Dividend stocks can form a solid foundation for your investment portfolio. These stocks make regular cash payments, making them particularly appealing to retirees and individuals seeking a consistent income.
However, the allure of dividend stocks extends beyond the income. One study by Hartford Funds and Ned Davis Research reveals that companies that consistently increase their dividend payouts tend to deliver superior total returns with less volatility than those that either maintain or reduce their payouts. This insight reveals something important: investing in companies that are committed to increasing their distributions can lead to both stability and growth.
If you're looking to bolster your portfolio with these reliable performers and have $1,000 in cash to invest, these three companies that have successfully raised their dividends annually for 42 years or more could be smart buys today.
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Coca-Cola
Coca-Cola (KO 0.29%) owns several of the most iconic global brands around. With beverage sales spanning 200 countries, led by familiar products such as Coca-Cola, Sprite, Minute Maid, Schweppes, and Fanta, the company boasts a resilient business that benefits from steady global demand.
The company's competitive moat lies in its brands, as well as its global distribution system and relationships with retailers and bottlers, which provide it with a widespread reach. As a result, the company tends to display pricing power and resilience even during times of rising prices. As a result, Coca-Cola's business generates strong cash flow with solid margins, and demand tends to be steady over time.
NYSE: KO
Key Data Points
For income investors, Coca-Cola has increased its dividend payout annually for 63 consecutive years, placing it in a special class of stocks known as Dividend Kings. With a 3.1% yield, Coca-Cola is a steady dividend stock to own today.
Procter & Gamble
Procter & Gamble (PG +0.88%) owns trusted brands across household cleaning, personal care, and health. Some of its products include Tide, Mr. Clean, Gillette, Old Spice, and Oral-B, among others. With its wide range of household products, the company enjoys shelf dominance in supermarkets worldwide.
NYSE: PG
Key Data Points
Like Coca-Cola, Procter & Gamble enjoys steady demand for its products from consumers during economic slowdowns or periods of rising inflation. That's because its products span high-demand items used daily by consumers, giving it pricing power. Looking forward, Procter & Gamble is focused on reshaping its portfolio by divesting from slower-growth brands and concentrating on its core, higher-margin products.
Procter & Gamble has raised its dividend for an impressive 69 consecutive years, one of the longest streaks of any publicly traded company. With a dividend yield of 2.8%, Procter & Gamble is another solid stock that consistently rewards shareholders with steady income.
Aflac
Aflac (AFL 0.34%) provides supplemental insurance policies that help its customers cover expenses not covered by traditional health plans. This includes options like cancer, accident, or disability coverages. Aflac has a strong business presence in the United States, but its earnings are primarily generated from Japan, where it holds a dominant market share.
NYSE: AFL
Key Data Points
Aflac has a strong moat due to its focus on supplemental insurance and a robust distribution network, thanks to partnerships with employers and brokers. The company has done a solid job navigating a challenging environment when interest rates were near historically low levels in the 2010s. This impacted its investment income but also put pressure on its fixed-benefit supplemental insurance and long-duration liabilities, where margins became more compressed.
The company struggled a few years ago amid the COVID-19 pandemic, which had a sizable impact on life insurers like Aflac. However, the insurer has improved in recent years as claims experience has seen positive trends. Rising interest rates have also been another tailwind for Aflac, boosting its investment income as it invests in higher-yielding fixed-income securities.
Aflac has consistently managed its capital effectively and increased its dividend payout annually for 42 consecutive years. With a dividend yield of 2%, Aflac is another solid income stock to consider today.
