No matter what the market is doing, one specific type of stock always will reward you -- and you don't have to lift a finger. This may sound too good to be true, but it actually isn't. Dividend stocks are this type of investment, offering you payouts whether the stock or the market is rising or falling. So, you can count on them for passive income, and that's something you'll appreciate in any market environment.
How should you choose a dividend stock? It's a great idea to start with Dividend Kings, companies that have increased their dividends for at least 50 consecutive years. This shows us they're committed to rewarding shareholders and have the resources to do it over the long haul. With this in mind, let's check out two fantastic tried and true players -- both Dividend Kings -- to double up on right now.
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1. Johnson & Johnson
You might think of Johnson & Johnson (JNJ -0.53%) every time you pick up a bandage or take a Tylenol -- but the company actually spun off its consumer health business that sells those famous products two years ago to focus on higher growth areas. So, today, J&J devotes all of its resources to its innovative medicines and medtech businesses, units that each delivered operational sales increases of more than 4% in the recent quarter. This is even as the company lost exclusivity for its blockbuster immunology drug Stelara.
J&J reported double-digit growth across 11 major brands, and multiple myeloma drug Darzalex posted sales of more than $3 billion for a third straight quarter. As for medtech, the company has boosted growth prospects by completing acquisitions in recent years, such as the purchase of heart pump maker Abiomed. This has proven to be a solid strategy as in the latest quarter, Abiomed products delivered 14% growth.
All of this, along with J&J's commitment to innovation -- it invested 15% of sales, or $3 billion, in research and development in the latest quarter -- bode well for revenue momentum over time.
Now, let's turn to dividends. The company recently said it would lift its dividend by 4.8%, marking the 63rd straight year of increases, and emphasized its commitment to returning capital to stockholders. J&J, with $18 billion in free cash flow, is well positioned to keep its dividend growth tradition going. The company pays a dividend of $5.20 per share, representing a dividend yield of 3.4% -- significantly higher than the S&P 500 dividend yield of 1.3%.
Finally, trading for only 14x forward earnings estimates, J&J looks like a bargain for its earnings strength -- and policy of rewarding shareholders with passive income.
2. Coca-Cola
Coca-Cola (KO 0.14%) is another company that's proven its commitment to sharing its successes with shareholders. The company in February increased its dividend for a 63rd consecutive year, lifting it 5.2%. That results in an annual dividend of $2.04, at a yield of 2.8% -- like J&J, surpassing the yield of the S&P 500.
So, Coca-Cola is a fantastic stock to buy in order to secure a long future of passive income for yourself. But you'll also like Coca-Cola for its history of earnings growth, solid brand strength, and resilience when faced with difficult economies. The world's biggest maker of non-alcoholic beverages has grown revenue over time, into the billions of dollars, and has more than one competitive advantage. You can count on its brand strength keeping customers coming back -- it has 30 billion-dollar brands -- and its bottling network and relationship with customers ensure revenue strength too.
In recent times, Coca-Cola has proven it can resist economic weakness as it reported 6% organic revenue growth in the latest quarter even as economic uncertainty and geopolitical tensions hurt business in certain markets. Also in the latest quarter as in previous quarters, Coca-Cola continued to gain share in the total non-alcoholic ready-to-drink market.
And the structure of the company's business, with a reliance on local bottling, shields it from much of the impact of one of the biggest potential headwinds these days: the United States' import tariff plan. This makes Coca-Cola a great choice for investors looking for investments that are less vulnerable to such a headwind.
Now is a great time to double up on this well-established business with a strong moat, resilience, and dividend strengths. That's because it trades for only 23 times forward earnings estimates -- a reasonable price for a player that's proved itself over the long haul.
