Top dividend stocks feature handsome yields and good growth prospects. But just because a stock has a high dividend yield doesn't mean that it has withstood the test of time. Instead, it's essential to look beyond the yield and see whether companies have a blue chip pedigree to support their payouts, and whether they've been able to deliver strong share performance over time. That's why Coca-Cola (NYSE:KO), Novartis (NYSE:NVS), and Anheuser-Busch InBev (NYSE:BUD) are worth a closer look, with their 3%-plus dividend yields, year-to-date gains of at least 10%, and potential for gains in the future.
Coca-Cola has its fizz
Coca-Cola has a long history of being good to dividend investors. For more than half a century, the beverage giant has increased its dividend payouts to its shareholders each and every year, including its more than 6% increase in its dividend earlier this year. With the move higher, Coca-Cola stock currently yields about 3.25%, well surpassing the overall market average for dividends.
Many investors have been fearful about Coca-Cola's future growth prospects, as they've noted consumer reluctance to embrace the company's namesake sugary carbonated soft drinks. Other beverage makers have started to catch up to Coca-Cola's leadership position in the industry. But Coca-Cola has responded with initiatives to bolster its level of innovation and come out with new product categories that can drive future growth. With greater emphasis on water, juice, tea, and other offerings that are perceived as being healthier than Coke, the beverage giant believes that it can use its world-renowned brand to its advantage and bolster its long-term growth.
Novartis mounts a comeback
Novartis is well known in the pharmaceutical industry, with blockbuster treatments like its Gleevec drug for blood cancer and its hypertension treatment Diovan. Yet like all drug companies, Novartis has had to deal with these drugs and others losing patent protection, and that has forced the company to come up with new replacements from its pipeline to restore lost sales and continue the long-term success of the business, as a whole. Launches of treatments like autoimmune disease fighter Cosentyx and heart-failure drug Entresto have shown considerable promise.
Novartis currently has a dividend yield of 3.3%, and the company has been good about delivering solid dividends over time. Growth has been a bit slow in coming, and Novartis follows the European model of making dividend payments only on an annual basis rather than through quarterly payouts. Nevertheless, after a tough 2016, Novartis shares have done well so far in 2017, and investors increasingly believe that the company has a competitive spirit that can help it become a bigger leader in the global pharmaceutical space going forward.
Raise a glass to dividends
Finally, Anheuser-Busch InBev has become a dividend powerhouse of its own. The company currently has a yield of about 3.4% and a seven-year streak of paying higher dividends each year. Not all of those gains have been spectacular, with the most recent amounting to just 2%.
However, the reason for Anheuser-Busch's recent stinginess is easy to understand. The acquisition of rival SABMiller cost A-B InBev more than $100 billion, but it also opened the doors to long-term growth prospects that the beer maker couldn't have secured on its own. As Anheuser-Busch works to integrate SABMiller's continuing operations into its own network, investors can expect dividend growth to take a back seat to internal investment in operations. In the long run, though, the larger A-B InBev resulting from the merger should be able to boost its profits considerably, and that should lead to higher dividends for shareholders in the future.
Stocks yielding 3% or more are impressive, but not all of them make ideal investments. These three stocks have the track records you want in a dividend investment, and their well-known brands and smart strategic visions give them the potential to keep performing well far into the future.