* Six Great Dividend Stocks, But...

How about a list of some great dividend stocks that have a long history of increasing their dividends, some for decades? These aren't just any dividend stocks they are supported by a powerful balance sheet and have a track record of generating consistent cash flows. Even better, they are well-managed, and aside from the normal bumps in the road from the economic downturn, they are doing quite well, but...

Don't you hate that final "but" that always seems to come just when things are looking good? The "but" here relates to valuation. Over the last several weeks, the list of great companies that are under-valued has diminished as a result of the recent market recovery. The curse of the value-based contrarian in a rising market. Below are six stocks that have been "cursed" with increased valuations since the market's bottom on March 6, 2009:

Illinois Tool Works Inc. (ITW) – Yield: 3.00% – 2 Stars – Analysis
Illinois ToolWorks Inc. is a diversified manufacturer that operates a portfolio of about 750 industrial and consumer businesses located throughout the world. (45 consecutive years of dividend increases)

• 3/6/09 Price: $26.80
• 8/14/09 Price: $41.29
• 3 Star Price: $38.18
• 4 Star Price: $36.69

3M Co (MMM) – Yield: 2.86% – 2 Stars – Analysis
3M Co. is a diversified technology company with a presence in various businesses, including industrial & transportation, healthcare, display & graphics, consumer & office, safety, security & protection services, and electro and communications. (51 consecutive years of dividend increases)

• 3/6/09 Price: $41.83
• 8/14/09 Price: $71.32
• 3 Star Price: $56.26
• 4 Star Price: $44.42

General Dynamics Corp. (GD) – Yield: 2.65% – 3 Stars – Analysis
General Dynamics is the world's sixth largest military contractor and also one of the world's biggest makers of corporate jets. (16 consecutive years of dividend increases)

• 3/6/09 Price: $36.49
• 8/14/09 Price: $56.24
• 4 Star Price: $51.40

Genuine Parts Co. (GPC) – Yield: 4.26% – 3 Stars – Analysis
Genuine Parts Co is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products. (53 consecutive years of dividend increases)

• 3/6/09 Price: $25.55
• 8/14/09 Price: $37.53
• 3 Star Price: $36.21
• 4 Star Price: $35.24

AFLAC Inc. (AFL) – Yield: 2.66% – 4 Stars – Analysis
Aflac Incorporated engages in the marketing and sale of supplemental health and life insurance plans in the United States and Japan. (27 consecutive years of dividend increases)

• 3/6/09 Price: $13.44
• 8/14/09 Price: $42.06
• 5 Star Price: $34.24 (fair value buy price)

Nucor Corp. (NUE) – Yield: 2.99% – 4 Stars – Analysis
Nucor Corporation is engaged in the manufacture and sale of steel and steel products. As the largest minimill steelmaker in the U.S., Nucor has one of the most diverse product lines of any steelmaker in the Americas. (35 consecutive years of dividend increases)

• 3/6/09 Price: $32.34
• 8/14/09 Price: $46.79
• 5 Star Price: $41.18 (fair value buy price)

So how do you overcome the overvaluation "curse"? Patience and research. What goes up usually comes down or the economic fundamentals of the business catch up with the stock price. Every stock goes on sale at some point, but usually it is at a time we are afraid to buy.

Full Disclosure: Long ITW, MMM, GPC, AFL, NUE. See a list of all my income holdings here.

Tags: [AFL] [GD] [GPC] [ITW] [MMM] [NUE]