These companies are royalty among dividend stocks.
Some income investors place a priority on yield above all else. This can backfire, however, since a big payday in the past is no guarantee of future payouts. A better strategy is to look at long-term consistency and dividend growth — even if that means today’s payout isn’t huge. Growing dividends signal investors will be paid more over time, and these increases are an important indicator that a company is doing well and committed to sharing its success with stockholders. A “dividend aristocrat” is an elite class of dividend stock that has increased its payout at least once a year for the last 25 years or more. Here are nine of the best dividend aristocrats to buy.
3M Company (ticker: MMM)
With 62 consecutive years of dividend growth, 3M is a shining example of a slow-and-steady dividend aristocrat that is committed to driving shareholder value through sharing its profits directly with investors. The diversified chemical company has deep roots dating back to 1902, with a host of business lines right now that span safety, electronics, transportation, health care and consumer products. That built-in diversification coupled with the company’s large scale ensures steady revenue to support the prospect of continued income growth for years to come from this dividend aristocrat.
Current yield: 3.7%
You likely recognize the company behind the pesky duck that squawks at you during commercial breaks. But what you might not know is Aflac’s rich dividend history, which includes 37 consecutive years of growth in its distribution. This insurance and financial services company focuses mainly on supplemental health and life insurance policies, and as a result it can depend on a steady flow of cash from customers who pay their premiums each month. The stock was hit hard by pandemic-related claims in the spring, but Aflac has stabilized since then and now offers a generous yield in addition to its long history of dividend increases.
Current yield: 3.1%
Cardinal Health (CAH)
Cardinal is a midsize health care stock that doesn’t quite have the same name recognition as some bigger names in the sector, but it’s still an important player in the industry. Cardinal provides services and products related to the general operations of hospitals, pharmacies, clinics and other facilities. That includes delivery of generic and over-the-counter drugs as well as gloves, IV tubing and materials, bandages and a host of other items. Cardinal has a steady stream of revenue from these products, and as a result the stock has enjoyed 33 years of consecutive dividend growth.
Current yield: 3.9%
Coca-Cola Co. (KO)
When you think about entrenched consumer brands, there is perhaps no name bigger than Coca-Cola. This company is a $200 billion powerhouse of the beverages market, with a presence in almost every country in the world. And while its namesake soft drink is admittedly not quite in favor the way it once was given recent shifts to healthier options in many households, a deep bench of popular products including Smartwater, Minute Maid juices, Honest teas and Powerade sports drinks ensures strong sales for many years to come — and a safe future of dividend payments for its shareholders. The company has increased its payout for 58 consecutive years.
Current yield: 3.4%
Colgate-Palmolive Co. (CL)
Another high-profile dividend stock, Colgate is a company that’s more than 200 years old and is one of the most recognizable consumer brands on the planet. More impressive to income investors, however, should be this firm’s 56-year history of consecutive dividend increases. When you have a diverse product portfolio of in-demand items that includes its Colgate toothpaste and Palmolive dish soap, it’s easy to depend on your business model to generate consistent revenue. That reliable flow of cash also supports reliable dividends to CL shareholders.
Current yield: 2.1%
Cincinnati Financial Corp. (CINF)
CINF is an unassuming investment and insurance company based in Ohio, with about 5,000 employees and a market cap of around $12 billion. And while you may not have heard of Cincinnati Financial, that’s a pretty good thing considering the wide range of financial firms that became infamous after suffering steep losses and slicing dividends during the 2008 financial crisis. It’s also worth noting that despite recent pandemic disruptions, this stock is still comfortably profitable and committed to maintaining its impressive streak of 60 consecutive years of increased dividend payments.
Current yield: 3.3%
Hormel Foods Corp. (HRL)
Consumer staples stocks are among the most reliable investments on Wall Street. These stocks tend to offer a strong baseline of sales as shoppers regularly ring up their products at the grocery store each week. Meats and packaged foods giant Hormel is among the biggest and most respected stock in this class of companies, with a wide array of offerings that range far beyond its branded bacon to include things like Skippy peanut butter and Asian cuisine under the House of Tsang brand. This diversity in products adds diversity to sales, supporting steady financials that have driven 54 years of consecutive dividend growth.
Current yield: 1.9%
Johnson & Johnson (JNJ)
If you’re looking for a stable and reliable income investment, health care powerhouse JNJ should already be at the top of your list. This $370 billion megacorporation is not only a dominant force in its industry, but the industry itself is relatively recession-proof considering folks will buy medicine whether the economy is good or bad. When you add in a generous payout and 58 consecutive years of dividend increases, the case for being a long-term JNJ shareholder is pretty clear.
Current yield: 2.9%
People’s United Financial (PBCT)
One of the more recent additions to the list of dividend aristocrats, Connecticut-based regional bank People’s United has “only” 27 years of consecutive dividend increases under its belt. However, as that history spans the financial crisis of 2008, its relatively short track record of dividend increases still makes it one of the longest in the sector after big banks from Citigroup (C) to Bank of America Corp. (BAC) were forced to cut back after the economy collapsed. Shares are admittedly still down sharply from their early 2020 highs because of the pandemic, but the payouts remain intact — and include a modest bump to dividends this spring.
Current yield: 6.8%
Nine dividend aristocrats to buy:
— 3M Company (MMM)
— Aflac (AFL)
— Cardinal Health (CAH)
— Coca-Cola Co. (KO)
— Colgate-Palmolive Co. (CL)
— Cincinnati Financial Corp. (CINF)
— Hormel Foods Corp. (HRL)
— Johnson & Johnson (JNJ)
— People’s United Financial (PBCT)
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