If you'd like to collect regular cash payments from stocks but would also like to take a passive approach to investing, you've got options. Lots of stocks are not only generating reliable dividends, but are raising their payouts like clockwork. They'll likely do so for the indefinite future too.
Here's a closer look at three such names that have not only dished out dividends for several decades, but increased their annual payouts for 50 or more years -- qualifying them as so-called Dividend Kings.
1. Procter & Gamble
You may be more familiar with the company than you think. In fact, you may be a customer without even realizing it. Procter & Gamble (PG 0.54%) is the parent company to Pampers diapers, Tide detergent, Charmin toilet paper, Gillette razors, Old Spice deodorant, Crest toothpaste, and more. These are, of course, the products -- and brands -- you buy without giving the purchase a second thought.
Consumers being in the habit of buying these same goods over and over again means Procter & Gamble enjoys reliable cash flow, which is then converted into earnings, which in turn funds dividend payments. That's how the company's been able to make a dividend payment for the past 133 years and raise its annual quarterly payout for the past 67 years.
That said, there are trade-offs with every stock holding, and P&G is no exception. Here, the trade-off is growth.
See, the consumer goods business is typically a slower-growth, lower-margin one, with a sizable chunk of profits usually being passed along to shareholders rather than being invested back into the business itself. For perspective, through the first nine months of the current fiscal year set to end in June, $2.76 of the company's $4.67 worth of per-share earnings were dished out as dividends. That's more than half of Procter's profits. In the meantime, year-to-date sales are only up a fairly typical 1%, while earnings are down just a bit due to inflationary headwinds.
If you're looking for a 2.5% yield you can count on, though, the trade-off is more than worth it with P&G.
2. Coca-Cola
There are lots of similarities between Procter & Gamble and beverage giant Coca-Cola (KO 2.14%). The biggest and most obvious one is the same way the two companies benefit from brand loyalty. Like P&G's customers, Coke's customers often keep purchasing the company's products without even thinking about it.
However, there are differences that in some ways make Coca-Cola an even better dividend stock. Chief among them is its relatively new corporate structure.
From a consumer point of view, it's not obvious, nor does it really matter. But this beverage behemoth doesn't actually do a lot of its own bottling these days. It sold off the bulk of its bottling operations beginning in 2015 to focus more on the licensing and franchising aspects of the business.
The end result is less revenue, but as it turns out, more profits. The strategic maneuver also puts a great deal of the business's cost risk back on the bottlers themselves -- a move that wound up being incredibly fortuitous in the wake of last year's swell of inflation.
To this end, while many other dividend-paying companies are finding themselves a bit cash-strapped in the current environment, only $0.46 of Coke's per-share profits of $0.72 were needed to pay its quarterly dividend. By Coca-Cola's historical standards, it's still earning as much after funding its dividend as it ever has, positioning the company to lengthen its streak of 61 consecutive yearly dividend increases.
KO EPS Diluted (Quarterly) data by YCharts
Coke shares' current yield stands at a healthy 2.9%.
3. Walmart
Last but not least, add value-oriented retailer Walmart (WMT 0.46%) to your list of dividend stocks you can count on to keep making payments while you sleep.
OK, the current yield of 1.5% isn't exactly thrilling, but take a step back and look at the bigger picture. The quarterly payment has grown from $0.09 per share back in 2003 to $0.47 per share 10 years ago to $0.57 now. Yet its full-year dividend payment of $2.28 is still only a fraction of the company's current full-year earnings on the order of more than $6 per share.
That leaves plenty left over to invest in growth-driving efforts like automation, healthcare, and e-commerce. And that's how Walmart was able to produce revenue growth of 7.6% last quarter and same-store sales growth of 7.4% within the United States. Meanwhile, rival Target's same-store sales growth was flat.
The key to Walmart's continued sales, earnings, and dividend growth is sheer dominance. With more than 3,500 stores in the United States alone in addition to 600 Sam's Club warehouses and nearly 700 neighborhood grocery stores, competitors just can't get much of a toehold. This existing brick-and-mortar presence (and its corresponding supply chain and logistics infrastructure) also provides launching points for initiatives like the aforementioned healthcare business, while its e-commerce website is a platform expected to eventually drive billions of dollars' worth of advertising revenue.
Connect the dots: Walmart's 50-year track record of raising its dividend payout is not only well intact, but should be easily extended into the distant future.
