Dividend Kings are among the best income stocks on the market. Any corporation capable of raising its payouts for 50 consecutive years -- the requirement to become a Dividend King -- has an incredibly strong business capable of navigating company-specific challenges and economic peaks and troughs.
So, looking at the list of Dividend Kings is an excellent start for investors trying to find stocks that can continuously raise their payouts for a lifetime. Let's consider two companies in this elite group with the exact qualities long-term income investors want: Coca-Cola (KO 1.59%) and Abbott Laboratories (ABT 0.46%).
NYSE: KO
Key Data Points
1. Coca-Cola
Few businesses are better known worldwide than Coca-Cola. The company owns a portfolio of beverage brands across multiple categories: soft drinks, alcoholic beverages, tea, coffee, sports drinks, juices, and more.
The company also has an extensive geographical footprint. It's hard to find a single country where it doesn't operate and where children won't get excited at the sight of its famous logo. Having a recognizable brand is a powerful competitive advantage that has helped generate steady financial results and continuous dividend raises.
The company's streak as a Dividend King stands at 62 years, and there doesn't seem to be any end in sight. True, it isn't a particularly attractive growth company (it hasn't been for a while). In the third quarter, revenue decreased by 1% year over year to $11.9 billion. Adjusted earnings per share (EPS) were up 5% year over year to $0.77. Investors weren't impressed with the performance for the period, which caused the stock price to dip.
However, Coca-Cola continues to prove its resilience. Even in the past few years, when consumers have had to deal with inflation, the company's unit volume has remained respectable. It fell slightly by 1% year over year in the third quarter. In other words, people continue to buy the company's products at nearly the same volume -- despite widely available alternatives -- even when its prices rise.
Coca-Cola has also evolved with the times, adapting to worries over potential health concerns by offering low-sugar options for some of its drinks. It should remain a well-established leader in its niche for a long time while still rewarding shareholders with dividend hikes.
It currently offers a forward yield of 3.10%, compared to the S&P 500's average of 1.32%. This is one dividend stock investors can safely keep in their portfolios for good.
NYSE: ABT
Key Data Points
2. Abbott Laboratories
Abbott Laboratories is a medical device leader with a long history of innovations. The company's business spans three other segments: nutrition, established pharmaceuticals, and diagnostics.
Abbott has continued to deliver strong financial results despite several headwinds. The healthcare giant's business struggled in the early days of the pandemic since the demand for its medical devices dropped. Then, it had to navigate challenging conditions like everyone else. The company also dealt with issues within its nutrition business that resulted in lawsuits.
Lastly, its diagnostics segment, which was its saving grace during the early pandemic days, has been inconsistent as the outbreak has receded in the past couple of years.
Despite all that, results remain robust. In the third quarter, sales increased by 4.9% year over year to $10.6 billion. Excluding the impact on its coronavirus diagnostic business, sales increased 8.2% organically compared to the year-ago period. Adjusted EPS of $1.21 climbed by about 6% year over year.
Abbott's business has been a picture of stability for a long time. The company has deep experience navigating the healthcare industry, which is one of the most regulated.
It also has a reputation in its niche. Physicians are like the rest of us: They tend to stick to those companies whose products they know are effective, especially when people's lives are at stake. And the company benefits from many patents that protect its inventions.
Abbott has multiple growth opportunities, especially in diabetes care, spearheaded by its continuous glucose monitoring (CGM) franchise, the FreeStyle Libre.
Thanks to all this, it is unlikely to cut its payouts and interrupt its streak of 52 consecutive annual dividend increases. The forward yield of 1.88% isn't too impressive but is still above the S&P 500's average. The company's business is what matters most, and in that department, investors have little to worry about. Abbott Laboratories remains a top dividend growth stock to hold on to for good.
