“Dividend aristocrats” are companies that are part of the S&P 500 index and have increased their dividend payments for at least 25 consecutive years. These companies are usually a bit long-in-the-tooth, but they have steadily growing profits and can usually withstand a recession. For the risk-adverse investor, these dividend stocks make perfect sense, especially in volatile markets like the one we are in now, as they are less susceptible to large price swings.
Here are three dividend aristocrats that would be a worthy of consideration for any yield hog’s portfolio:
1. Johnson & Johnson
When I think of Johnson & Johnson (NYSE:JNJ) stock, the word “boring” comes to mind. But boring in the world of dividend investing is a good thing, since investors know they’ll be buying stability.
Johnson & Johnson is one of the largest and most diversified healthcare companies in the world. About half of the company’s sales come from pharmaceutical products, while the rest come from medical devices and consumer products. The company is also diversified globally, with a little more than half of its sales coming from overseas.
Johnson & Johnson currently has a dividend yield of 2.9%, which is a bit low. However, consider that it has raised its annual dividend payout for 53 straight years. In the last decade alone, the company has increased its dividend by 8.8% per year and by 7.1% over the past three years.
2. Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. (NYSE:WMT) is the world’s largest retailer. However, the company has been hitting a bit of turbulence lately, as sales and earnings both declined in the most recent quarter. Currency fluctuations hit Wal-Mart’s top line (on a constant currency basis, revenue was up 2.2% year-over-year), while investments in the company’s online site reduced earnings.
Walmart warned that growth would be sluggish for the next couple of years. While that’s news that a dividend investor doesn’t want to hear, the company has increased its dividend for the last 42 years.
Even if Walmart can’t afford another dividend increase during its staid growth period (highly unlikely), WMT stock has fallen over the last few months to an attractive dividend yield level. At its current price, Walmart stock is yielding a 3.09% dividend.
3. Procter & Gamble Co
Procter & Gamble Co (NYSE:PG) is probably the safest stock you can own among the dividend aristocrats. It’s a well-diversified consumer products company with well-known brands under its hood, including Pampers, Tide, Crest, and Old Spice. Its products are sold worldwide and are widely recognized by consumers.
The company has been a warrior when it comes to paying dividends. Procter & Gamble has been paying a dividend for 125 straight years, since it was formed in 1890. Last year marked the 59th straight year the company has increased its dividend. I think it’s safe to say that investors will likely never lose their dividend if they hold onto PG stock.
At its current price, Procter & Gamble sports a 3.2% dividend yield and it has grown its dividend payout at an annual rate of 9.7% over the last decade.