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3 Dividend Aristocrats to Buy and Hold Forever

By Royston Yang - Apr 20, 2021 at 6:09AM

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Income-seeking investors should turn their attention to these three dependable dividend-paying businesses.

Economic cycles may come and go, but some businesses still stay the same. I'm talking about businesses that are resilient enough to churn out a steady, rising dividend for stockholders even as they weather multiple crises. Such companies usually have a strong product portfolio, brands that occupy a dominant mindshare among customers, and a distribution network that spans the globe.

If you are an income-seeking investor, you should be looking for businesses that continue paying a dividend through good times and bad. Fortunately, these Dividend Aristocrats do exist and are still churning out rising dividends through the pandemic. A Dividend Aristocrat is defined as a company that has increased its base dividend every year for at least 25 consecutive years.

Here are three such companies that you can consider owning for the rest of your life.

Bottles of bleach and cleaning equipment sitting on a table.

Image source: Getty Images.

1. Clorox

If you've ever used cleaning products such as bleach for your home and bathrooms, chances are you've come across one of the brands owned by Clorox (CLX 1.32%). The company's portfolio of brands includes Calm, Glad, Pine-Sol and Brita, and covers a wide range of products from bleach to water filtration. Many of these brands are category leaders, and Clorox's products can be found in 90% of U.S. homes.

What investors may not realize is that Clorox is a superb dividend payer as well. Over the last 20 years, its total annual dividend payouts per share have risen from $0.83 to $4.39, up more than five-fold and increasing at a rate of 9% per year on average. And for its latest quarter, the board has approved a quarterly dividend of $1.11 per share, or $4.44 annualized, implying a 1.1% year-over-year increase.  The company has raised its annual dividend for an impressive 43 consecutive years. 

This track record looks set to continue. For its fiscal 2021 second quarter, Clorox reported a 27% year-over-year rise in sales as the pandemic has pushed up demand for cleaning products. Management has guided for full-year sales growth of 10% to 13% with earnings per share increasing by 9% to 12%. In what will surely be an added sales boost for the company, third-party testing for its popular disinfecting products has confirmed that they are effective against the current three most common strains of the coronavirus. 

2. Johnson & Johnson

I fondly recall using Johnson's baby powder when my child was much younger, one of the many products manufactured and sold by Johnson & Johnson (JNJ 0.09%). The consumer goods conglomerate also has a pharmaceutical and medical devices division that's responsible for researching and developing drugs for tackling diseases. Johnson & Johnson recently formulated a COVID-19 vaccine that was the third vaccine authorized for use by the U.S. Food and Drug Administration.

What investors may not know is that aside from delivering cutting-edge products and being a household brand name, the company has also been a consistent and reliable payer of dividends. Its dividends have increased for 57 consecutive years as the company has successfully navigated an entire range of crises to emerge relatively unscathed. To illustrate just how much its dividends have grown, Johnson & Johnson paid out $0.62 per share during its 2000 fiscal year; by fiscal 2020, the dividend per share had risen more than six-fold to $3.98.

The company looks set to continue this track record, reporting flat year-over-year sales for 2020 despite weakened consumer demand. Its health, pharmaceutical, and medical devices divisions should buffer any drastic fall in sales as demand should remain high during the pandemic.

3. Procter & Gamble

Procter & Gamble (PG 0.93%) is one of the leading consumer companies in the world, boasting an impressive array of brands in the beauty, healthcare, home care and baby care categories. Its products are distributed in more than 180 countries and sold under well-known brands such as Gillette, Pantene, Oral-B, Pampers, and Tide. 

The company has paid out dividends for 130 years and has increased them for over 65 consecutive years, one of the longest unbroken streaks for a company. From its fiscal year 2010 till 2020, the dividend per share rose from $1.80 to $3.03. The latest quarterly dividend was hiked to $0.8698 per share for an annualized dividend of $3.4792. This increase comes on the back of an 8% year-over-year rise in net sales for its latest fiscal 2021 second quarter, with net earnings inching up 4% year over year. 

The ability of the company to post increased sales and profit in a pandemic year is impressive, and a clear demonstration of Procter & Gamble's market leadership. The company has increased its fiscal 2021 guidance from an initial 2% to 4% year-over-year increase in sales to 5% to 6% as economic conditions improve due to the rollout of vaccines. With earnings forecast to grow at around 8% to 10% year over year, Procter & Gamble looks set to continue its stellar track record of dividend increases.

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Stocks Mentioned

The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
$146.05 (0.93%) $1.35
Johnson & Johnson Stock Quote
Johnson & Johnson
$178.30 (0.09%) $0.16
The Clorox Company Stock Quote
The Clorox Company
$146.66 (1.32%) $1.91

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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