Investors have always loved dividend stocks for their combination of growth potential and current income. With interest rates at rock-bottom levels, it's hard to find good income-producing alternatives to dividend stocks right now. Yet with the coronavirus pandemic raging on, many companies are under financial pressure to preserve cash at all costs, and that's led to even some of the most stable companies in the market reducing or suspending their dividend payments.
Yet even in tough times, there are still some high-profile companies that are managing not only to keep paying dividends, but also to increase them. Among them are Colgate-Palmolive (CL +2.62%), General Dynamics (GD +0.41%), and Johnson & Johnson (JNJ 0.15%). Let's take a look at how these Dividend Aristocrats were able to sustain their long streaks of dividend growth, and what lies ahead in their respective futures.
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Colgate cleans up
Colgate-Palmolive has been a Dividend Aristocrat for a long time, and its track record of dividend increases is especially impressive. Coming into 2020, Colgate had boosted its annual payout in 56 straight years, and the cleaning-products company made it 57 years in a row when it increased its dividend payment in April.
The coronavirus pandemic has given Colgate's personal-care product line a chance to shine. Reliable demand for items like toothpaste, soap, and pet food have all contributed to Colgate's growth, and most of the stores that sell the company's essential products have remained open throughout the pandemic. That should help limit any damage to Colgate's financials in coming quarters.
Colgate's dividend increase of just $0.01 per share to $0.44 every quarter wasn't exactly the biggest boost ever. But it gives the stock a solid 2.4% dividend yield, and investors can generally rely on Colgate's dependable business model to continue to perform well in the rest of 2020 and beyond.
Defending its dividend
General Dynamics is the newest entrant to the Dividend Aristocrats on this list of three stocks, but don't let that fool you. The defense contractor has been helping dividend investors get more income for 29 straight years, now that it boosted its payout by roughly 8% to $1.10 per share each quarter back in April. That's enough to give the stock a yield of almost 3%.
General Dynamics hasn't had the easiest of times during the pandemic. In late June, workers at the company's Bath Iron Works shipyard in Maine went on strike, demanding improved treatment related to seniority, subcontracting, and working rules. With production already well behind schedule, the ongoing strike has caused even more havoc and distracted General Dynamics from efforts to navigate the economic impacts of the coronavirus.
It'll take a lot of work for General Dynamics to shore up its business, both on the defense side and with its Gulfstream commercial aviation segment. Yet April's dividend boost indicates that General Dynamics has confidence it will get through the pandemic without permanent damage.
Make your portfolio healthier
Finally, Johnson & Johnson needs little introduction as a Dividend Aristocrat. The healthcare conglomerate has boosted its dividend every year for 58 years, including its 6% boost to $1.01 per share in late May. That's good for a yield approaching 2.75% at current prices.
Demand for consumer products like Band-Aids and Tylenol is largely recession-resistant, but the real story at J&J in recent years has been the growth in its pharmaceutical portfolio. Even as old blockbuster drugs like immunosuppressor Remicade start to fall off, new ones like Stelara and Darzalex for fighting psoriasis and a form of cancer called multiple myeloma come up in its place. In addition, J&J has a medical-device business that has done well over the years.
Investors see Johnson & Johnson continuing to move forward with an impressive pipeline of candidate treatments. That should pave the way for even more dividend growth in the future.
Don't turn down higher dividends
In today's stock market environment, consistency is worth a lot. These three Dividend Aristocrats have stood the test of time, and Johnson & Johnson, General Dynamics, and Colgate-Palmolive should keep rising in value for investors well into the future.
