These elite dividend payers can help you safely grow your savings.
Putting money into Dividend Kings is almost always a good idea if you want to increase your dividend income. These are stocks whose dividends have gone up for at least 50 years in a row. A company that has such a great history of paying dividends must clearly have strong finances and growth possibilities, or it wouldn’t be able to keep raising dividends for decades on end.
Some writers to fool.com say that right now you should buy Coca-Cola (KO 1.44%), Philip Morris (PM 0.88%), and Realty Income (O 1.53%). This is why.
A resilient consumer brand
John Ballard (Coca-Cola): Coca-Cola is the most famous drink brand in the world, and its profits have been growing for 62 years in a row. After good earnings in the first half of 2024, the price is up 21% so far this year.
Even though people are spending less, the beverage business has been able to stay strong. Last quarter, Coca-Cola said that unit case volume went up 2% year-over-year. The company also saw double-digit organic revenue growth and better margins.
The Coca-Cola Company has many different types of teas, juices, and carbonated drinks. It makes a good operating profit margin of 21% on all of these brands, and management is trying to make that even higher by refranchising its bottling operations. The profitable lineup gives the business a lot of chances to make sales at different times and makes a good profit that the company can use to pay rising dividends.
What the company does is give out about 75% of its yearly profits as payouts. The dividend is now $0.485 per share, which is 21% more than it was five years ago. The forward-dividend yield is now a nice 2.71%, while the S&P 500 yield is only 1.32%.
The performance of the stock shows how strong the name is and how much room there is for long-term growth. The areas where Coca-Cola did the best in the second quarter were Latin America and Asia Pacific. With more growth to come, the stock’s above-average yield is a great deal for buyers.
This longtime dividend payer is still heating up
Jeremy Bowman (Philip Morris): Philip Morris might not seem like a good choice for a stock with a long-term yield.
Even though everyone knows that smoking is going down, Philip Morris is now in the business of a lot more than just smokes. It has done a good job of branching out into new products, such as the IQOS heat-not-burn sticks, which work like vapes but use tobacco instead of e-liquid, and Zyn nicotine bags, which it got when it bought Swedish Match in 2022.
Next-generation smoke-free products now bring in about 40% of tobacco stock’s sales, thanks in large part to the success of those two products. These products also make more than 40% of Philip Morris’ gross profit, since they have even higher profit margins than cigarettes.
Zyn is in such high demand that the company just announced plans to spend more money to increase capacity in Colorado and Kentucky.
This is because Philip Morris only sells cigarettes in foreign markets. However, the company is still growing its cigarette category, as it saw 4.8% growth in organic revenue from combustibles, which are mostly cigarettes, in its most recent quarter. Cigarette sales went up by 0.4% in the third quarter.
In the quarter, organic sales rose 9.6% to $9.5 billion, and organic operating income rose 12.5%. These are great numbers for a dividend stock that seems to be well established.
Philip Morris also just raised its quarterly dividend to $1.35, an increase of 3.8%. Even though the company isn’t a Dividend King, its past as part of Altria means that it has raised its dividend for 55 years in a row.
The company’s income yield is 4.4% right now, and it looks like it will keep going up for years to come.
Monthly, high-yielding dividends
Jennifer Saibil (Realty Income): Real Estate Income is one of the best income stocks on the market. If you want to invest in stocks for passive income, this one has it all: The company pays the dividend every month, which is an added bonus. The dividend has a high yield, is reliable, and is rising.
Realty Income rents out buildings to stores because it is a retail real estate investment trust (REIT). But it has grown a lot in the last few years and now has a lot of different industries.
Even though it’s tough times like pandemics and inflation, retail properties still make up 79.4% of the portfolio. Within retail, it focuses on basics like grocery stores, convenience stores, and dollar stores, which makes it strong. More than 26% of the whole portfolio is made up of these groups.
It has more than doubled the number of properties it owns in the last few years, to 15,450, through two recent purchases and purchases of new properties. It has moved into games and industrials, which together make up almost 18% of the portfolio and give it the variety it needs to avoid the risk of focusing on just one area.
Most of the money that REITs make is given out as dividends, which is why they’re often great income stocks. Realty Income has raised its income for 108 quarters in a row, a streak spanning more than 50 years. At this price, it gives almost 5%, which is more than its average of about 4% and almost four times the average for the S&P 500.
When people were worried about the real estate market and interest rates were high, Realty Income stock went down. As a result, the dividend yield went up. In spite of this, buyers are getting more sure, and the price has gone up over the last few weeks.
Realty Income is a safe way to make passive income for life, and now is a great time to buy before the price goes up and the yield goes back down.
Should you invest $1,000 in Coca-Cola right now?
Think about this before you buy Coca-Cola stock:
There are 10 stocks that the Motley Fool Stock Advisor team thinks are the best for buyers to buy right now. One of them wasn’t Coca-Cola. The 10 stocks that made the list could give you huge gains over the next few years.
Think about when Nvidia made this list, on April 15, 2005. If you had put $1,000 at that time, you would now have $710,860!
Stock Advisor gives investors an easy-to-follow plan for success that includes advice on how to build a portfolio, regular updates from experts, and two new stock picks every month. Since 2002, the Stock Advisor service has more than four times the return of the S&P 500.