Does the abrupt collapse of Silicon Valley Bank have you thinking twice about investing in risky growth stocks? You're not alone.
Over the past 15 months, the Vanguard S&P 500 Growth ETF collapsed about 30% from its former peak. While there are probably some bargains to buy on the dip, over a year of losses is enough to make the most devoted growth investors consider stocks that pay dividends.
If you're unsure where to start with dividend investing, we've got you covered. Here are three companies with ultra-reliable cash flows. Read on to see how they can deliver a growing passive income stream to fuel your retirement dreams.
Johnson & Johnson
Aspiring retirees can find a lot to like about Johnson & Johnson (JNJ 0.73%). For starters, J&J offers a 3% yield at recent prices. This is much better than the 1.76% yield offered by the average dividend-paying stock in the S&P 500 index.
A high yield will only help you retire faster if the underlying business can be relied upon to maintain and raise its payout. A diverse collection of healthcare-related businesses has allowed J&J to raise its dividend payout for 60 consecutive years.
While famous for consumer health brands, such as Tylenol and Listerine, pharmaceuticals and medical technology generate heaps more cash for J&J's bottom line. In fact, the company generated $17.2 billion in free cash flow over the past year.
With cash flows that are more than adequate to meet its dividend obligations, J&J can also make strategic acquisitions. Last December, it acquired Abiomed and its line of Impella heart pumps for $16.6 billion up front. Now, it's one of 12 medical technology platforms with more than $1 billion in annual sales in J&J's lineup.
CVS Health
You're probably familiar with CVS Health's (CVS 1.02%) ubiquitous chain of retail pharmacies. What you may not realize is that pharmacy sales are a relatively small part of this company's overall business.
At the moment, CVS Health stock offers a 3.1% yield that could soar in the years ahead. Over the past 10 years, the company raised its payout by 169%, and its best days are still to come.
CVS Health's earnings have climbed in recent years because, in 2018, it acquired Aetna. This leading health insurance benefits manager collects premiums from approximately 35 million people.
With over 9,000 pharmacies and 1,100 walk-in clinics, CVS Health can provide many of the healthcare benefits it's also paid to manage. The pending acquisitions of Oak Street Health and Signify Health that CVS Health announced in recent months could take the company much further in this direction.
Medical Properties Trust
Shares of Medical Properties Trust (MPW 3.17%) offer a sky-high 13.2% dividend yield, which is sky-high right now because investors are worried the company will have to reduce its payout for the first time since 2008.
Medical Properties Trust is a real estate investment trust (REIT) that owns 444 hospitals and other acute care facilities spread throughout the U.S. and nine other countries. As a REIT, it doesn't have to pay income taxes as long as it distributes at least 90% of profits to shareholders as a dividend.
This REIT typically generates highly reliable cash flows because it doesn't run its hospitals. Instead, it collects rent from 55 hospital operators that sign long-term leases. The REIT structures its leases so that all the variable costs of ownership are the tenant's responsibility. Not even inflation is a major issue because its operators are on the hook for inflation-adjusted rent escalators.
Medical Properties Trust shares recently fell after the company reported a rare quarterly loss. Prospect Medical, one of its larger tenants, is having trouble paying its bills. While there's a strong chance the REIT will need to lower its payout to compensate, this company has transitioned properties from troubled tenants to ones that can pay in the past. Even if Medical Properties Trust trims its payout, buying some shares of this stock on the dip gives you a great chance to come out ahead over the long run.