Why I'd buy this progressive dividend stock alongside Legal & General Group plc

What would you say to a company that says it's "on track to deliver full-year growth in operating profits," speaks of "robust and innovative product pipeline and tight control of costs," and tells us this is all happening "despite tough trading conditions in most markets which have been evident in the first quarter and which are expected to continue for the full year"?

That's what PZ Cussons(LSE: PZC) said Wednesday, in a trading statement released on the day of its AGM. Cussons is in the enviable position of having worldwide markets to tap, so while consumers are apparently shopping cautiously in the UK and that market is very sensitive to competition among discounters, other markets are looking good.

The company reported "improved performance across all categories" in Australia, while Indonesia showed good growth in several ranges, and we heard overall that "the business remains in good shape with market shares holding or growing in key categories."

Reliability

This all underpins my feeling that PZ Cussons is one of the most reliable income stocks out there. And while its annual yields are a little below the FTSE 100's average of around 3% (there's 2.7% forecast for this year and 2.9% next on the 325p shares), the progressive nature of the dividends nicely compensates for that -- by 2019 it should have grown by 27% in six years.

We've seen three years of stagnation for Cussons' earnings, but I don't think that's bad in the current economic climate, and growth of 6% per year is already forecast for this year and next.

The annual payment is around twice covered by earnings too, and that adds to my confidence that Cussons shares would be a boon to many an income portfolio.

Bigger yield

I often think an ideal income portfolio should contain a mix of super-reliable payers, together with some higher-yielding ones thrown in. And I reckon Legal & General(LSE: LGEN) should be a good partner for PZ Cussons.

The insurance giant's share price plunged in the aftermath of last year's Brexit vote along with the whole financial sector (though it did soon recover), but there's no sign of an effect on its handsome annual dividend.

Last year provided a yield of 5.8%, and with the shares at 259p we're looking at a forecast yield of 5.9% for the current year and 6.2% next. On top of that, we've seen a progressive climb from 7.65p in 2012 all the way to 2016's 14.35p.

Why the two?

Faced with that, why would you ever include lower-yielding shares like Cussons in your portfolio? There are difference in cover and safety. Legal & General's predicted dividend would be covered around 1.6 times by earnings, which is good, but it's in a sector that is likely to be more erratic in the long term than Cussons' consumer products business and the personal care giant's cover is stronger.

Also, the Legal & General dividend climb of recent years comes on the back of a big cut during the financial crisis -- between 2007 and 2009, the payout was slashed by 47%.

The medium-term future does look good for Legal & General, with an ageing population and more and more dependence on individual retirement investing. And I see the firm as that bit meaner and more efficient after having been through the mill of the banking crash.

But on the whole, I'd be happy holding both.

Snagging the cash

Investing in long-term dividend payers like these two can be a great step on the road to financial security.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of PZ Cussons. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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