2 Dividend Stocks You Can Count On

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Most dividend investors share a common desire for a consistent, healthy stream of cash. It's pretty easy to find dividend stocks that will pay handsome dividends for the next few quarters. But what about finding stocks you can count on to provide cash flow for years to come? If history is any guide of the future, Coca-Cola (NYSE: KO  ) and Procter & Gamble (NYSE: PG  ) are two dividend stocks that can give you that security.

Talk about consistency. For more than a half decade, Coca-Cola has delivered dividend increases. And, if more recent history is an indication of the dividend increases investors could expect going forward, Coca-Cola shareholders are in for some solid growth. The company has increased its dividend by about 8.25%, on average, every year over the last five years.

Though the company has delivered in the past, we'll need more evidence that cash will continue to flow in the future. Two factors point to promising times ahead for Coca-Cola's cash flows: a powerful distribution network, and a fairly low payout ratio.

Coca-Cola has a distribution network so massive that it seems nearly impossible for any new entrant to attempt to duplicate its scale. Spanning over 200 countries (and growing), the company's distribution infrastructure alone is a major competitive advantage.

Its payout ratio of 55% leaves plenty of wiggle room if Coca-Cola ever faces tough times. Or, another way to look at it: Currently paying out just 55% of earnings, the company has plenty of room to continue to boost its dividend payout going forward.

Procter & Gamble
Take Coca-Cola's dividend history and double it. Now, add two decades. You're about at Procter & Gamble's number. This consumer packaged-goods giant has paid a dividend for a consecutive 123 years.

Procter & Gamble isn't going anywhere. The company has scale in manufacturing, distribution, and brand power, with more billion-dollar brands than any of its competitors.

The company's 57% payout ratio is fairly low, too. And initiative to cut costs by $10 billion over the next several years should help it grow EPS by 8% to 10%, according to management. Both of these factors imply that the company's 59 years of consecutive dividend increases are far from over.

The next 50 years
Dividend investors want stocks they can count on. Procter & Gamble and Coca-Cola's dividend history, competitive advantages, and low payout ratios are excellent signs that these companies will reward dividend investors for decades. Fool contributor Travis Hoium went as far as to list them among his 5 dividend stocks for the next 50 years.

Though Coca-Cola and Procter & Gamble provide investors with dividend yields of 2.8% and 3.1%, respectively, this payout will likely grow over time. So, not only can investors get a nice yield today on these very reliable dividend stocks, but they can lock in a constant stream of dividends that will likely grow in the future.

If you're an investor who prefers returns to rhetoric, you'll want to read The Motley Fool's new free report, "5 Dividend Myths... Busted!" In it, you'll learn which stocks provide premium growth and whether bigger dividends are better. Click here to keep reading.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2515756, ~/Articles/ArticleHandler.aspx, 9/26/2016 3:39:11 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
KO $42.74 Down -0.22 -0.51%
Coca-Cola CAPS Rating: ****
PG $87.76 Down -1.23 -1.38%
Procter and Gamble CAPS Rating: ****