3 Dividend Stocks That Prove Boring Is Beautiful

By George Budwell, Rich Smith, and Neha Chamaria Markets Fool.com

Want income checks rolling in just for sitting tight and doing nothing? How about capital gains on top of that? One of the best parts about owning high-quality stocks that pay regular dividends is their uncanny ability to produce market-beating returns due simply to the awesome power of compound interest. These types of stocks let Father Time do the bulk of the heavy lifting, which may not sound exciting but is a tried and true wealth-building strategy.

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Keeping with this theme, our Foolish contributors think that Pfizer (NYSE: PFE),Sherwin-Williams (NYSE: SHW), andTupperware Brands (NYSE: TUP)are three large-cap dividend stocks that prove beyond a doubt that boring is beautiful when it comes to creating wealth.

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Buy this pharma titan for a reliable source of income

George Budwell(Pfizer): Despite often being considered "dead money" because of its inability to get a big deal done in the past few years or finally commit to a much-needed break-up, Pfizer's shares have still produced stellar overall returns (when factoring in the company's above average dividend) since its last major acquisition (Wyeth) in 2009:

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PFE Total Return Price data by YCharts

The cold hard truth is that Pfizer's stock has largely been ignored by growth-oriented investors of late because of lingering problems associated with the patent cliff. Cutting to the chase, the rapidly falling sales of several former stars drugs like the blockbuster painkiller Celebrex have blunted the strong commercial launches of newer products, such as the breast cancer drug Ibrance and the blood thinner Eliquis, among many others.

The drugmaker's spate of recent multi-billion dollar acquisitions -- which brought in exciting growth products such as the advanced prostate cancer medicine Xtandi -- have also failed to generate much enthusiasm due to the steep overhang from Pfizer's legacy products business.

The net result is that Pfizer's shares are currently trading at an attractive price-to-sales ratio of 3.8 and a dirt cheap forward price-to-earnings ratio of less than 12 -- and I think the market's concerns about the drugmaker's legacy product segment are simply overblown.

Digging deeper, Pfizer also comes with a slightly above average dividend yield of roughly 4%, positive near-term revenue growth prospects, and exceedingly strong free cash flows. The bottom line is that this pharma stock's value proposition appears to be deeply under-appreciated by the broader market, making it potentially a superb long-term buy and hold.

This paint stock can color your dividend portfolio like no other

Neha Chamaria (Sherwin-Williams): If youve given your home makeovers with paints but never considered investing in a company that makes them, you could be losing out on extra income. The paints and coatings business may sound boring to invest in, but leading manufacturers like Sherwin-Williams have doled out hefty dividends to shareholders year after year.

Dont be deterred by Sherwin-Williams current 1% yield, for the companys incredible dividend growth has even gained it entry into the prestigious Dividend Aristocrats list, making it a fantastic dividend stock to own. Consider this: Sherwin-Williams has raised its dividend every year since 1979 -- including during the housing bubble period -- and its dividend has more doubled since 2011. With the stock jumping almost fourfold since compared to the S&P 500s 84% returns, Sherwin-Williams has proved, yet again, how dividend champions can outperform the market.

SHW data by YCharts

Id credit the solid brand image that Sherwin-Williams has built for itself over the years for its incredible shareholder returns. Today, Sherwin-Williams private labels and coatings brands such as Dutch Boy and Pratt & Lambert are among the leaders in the industry. This brand power, combined with a solid global footprint, has helped the paint maker expand its same-store sales and cash flows even during difficult times. In 2016, Sherwin-Williams same-store sales improved 5%, and it generated nearly as much in free cash as net income. With the company stepping into 2017 with FCF above $1 billion, investors can safely expect another dividend hike coming their way soon.

In coming years, Sherwin-Williams dividend could grow even bigger if it merges with Valspar as planned. The deal, which is expected to close soon, will create the worlds largest paints and coatings company in terms of sales, giving Sherwin-Williams a huge lead over arch rivals PPG Industries and Akzo Nobel. As Sherwin-Williams expects the deal to be immediately accretive to earnings, investors can sit back and watch the companys earnings and dividends grow for years to come.

It's Tupperware party time!

Rich Smith(Tupperware Brands): If it's boring you want, it'sTupperware Brands stock I've got. But don't be fooled: Tupperware stock really is beautiful.

Best known for its iconic eponymous food storage products, Tupperware Brands has assembled a whole series of other "brands" under its corporate umbrella over the years, including skin- and hair-care products, toiletries, cosmetics, and even nutritional products. It's also diversified broadly from its origins in 1950s American suburbia (actually, the company was founded in 1946-- but close enough). Today, Tupperware operates a globe-spanning empireand derives 75% of its revenues -- and 82% of its profits -- from outside U.S. borders.

Priced at just a hair over $3 billion in market capitalization, Tupperware stock earned nearly $224 million in profits last year, which gives it a P/E ratio of just 13.7. For that price, you get a 4.4% annual dividend yield, and (according to analysts at least) a strong likelihood of 12% annual profits growth over the next five years. Put those two numbers together, and this most boring-est of stocks could deliver 16.4% total returns to new investors, resulting in a beautiful, bargain basement PEG ratio of less than 1.1.

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George Budwell owns shares of Pfizer. Neha Chamaria has no position in any stocks mentioned. Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Sherwin-Williams. The Motley Fool has a disclosure policy.