Are you seeking a steadily growing passive income stream? If so, these dividend-paying stocks are right up your alley.
All of these companies have a long history of making and raising their dividend payouts. Best of all, it looks like their best days are in front of them.
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CVS Health
You're most likely familiar with CVS Health's (CVS -1.07%) chain of retail pharmacies and walk-in medical clinics. But it's the businesses you don't really see that make this a great dividend-paying stock to buy right now. That said, you won't find CVS Health on the Dividend Aristocrats list. In 2018, the company froze its dividend payment to help pay for a transformative merger with the major U.S. health insurer Aetna.
The merger with Aetna has been so successful that CVS Health cranked up its quarterly dividend payout by 10% in early 2022. There could be another big payout bump coming soon. The company reported a medical benefit ratio (MBR) of 82.9% in the second quarter. This essentially means that for every $1 collected as monthly premiums, the company had to spend a little less than $0.83 in healthcare-related costs.
Aetna has one of the best MBRs in the business because CVS Health can provide many of the benefits it gets paid to manage. In addition to a retail pharmacy, the company owns a pharmacy benefits management business with around 110 million members.
Despite the years-long freeze, CVS Health's dividend has risen a stunning 144% since 2012 and it offers a 2.3% yield at the moment. With a unique combination of healthcare businesses that feed into each other, the payout could rise much further in the decade to come.
Medical Properties Trust
Medical Properties Trust (MPW -0.82%) is a real estate investment trust (REIT) that owns heaps of hospitals in the U.S. and abroad. As a REIT, it can avoid paying income taxes so long as it distributes nearly all its earnings to investors in the form of dividends.
It isn't easy to grow a business when you can only reinvest a very limited portion of profits. Despite the challenge, the company has raised its quarterly payout for eight consecutive years. While many healthcare REITs had to reduce their payouts in response to the COVID-19 pandemic, Medical Properties Trust maintained a steady string of annual payout bumps.
A focus on essential hospital infrastructure isn't the only reason this REIT has proven more reliable than its peers. The company insists its tenants sign net leases that leave them responsible for all the variable costs of building ownership, such as taxes and maintenance.
At recent prices, shares of Medical Properties Trust offer an eye-popping 10.1% yield. With steady cash flows from net-leased hospitals, investors will more than likely see this payout continue moving in the right direction for many years to come.
Abbott Laboratories
Abbott Laboratories (ABT -0.26%) is an ultra-reliable healthcare conglomerate that hasn't missed a quarterly dividend payment since 1924. Moreover, the company hasn't gone over a year without raising its payout at least once for 50 consecutive years.
One of Abbott's specialties is diagnostics, and soaring demand for COVID-19 tests drove earnings, and in turn the dividend, much higher. The company has been able to raise its payout a stunning 236% over the past 10 years.
Demand for COVID-19 tests is waning but Abbott's next-generation device for millions of diabetic patients will pick up the slack and drive growth in the years to come. The company's new continuous blood-glucose monitor (CGM) received clearance from the FDA in May. During the quarter that ended Sept. 30, 2022, U.S. diabetes care sales soared 31% year over year.
At recent prices, the stock offers a 1.9% yield, which is more modest than the other stocks on this list. Before you let that turn you away, know that soaring sales of its new CGM could help Abbott's payout rise the fastest. Adding some shares to your own portfolio and hanging on to them for the long run looks like a smart move right now.
