yield equivalent to over half his original outlay.
A powerful brand can dig a deep moat that provides an ongoing competitive advantage. And I can think of few attributes that are more important to dividend investors. With that in mind, this month's stock screen singles out companies with growing revenues, healthy earnings outlooks, valuable brands, and above-average dividend yields up to 5.4%.
* Trailing 12 Month
As you might expect, there were some household names on the list of top brands that immediately conjure up images of wealth and status... Rolex, Hermes, Cartier, Gucci.
But there were also some everyday names like Kraft, Colgate, and Frito Lay. These consumer staples are commonly found in almost every home in America and are somewhat impervious to economic slowdowns.
One of my favorites in this group is Procter & Gamble. The company has built an impressive roster of more than 65 iconic brands, 23 of which generate over $1 billion in annual sales each. The list includes Crest, Dawn, Charmin, Pampers and Tide.
Diapers, toothpaste and laundry detergent just don't go out of style. And many of P&G's brands are No. 1 in their respective market segment. The company's products reach 5 billion consumers globally. I also like that free cash flow ran at 115% of reported earnings last year, allowing management to return $15.6 billion to stockholders.
That's nothing new. This reliable stalwart has paid dividends for 126 consecutive years -- raising the payments for the past 60 years in a row.
While the current yield is a bit shy of my 4% minimum threshold for inclusion in my premium newsletter, High-Yield Investing, PG is a great portfolio anchor that I would heartily recommend to almost anybody.
The other names on this list are worthy of further consideration as well. But if you're looking for the absolute best high-yielding picks on the market -- the kind most investors are completely unaware of, then I encourage you to check out this report.
This article originally appeared on Street Authority.