If you're hesitant about putting money to work in the stock market right now, that's both understandable and wrong. History has shown again and again that shares of great businesses lose ground in a bear market almost as easily as shares of those that never recover.
But how do you separate businesses destined to survive market downturns from all the rest? It helps to look for mature companies with reliable profits that they share with investors in the form of dividends that they steadily increase year after year.
If you're new to the world of dividend investing, here are three stocks poised to deliver a lifetime of passive income.
Medical Properties Trust
No list of dividend stocks for beginners would be complete without at least one real estate investment trust, or REIT. These specialized businesses don't have to pay income taxes as long as they distribute at least 90% of profits to shareholders as nonqualified dividends. Medical Properties Trust (MPW 0.56%) is one of the world's largest owners of hospitals with around 440 facilities spread throughout the U.S. and eight other countries.
This REIT doesn't operate the hospitals. Instead, it collects rent from hospital operators, which is typically the last expense these operators can shrug off during difficult times. With annual inflation-based escalators built into long-term leases, cash flows are somewhat insulated from the effects of inflation.
At recent prices, Medical Properties Trust shares offer a tempting 7.4% yield. Consistent dividend raises are extra challenging for a business that has to distribute nearly all its profits instead of setting some aside for a rainy day. Medical Properties Trust has proven itself up to the challenge with a payout it's raised about once a year since 2013.
Chevron (CVX 0.66%) is a great starter stock for dividend investors because it can thrive under almost any market condition. Its oil and gas production business is raking in profits right now because oil prices are above $110 per barrel. When energy prices fall, as they always do, lower input costs for the company's refineries will become a strong source of profits.
Even a green future less reliant on fossil fuels wouldn't be a death blow for Chevron. In June, the company completed its acquisition of Renewable Energy Group in order to prepare for a clean energy transition.
At recent prices, shares of Chevron offer an attractive 3.9% dividend yield. With a diverse operation that can succeed in almost any economy, investors can look forward to a quarterly payout that keeps rising year after year.
Johnson & Johnson
Johnson & Johnson (JNJ -0.72%) practically invented the consumer health business with Listerine and Band-Aids over a century ago. More recently, it's become one of the largest pharmaceutical companies on the planet plus it's a leading manufacturer of innovative medical devices.
At recent prices, J&J shares offer a 2.5% yield and investors can reasonably expect increasing payments in the years to come. It's been 60 years since the company went more than 12 months without raising its dividend payout at least once.
In 2023, J&J plans to spin off its consumer business into a new company, so investors who buy the stock now will get two dividend payouts for the price of one. While the new consumer goods company isn't expected to set off any fireworks, the streamlined medical device and pharmaceuticals businesses are poised for strong growth in the years ahead.
Based on first-quarter sales, Tremfya, a relatively new injection from J&J for the treatment of psoriasis, is on track to generate $2.4 billion in revenue this year. That's a big jump from a year earlier, and recently presented clinical trial results that show the drug is still safe and effective after five years of treatment should help it reach a $4.5 billion peak annual sales estimate.