The strongest companies can provide you with a reliable dividend income stream that you can count on quarter after quarter and year after year. This is true even during times of crisis and economic devastation, such as what we're facing now during the COVID-19 pandemic.
Here are three great dividend stocks that have the financial strength to increase their payouts to their shareholders, both now and in the future.
These stocks recently boosted their dividends. Image source: Getty Images.
Johnson & Johnson
Healthcare colossus Johnson & Johnson (JNJ 0.44%) has long been a bastion of dividend income for its investors. That remains the case today. J&J boosted its dividend by 6.3% on April 14, to an annual rate of $4.04 per share, placing its stock's current yield at more than 2.6%.
Many businesses have unfortunately seen their revenue and earnings plunge during the COVID-19 crisis. Johnson & Johnson, however, should be able to weather the storm relatively well. Although sales of its medical devices could be delayed due to the deferral of surgical procedures during the pandemic, J&J's consumer health products -- such as Tylenol, Motrin, and Zyrtec -- are experiencing higher sales during the crisis.
J&J is also a key player in the search for a coronavirus cure. It's investing more than $1 billion to develop a vaccine for the deadly disease. "Johnson & Johnson is built for times like this, and we are leveraging our scientific expertise, operational scale, and financial strength in the effort to advance the work on our lead COVID-19 vaccine candidate," CEO Alex Gorsky said in the company's first-quarter earnings release.
Johnson & Johnson has a long and storied history of doing well for its shareholders by bringing much-needed medicines to the world. And it's a safe bet that its 58-year streak of annual dividend increases will continue well into the future.
Costco
Many retailers have suffered brutal sales declines during the pandemic. Not Costco (COST -0.81%). The discount warehouse giant saw its sales climb nearly 12%, to $15.5 billion, in March.
People are turning to Costco -- which is renowned for its low prices on bulk goods -- to stock up on food and other supplies during the COVID-19 crisis. Being there for its members when they needed it most will likely lead to even higher membership renewal rates for Costco, which are already impressive, at typically over 90%.
Loyal customers mean steady cash flows, which Costco passes on to its investors via a steadily growing dividend. The retail titan boosted its quarterly cash payout by 8%, to $0.70 per share, on April 15. Costco will pay its next dividend on May 15 to shareholders of record at the market close on May 1. Its shares currently yield just under 1%.
Procter & Gamble
Like Costco, Procter & Gamble (PG -0.99%) is experiencing significantly higher sales during the coronavirus pandemic. The consumer goods titan's toilet paper and cleaning supplies are in high demand, and sales of its other essential household products like toothpaste and diapers are likely to remain solid. With brands such as Charmin, Tide, Crest, and Pampers, P&G's products are often the first ones consumers think about -- and the products they're likely to turn to during times of crisis.
P&G's best-in-class global distribution system is proving its worth during the pandemic. Despite some significant supply chain disruptions, P&G has been able to boost the production of its goods to meet the needs of its customers during the crisis.
Selling essential products that consumers need to buy repeatedly helps P&G generate strong and steady cash flow, to the tune of $4.1 billion in operating cash flow in the third quarter alone. P&G uses this cash to reward its shareholders with dividends and stock repurchases. The company raised its cash payout by 6% on April 14, marking the 64th straight year that P&G has increased its dividend.
Procter & Gamble has proven that it can continue to supply its customers with the products they need, even during times of crisis. Investors, therefore, can count on the consumer goods giant to continue to supply them with a steadily rising dividend stream for many years to come.
