The Key To Finding The Best Dividend Stocks

While Wall Street analysts focus on how a company will fare in the next quarter, I'm always thinking about what a business will look like in five, 10 or even 20 years down the road. Some companies simply hope that business will be good in future years, while others can speak with a high degree of confidence about their long-term goals. That's because these firms share one key trait: they have a "sticky" customer base. Let's take Automatic Data Processing, Inc. (Nasdaq: ADP ) as an example. The company provides outsourced payroll management and other services typically handled by human resources departments. Although ADP provides clear value to its clients, the company boasts of a 91% annual retention rate for another reason: switching costs.

Companies can also cultivate "stickiness" by developing great products that carry an impressive cultural cachet. Apple, Inc. (Nasdaq: AAPL ) is perhaps the best example. Every new iteration of an Apple device leads to hungry buyers waiting in long lines. You can draw a straight connection between the rising popularity of Apple's products and the rising popularity of its stock. Brand loyalty has translated into investor loyalty.

Source: NASDAQ

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