Investing in the stock market is an excellent way to build long-term wealth. For investors seeking passive income, dividend stocks are one way to turn your portfolio into a cash-generating machine. Not only that, but companies that pay dividends consistently tend to outperform those that don't.
Research by Hartford Funds, in collaboration with Ned Davis Research, shows that dividend-paying companies have historically outperformed their non-dividend counterparts. Over a 50-year period, investors in dividend stocks enjoyed an annual return of approximately 9.2%, more than double the 4.3% return from non-dividend-paying stocks. Companies that consistently grow their dividend perform even better, with annual returns of 10.2% and lower volatility.
If you're looking for dividend stocks that have reliably grown their payouts, here are five stocks to consider today.
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Chubb
Chubb (CB -0.92%) is a major player in the global insurance market, providing coverage for a range of risks, including property and casualty insurance, life insurance, and reinsurance. The company has a strong history of conservative underwriting and generates revenue from a diverse range of insurance products.
Chubb has consistently maintained steady underwriting profits and disciplined cash management. The company has increased its dividend for 32 consecutive years, showcasing its financial stability. It also generates substantial free cash flow to support its dividend payments and stock buybacks. With a 17% payout ratio, Chubb should have no problem supporting and growing its dividend.
Cincinnati Financial
Cincinnati Financial (CINF -1.08%) is another example of a stable insurance business that has proven itself over time. Thanks to its disciplined approach to underwriting insurance policies and effective capital management, the insurer has raised its dividend payout for over 65 consecutive years, making it a member of the exclusive Dividend Kings club.
In addition to its strong underwriting practices, Cincinnati's investment portfolio benefits from higher interest rates. It also invests in equities, which can boost returns during expanding bull markets.
With a conservative balance sheet, a modest payout ratio, and consistent underwriting profits, Cincinnati Financial is another solid dividend grower stock to buy today.
FactSet Research Systems
FactSet Research Systems (FDS 0.57%) provides financial data and analytics to institutional clients, generating steady, recurring revenue through its high client retention rates. Its scalable software-as-a-service (SaaS) and data-as-a-service (DaaS) models generate strong margins and free cash flow, powering its consistent dividend raises for over 27 consecutive years.
With an expanding global footprint, FactSet continues to reinvest in product innovation while rewarding shareholders. Its subscription model ensures visibility and durability, making it a solid dividend grower to hold for the long haul.
Aflac
Aflac (AFL -0.66%) is a significant player in the supplemental health and life insurance industry, particularly in Japan and the United States. Its conservative management, low payout ratio, and strong excess capital generation have enabled it to increase dividends for over 42 years.
Aflac's business thrives on consistent premium income, low volatility, and effective capital allocation, including buybacks. The company emerged from the COVID-19 pandemic stronger, as claims costs have decreased over the past several years, providing the stock with a boost.
The company has also gotten a boost from higher interest rates, which have boosted its net investment income and enable it to reinvest cash from lower-yielding assets to higher-yielding ones.
S&P Global
S&P Global (SPGI -0.78%) plays a pivotal role in financial markets, with its businesses encompassing credit ratings (S&P Ratings), indexes (S&P Dow Jones Indices), and data and analytics (S&P Global Market Intelligence). Its high-margin, recurring revenue businesses support substantial, growing dividends and robust buybacks.
With a history of dividend increases over 53 consecutive years and a wide economic moat, S&P Global compounds earnings while returning capital to shareholders. Its pricing power and global demand for its services make it a durable dividend stock suited for long-term investors.
