If you've got $1,000 you can afford to invest in the stock market right now, this could be an ideal time to buy shares of top companies. And there's no safer place for dividend investors to put their money into than in income stocks with terrific track records for not just paying but also increasing their dividend payments.
That's what you can expect to get with Dividend Kings Johnson & Johnson (JNJ 0.67%) and Colgate-Palmolive (CL -0.05%). Their yields are higher than the S&P 500 average of 1.8%, and are solid places to put your money for the long term.
1. Johnson & Johnson
Johnson & Johnson provides investors with a relatively safe place to invest in today. The healthcare giant has increased its dividend for 60 consecutive years and has one of the most impressive track records out there among dividend growth stocks.
The sheer size of the business also makes it fairly resilient. Next year, J&J will be spinning off its consumer health segment, which has been involved in legal battles relating to talc products. Consumer health sales of $14.6 billion accounted for just 16% of the company's total revenue in 2021 -- and it grew at a rate of only 4%. So this move shouldn't have a significant impact on the company's overall operations.
It's the company's medical device and pharma segments that are core to its business. And over the past decade, they have helped the company's revenue and operating profits rise in unison:
JNJ Operating Income (Annual) data by YCharts
A $1,000 investment in Johnson & Johnson's stock can be enough to generate roughly $260 in annual dividend income at its current yield of 2.6%. And over time, that dividend could increase significantly.
In fact, the company's current quarterly dividend of $1.13 has increased by 35% over the past five years. That averages out to a compound annual growth rate of 6.1%. If the healthcare company were to continue to increase its payouts at that rate, it would take approximately 12 years for its dividend to double.
Year-to-date the stock has been flat, although it has been rallying of late. However, it still isn't far from its 52-week low of $155.72. It's a fairly safe bet that Johnson & Johnson's dividend will continue increasing in the future, making it an ideal stock for dividend investors to own.
2. Colgate-Palmolive
Colgate-Palmolive also makes for a sound investment given the top consumer brands in its portfolio. In addition to Colgate and Palmolive, Softsoap and Speed Stick are some of the more popular brands that the consumer goods company owns in its portfolio.
What investors should like about the business is the stability that it offers, with Colgate-Palmolive's revenue over the past five years staying within a fairly narrow range between $15 billion and $18 billion. And in each of those years, operating income has been between $3 billion and $4 billion. There aren't many surprises investors are getting with the stock.
If it's a dividend you're primarily after, then investing $1,000 in Colgate-Palmolive is another potentially smart move to make. Its dividend streak is identical to Johnson & Johnson's, with the company announcing its 60th consecutive dividend increase back in March.
Its 2.6% yield is also similar to that of the healthcare giant's, so investors would earn a comparable amount on a $1,000 investment in this stock. The one difference is that Colgate-Palmolive's rate of increases has been a bit slower, with the company increasing its payouts by 18% in the past five years, for a CAGR of 3.3%. At that rate, it would take 21 years for the dividend to double.
However, the stock still makes for a sound, long-term investment and an excellent source of recurring income. Colgate-Palmolive stock is down 16% this year, and not far from its 52-week low of $67.84.
