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3 Top Dividend Aristocrat Stocks for $55 or Less

By Jeff Little – Updated Oct 13, 2021 at 5:06PM

Key Points

  • Coca-Cola's 3.1% dividend yield tops the non-alcoholic beverage industry's average yield of 2.6%.
  • Enbridge has been paying dividends to investors for over 66 years.
  • Cardinal Health's 4.03% dividend yield tops that of competitors.

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At least one of them has been known to bring a smile to faces.

One thing that all investment portfolios can benefit from is dividend-paying stocks. Dividends provide investors with the benefit of earning income in a timely manner through monthly, quarterly, or annual payouts by the companies in which investors own stock. Including dividend-paying stocks has proven highly successful for well-known investors such as Warren Buffett, whose Berkshire Hathaway has raked in $4.6 billion in dividends from five stocks alone so far in 2021.

Dividend-paying companies come in all shapes and sizes and are focused on various market sectors, including food and beverage, energy infrastructure, and healthcare. And when a company has a track record of paying out dividends consistently for over 25 years, it joins an elite group called Dividend Aristocrats. Three such Aristocrats highlighted here could be an excellent addition to any portfolio, and the share price for each of the three is currently below $55.

Three friends toasting with soft drinks in a restaurant setting.

Image source: Getty Images.

A Coke and a smile

You may be familiar with the legacy Coca-Cola (KO 0.25%) commercials in which drinking Coke will bring a smile to anyone's face at any time. The same probably holds true in the relationship between Coke's stock dividends and Coke investors, such as Warren Buffett whose dividends in 2021 from Coke stock have brought in $672 million.

The company has been paying and increasing its dividends annually for 59 consecutive years. Currently, the annual dividend is $1.68 per share, resulting in a dividend yield of 3.1%, which is ahead of the non-alcoholic beverages industry average yield of 2.61%. The stock price has also been kind to investors, having more than doubled since the start of 2009, from $21 to $54.

Coming off of a strong second-quarter earnings report, the company is heading in the right direction which should support further continued dividend payouts. Second-quarter results reported on July 31 highlighted a trifecta in growth on a year-over-year basis, including a 42% quarterly increase in net revenue, 48% jump in earnings per share, and doubling in cash flow to $5.4 billion.

The company noted that the growth in revenue is driven by recovery in markets that were negatively impacted by the coronavirus, leading Coca-Cola Chairman and CEO James Quincy to confidently state, "We are better equipped than ever to win in this growing, vibrant industry and to accelerate value creation for our stakeholders."

Enbridge: Fueling portfolios for over 66 years

If you live in certain parts of the U.S. or Canada, you've probably benefited from Enbridge (ENB -0.76%) operations at some point -- at least indirectly. The energy-delivery company operates 17,000 miles of pipeline that transport oil and natural gas from Western Canada to major North American markets. As a member of the elite Dividend Aristocrats, Enbridge could also fuel your investment portfolio with consistent income for years. 

Enbridge has been paying out stock dividends for over 66 years. It carries a dividend yield of 6.5%, which is in line with that of top competitors. In December 2020, the company announced a 3% increase, bringing its annual dividend to a healthy $3.34 per share, or a dividend yield of 6.46%. By comparison, top competitors Energy Transfer LP (ET -1.95%) and Kinder Morgan (KMI -1.86%) currently offer dividend yields of 6.14% and 6.09%, respectively.

This Aristocrat will likely continue paying out a solid dividend. Driven by higher demand, the oil and gas transportation market is projected to grow at a compound annual growth rate of 6% through 2026. Pipeline projects, delayed during the pandemic, are once again ramping up and operating at full capacity. This should provide Enbridge with revenue growth to support dividends and a boost to the stock price as it rebounds from a 35% drop during 2020. The share price declined from $42 to $27 before gaining upward momentum and once again hitting the $40 mark. 

Cardinal Health: Providing investors with healthy income

Like the oil and gas transportation market, the healthcare market is also experiencing a resurgence after a troubled 2020, with a projected 7.8% compound annual growth rate for the home healthcare market through 2028. Cardinal Health (CAH 0.99%) focuses heavily on this market, serving over 3.4 million patients with 46,000 products, ranging from basic skin and wound management to specialized devices that monitor, record, and treat irregular cardiac activity.  

It is also a proud member of the elite Dividend Aristocrats, having begun paying dividends in 1984. For the past 34 years, it has raised the annual dividend amount every single year -- most recently to $1.96, representing a 4.03% dividend yield. By comparison, two of its top competitors in the healthcare space -- AmerisourceBergen (ABC 0.70%) and McKesson (MCK -0.13%) -- offer annual dividend yields of 1.44% and 0.93%, respectively.

A gift that keeps on giving

Whether you're setting yourself up to help pay for vacations, college for kids, or retirement, having an investment portfolio that includes dividend-paying stocks can go a long way toward providing you with additional income while minimizing risks during volatile or down markets. 

Consider that a $10,000 investment in Coca-Cola at a 3.1% dividend yield would earn you an extra $310 per year. Over 20 years, you would have over $6,000 in extra income, not including reinvestment, potential raises in the dividend, or an increase in the stock price. With numbers like that and the proven success of investors like Warren Buffett, it might be time to reconsider your portfolio, especially if it lacks dividend-paying stocks. 

Jeff Little has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge and Kinder Morgan. The Motley Fool recommends McKesson. The Motley Fool has a disclosure policy.

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