In the stock market, most attention is fixed on stock prices. However, stock price changes aren't the only way to make money from owning stocks. There are also dividends, which can account for a good portion of investors' total returns.
Investors seeking reliable and consistent dividend income should look no further than the three stocks below. Each has above-average dividend yields and a track record of increasing payouts each year.
1. Chevron
Chevron (CVX 0.37%) is the world's third-most valuable oil company, trailing only Saudi Aramco and ExxonMobil, with a history going back over 140 years. Operating in more than 180 countries, Chevron is a global oil and gas industry pillar.
On a surface level, Chevron's financials for the second quarter of 2023 look disappointing. Revenue was down 27% year over year, net income fell 48%, and diluted earnings per share (EPS) was down 46%. Yet, Chevron still beat Wall Street's expectations.
In 2022, Chevron (and the oil industry in general) benefited from higher energy and oil prices that padded its top and bottom lines. At some point, inflation had to cool, and things had to return to more "normal" levels, so the year-over-year drops shouldn't be too alarming.
Chevron's quarterly dividend is $1.51, with a trailing-12-month yield of around 3.6%. The company has increased its dividend for 36 straight years, so investors should take comfort knowing Chevron is well-positioned to keep its dividend going regardless of the cyclical nature of its business.
2. Coca-Cola
Coca-Cola (KO) has been a dividend staple for quite some time now. Its 61 straight years of dividend increases make it a Dividend King, with no signs of annual increases slowing or stopping anytime soon.
Its Q2 2023 revenue grew 6% year over year to $12 billion, but its net income outpaced it with 33% year-over-year growth. Both lag behind Coca-Cola's main competitor, PepsiCo, but the company still holds a commanding market share lead. At the end of 2021, Coca-Cola had a 46.3% market share in the U.S. compared to PepsiCo's 25.6%.
The one thing you can be sure about Coca-Cola is that it'll be a category leader for decades to come. Aside from brand recognition that few companies can compete with, Coca-Cola has a distribution network that sets it up for sustained success. Getting distribution in over 200 countries (profitably) isn't a walk in the park, but Coca-Cola has managed to do it.
Even though the company has a portfolio that includes classics like its flagship Coca-Cola soda, Sprite, Powerade, and Simply juices, it's shown a commitment to investing in what's needed to stay with the times as new categories (like alcohol ready-to-drink) get introduced and consumer preferences change.
Coca-Cola's dividend payout ratio is 56%, so it has plenty of room to be shareholder-friendly while investing to ensure long-term success.
Data by YCharts
3. Procter & Gamble
If you're reading this at home, there's a good chance you can find a handful of Procter & Gamble (PG -0.78%) products lying around. P&G's portfolio includes:
- Baby care: Pampers
- Fabric care: Downy, Gain, Tide
- Feminine care: Always, Tampax
- Personal healthcare: Crest, Scope, Old Spice, Pantene
- Home care: Dawn, Febreze, Swiffer
That's not even half of its brands, either. P&G's portfolio puts it in a position where its products sell regardless of economic conditions. When the budget is tight, you can bet there's a long list of items people will cut back on before they cut back on grooming and home care.
P&G's fiscal 2023 (ended June 30) revenue was $82 billion. That's only 2% growth year over year, but organic sales -- which don't include factors like currency exchange rate changes and acquisitions and divestitures -- increased 7% year over year. The company managed to beat Wall Street's estimates for the year.
P&G has increased its dividend for 67 consecutive years and paid one for 133 years in total. It doesn't get much more consistent than that. Its current quarterly payout is $0.94 per share, with a yield of around 2.4%.
You likely won't be seeing double-digit percentage growth year in and year out with P&G, but you can be certain the dividend will be there and increase as the years go on. It's a great long-term buy-and-hold option that can act as a defensive stock during tough economic times.
