Dear Mr. Berko:

I’d like to build a portfolio of dividend growth stock for my sister. She just entrusted $54,000 to me, asking that I find good stocks that will pay her a decent income when she retires in 21 years.

I suggested mutual funds, but this money came from three mutual funds that she bought for $100,000 in 1999. She doesn’t like mutual funds because she really got burned. What stocks should I buy for her?

B.R., Fort Walton Beach, Fla.

Dear B.R.:

One of the best long-term strategies for making money in the market is to own dividend-paying stocks that have a long record of annual dividend increases.

The issues should have a minimum 10-year record of annual dividend increases averaging at least 10 percent, which is certainly above the rate of inflation.

She must reinvest all dividends via a dividend reinvestment plan and she must discipline herself to hold each issue for at least 10 years.

So here are 10 issues. I recommend you divide the $54,000 evenly among the companies. Your sister needs to know that stocks are like children. Some have to be watched more than others.

Abbott Laboratories (ABT-$42.78) is an $18 billion revenue global health-care company devoted to the discovery, development, manufacturer and marketing of pharmaceuticals and medical products. In 1993, ABT’s dividend was 34 cents. Today it is 98 cents.

BancorpSouth Inc. (BXS-$22.40) has enjoyed a 10.8 percent average annual dividend increase since 1993. Ten years ago, the dividend was 24 cents. Now it is 64 cents. BXS is an $11 billion holding company with headquarters in Tupelo, Miss.

Eaton Vance Corp. (EV-$33.95) markets mutual funds and provides investment management services to corporations and individuals. In the past decade, EV’s annual dividend has gone from 6 cents to 48 cents.

Illinois Tool Works Inc. (ITW-$67.64) manufactures components and fasteners plus machinery and special products for the automotive and construction industries. In 1993, ITW paid 25 cents. This year it pays 96 cents.

Mercury General Corp. (MCY-$45.12) is a holding company that writes property and casualty insurance. In 1993, the dividend was 30 cents. It has since risen to $1.32.

Superior Industries International Inc. (SUP-$42.08) makes auto parts and accessories for original equipment manufacturers and the aftermarket. In 1993, SUP paid 9 cents. Now, it pays 55 cents.

Teleflex Inc. (TFX-$44.17) engineers products for the marine, medical, automotive, industrial and aerospace industries. TFX’s 1993 payout was 23 cents. It’s up to 80 cents now.

Washington Mutual Inc. (WM-$39.26) is the largest thrift in the United States. The 1993 dividend was 22 cents. Today, it’s $1.60.

Nucor Corp. (NUE-$46.53) is a specialty manufacturer of steel and steel products. Ten years ago, the company’s dividend paid 18 cents. Now it pays 80 cents.

Sysco Corp. (SYY-$32.88) is $26 billion distributor of food products to the food service industry. In 1993, the dividend was 10 cents. It has since risen to 44 cents.

Synovus Financial Corp. (SNV-$25.99) is a bank holding company with $22 billion in assets. A decade ago, the dividend was 15 cents. It has been raised to 66 cents.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.