The S&P 500 is bouncing off lows it hadn't seen since 2020, but there's good reason to believe the index may revisit them this year and sink deeper into bear market territory again. Rampant inflation, record high gas prices, the Federal Reserve hiking interest rates, and pessimism among both corporate CFOs and small business owners suggest a bear market is in our future.
Although investors fear a crash, it's important to remember that they tend to be relatively short-lived and are often followed by bull markets. So when things look the worst, that means it's the best time to buy.
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The stocks you buy, though, are key, and dividend stocks may be the best bet. In particular, stocks that consistently raise their payout have been found to be the best performers in all types of markets going back decades. And Dividend Aristocrats, or stocks on the S&P 500 that have increased their dividends for 25 years or more, provide a stable choice for investors. Out of the more than 6,200 stocks on the New York Stock Exchange and Nasdaq, only about 1% have achieved this record.
The pair of Dividend Aristocrats below could be worth buying for a lifetime of income and wealth.
3M
3M (MMM -0.66%) started life more than 100 years ago as a small mining operation named Minnesota Mining and Manufacturing. Today it has evolved into a diversified manufacturing giant that was arguably best known as the maker of Post-It notes and Scotch brand tape until the pandemic, when its N95 masks and respirators shot to the top of must-own products.
3M makes products for virtually every industry across the globe, including automotive, construction, electronics, and consumer products. While such segment and geographic diversification is often a shield against downturns, it's working against 3M at the moment because inflation and supply chain issues are hampering growth despite solid consumer demand. It might challenge profitability for the foreseeable future, too.
Those hurdles are why 3M's dividend is yielding a historically high 4.4% at the moment, but it gives investors a chance to reap the reward of patience as it builds back its business. 3M has been through numerous global calamities and business cycles over the last 120 years, and coupled with a track record of raising its dividend every year for over 60 years, it's become an income investor's favorite stock.
At just 14 times trailing earnings and 11 times next year's estimates, 3M is a dividend stock that's too cheap to ignore.
Consolidated Edison
What investors look for in regulated electric utility operators like Consolidated Edison (ED 0.73%) is a defensive position because of the general surety of managed growth and income. There's a reason why utilities were often seen as the "widows and orphans" gold standard.
In the more deregulated world of today, they're not quite the same money-printing machines they used to be, but utilities and ConEd still provide a record of reliability not to be ignored.
ConEds regulated electric, gas, and steam delivery businesses are able to proceed forward with constructive capital programs and a workable rate base.
Regulated utilities go through periodic risk to profitability as regulators push back on rate increase requests, and the current environment of higher costs is not lost on those setting rates. It may not exactly be a happy medium that is reached, but over the long haul a utility needs to be able to maintain and expand its infrastructure, and is more often than not granted the ability to do so.
ConEd's dividend of $3.16 per share, which is currently yielding 3.4% annually, has been increased steadily for nearly 50 years, and when it crosses that threshold, it will join the even rarer group of stocks known as Dividend Kings.
You're not likely going to find a utility being a fast-growth momentum stock, but rather a solid stock that can offer a lifetime of income and steady growth. Consolidated Edison isn't an attention-grabbing stock, but it's one that income investors can feel comfortable getting behind for unstoppable support through good times and bad.
