Pursuing Secure Dividend Earnings in 2024 and Beyond? Consider Investing in These 3 High-Yield Stock Titans.
Diving into dividend-paying stocks has shown to be profitable for shareholders. However, prosperity is not solely about selecting stocks with high dividend percentages, as sustainability of these dividends is crucial. Consequently, it's essential to pick companies that can consistently meet their dividend obligations.
The following three companies outperform the S&P 500's 1.3% dividend yield and have demonstrated both durability in maintaining their payouts and a history of boosting them. Each company has surpassed the 50-year mark in enhancing dividends, earning them the title of "Dividend Kings." This underscores their commitment to rewarding shareholders with dividends.
1. Coca-Cola
Coca-Cola, famously known for its carbonated beverages like Coca-Cola and Sprite, also markets various other products such as water and juice. Despite the company's global recognition, its long-standing reputation as a dividend payer may be less known. Coca-Cola has increased its dividend payments for an astonishing 62 consecutive years.
This remarkable feat includes periods of economic downturns like recessions, which challenge even the most established businesses. This year, they approved a 5.4% increase, raising the dividend to $0.485 per quarter. Historically, the first quarter dividend is subject to an increase, so another increase is likely imminent.
Currently, Coca-Cola has a 78% payout ratio, indicating they maintain sufficient reserves to maintain dividend payments. This indicates that less than 100% of their profits are being utilized for dividends, a positive sign concerning their ability to sustain payments.
Coca-Cola's stock offers a 3.1% dividend yield, surpassing the S&P 500's yield by approximately 1.8 percentage points.
2. Procter & Gamble
Procter & Gamble produces a wide range of popular products like shampoo, deodorants, razors, toothpaste, and diapers. These are sold under well-known brands such as Head & Shoulders, Gillette, Crest, Tide, and Pampers. The company's broad product portfolio commands a significant market share.
Additionally, these products are considered "consumer staples," meaning they continue to be in demand regardless of financial circumstances. Procter & Gamble has paid dividends for 134 years and has increased them for the past 68. In May, they boosted the quarterly payout by 7%.
The company's strong product line drives substantial "free cash flow (FCF)." In the last fiscal year, they produced FCF of $16.5 billion, ample for the $9.3 billion in dividends they paid out.
Procter & Gamble's shareholders enjoy a 2.4% dividend yield.
3. Target
Target offers a diverse selection of products through its physical stores and online platform. Their offerings have solidified their place as a preferred shopping destination.
Two years ago, Target admitted to having an inappropriate inventory mix, focusing too heavily on discretionary items. As a result, they heavily discounted merchandise, resulting in a temporary hit to their gross margin and profitability. However, the company seems to have recovered.
Fortunately, Target's checkered past has not affected its ability to pay dividends. The board of directors approved an increase of 1.8% to $1.12 for the September quarterly payment. Target has been paying dividends since 1967 and has increased them for 53 consecutive years.
Target's financials suggest they can comfortably pay dividends, boasting a 45% payout ratio.
Target's shareholders will receive a 2.9% dividend yield, surpassing the S&P 500's yield.
The discussion on profitable dividend-paying stocks leads us to Coca-Cola, a company that has increased its dividend payments for an impressive 62 years. With a current 3.1% dividend yield, this Dividend King has demonstrated financial resilience, even during economic downturns.
Investing in Procter & Gamble also proves beneficial, as this company offers a 2.4% dividend yield while maintaining a strong fiscal position. Their commitment to shareholders is evident in their 68-year record of dividend increases, making them another Dividend King.
