You may say that dividends which are paid and increased is the best type of dividend. There is no better feeling for an investor than to understand your stocks are giving you money while you sleep, and even giving you a raise every year!
How do we find these reliable companies that let us sleep well at night while holding them? Let’s break down the anatomy of a dividend stock and highlight three of the best there are.
To find the best dividend stocks, you want one with a dependable business model, a strong brand, and one with great numbers on their balance sheet.
The stocks bellow all check the boxes on this list, and I believe they have the ability to pay you every year for the rest of your natural life.
1. Procter & Gamble: giving a 2.5% dividend yield
If you check your laundry room or bathroom, you will likely see one of Procter & Gamble’s many products from its 65 different brands. The company is a huge conglomerate that sells its goods all over the world.
Its brands include Tampax, Pampers, Bounty, Puffs, Crest, Gillette, Suave, NyQuil, Olay, Head & Shoulders, Tide, Old Spice, and more. These are products you likely get at the store each month, often without even thinking about it.
During any hardship, you will probably keep brushing your teeth and washing your clothes; it will likely be other items in your budget that you cut first. Because of this, Procter & Gamble has been very stable, and has boosted its dividend each year for the previous 65 years! It has created over $15 billion in free cash flow over the previous 12 months and spends only half of it for its dividend, so investors should expect these payments to keep going for years.
2. Johnson & Johnson: giving a 2.6% dividend yield
Healthcare is among the largest and most crucial industries in the world. Our health comes first in our budget, and conglomerate Johnson & Johnson gets a lot of that.
It is one of the world’s top pharmaceutical companies, with 13 drugs that bring in $1 billion or more in annual sales. It is a medical device firm with products for things like surgery, wound care, vision and a lot more. If you go to any drugstore, you will find the company’s products, including Motrin, Tylenol, Band-Aids, Benadryl, and Listerine. Johnson & Johnson is pretty much everywhere in the healthcare industry.
Having such a large presence within the sector has enabled it to keep putting money into the pockets of investors, increasing its dividend for the previous 59 years and going. The company has given more than $22 billion in free cash flow during the previous 12 months and spends less than half on its dividend, giving investors value for years with more dividends.
Author: Scott Dowdy