The stock market can be quite unpredictable, yet investing in dividend stocks often offers a sense of stability. If you focus on high-quality dividend stocks, you can generally expect reliable returns. The key factor here is “quality.” There are, unfortunately, numerous instances of companies having to cut or eliminate their dividends when they hit financial struggles.
If you’re on the hunt for dependable dividend stocks, three options stand out. Each of these companies qualifies as a dividend king, meaning they’ve increased their annual dividends for at least 50 consecutive years.
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Being labeled a Dividend King means that these companies have endured downturns, conflicts, and other challenges while still maintaining their dividend payouts. That kind of consistency is, well, pretty hard to dispute.
Walmart (NASDAQ:WMT) has really nailed two important elements that appeal to consumers: convenience and affordability. With physical stores spread all over the U.S., it often remains the lowest-priced option around. This is why Walmart generally does well, regardless of the economic climate.
However, Amazon has recently become quite a powerhouse, surpassing Walmart to emerge as the highest-grossing publicly traded entity for a spell. Last fiscal year, sales reached $713.2 billion across Alphabet and Microsoft, all in a similar timeframe.
Importantly, Walmart possesses ample cash flow to sustain its dividend payments. While its dividend yield might seem modest at 0.74% as of now, the company has consistently raised its dividends for 53 years straight.
Thanks to its solid brick-and-mortar presence and impressive growth in the e-commerce, Walmart has been experiencing significant success beyond just retail lately.
Coca-Cola (NYSE:KO) is often recognized as one of the most iconic brands worldwide. The company has leveraged its ability to distribute products almost everywhere while minimizing logistics and capital costs, which is quite an advantage.
Coca-Cola operates efficiently due to its asset-light model; it sells syrups and concentrates to distributors, who handle the local deliveries. This approach is primarily why Coca-Cola can outpace many competitors.
Coca-Cola’s products tend to sell well, irrespective of market conditions. While consistent double-digit growth may not be on the table, the dividend remains steady.
This marks the 64th consecutive dividend increase, which is noteworthy. The company’s payout ratio, hovering around 67%, indicates that about two-thirds of its profits are given back to shareholders. Though this might sound a lot, given Coca-Cola’s predictable cash flow, it’s sustainable.
Altria (NYSE:MO) handles well-known brands like Marlboro and Black & Mild. For better or worse, Altria has maintained its power due to cigarettes being in the “will always sell” category.
More so than the other companies here, Altria has pricing power, which helps it deal with declining sales volumes seen in recent years.
Tobacco consumers might not particularly enjoy the price hikes, but moving to a different brand or quitting takes time. Often, tobacco firms will increase prices uniformly, reducing incentives to switch brands.
With one of the highest dividend yields in the S&P 500, Altria typically delivers a current yield of around 6.5%, which is below its five-year average of 7.7%. It generally aims for an 80% payout ratio on adjusted earnings per share, a target it meets most of the time, achieving just over 76% in 2025.
Altria recognizes that dividends matter: they are crucial for most investors, and the company works to prioritize them. Recently, it celebrated its 60th dividend increase within 56 years.
Before you consider purchasing Walmart stock, there are a few things to think about:
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Stefon Walters holds shares in Coca-Cola, Microsoft, and Walmart. The Motley Fool currently has investments in and endorses Alphabet, Amazon, Microsoft, and Walmart. For further details, see the disclosure policy.
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