Income Lover’s Paradise: 3 Dividend Stocks With Stellar Track Records

Boost your income and total return with these forever dividend stocks

• These dividend stocks are quality picks with more than 60 consecutive years of annual dividend increases.
• Genuine Parts (GPC): This automotive and industrial parts distributor has had 67 years of dividend growth.
• Coca-Cola (KO): The soft drinks powerhouse has unmatched brand equity that supports stable growth.
• Johnson & Johnson (JNJ): Its diverse pharmaceutical and MedTech businesses have supported dividend growth for 61 years.

Dividend stocks not only offer the potential for capital appreciation but also provide a steady income stream. According to S&P Dow Jones Indices research, dividends have contributed about 32% of the total equity return since 1926. Moreover, they argue that dividends signal quality and reflect confidence in a company’s outlook.

Typically, dividend-paying stocks have stable operations from which they generate consistent cash flows to pay dividends. In contrast, unprofitable or distressed companies cannot afford dividends as they would further weaken their financial strength. Thus, most of the time, dividend payments indicate strong cash flow generation and a fortress balance sheet.

Genuine Parts (GPC)

Genuine Parts (NYSE:GPC) is a global automotive and industrial parts distributor. Over the decades, it has built an unmatched distribution network across North America, Europe, Australia and New Zealand with over 10,600 locations. This strategic position and extensive supply chain network have earned the company a competitive advantage over peers.

Today, the company is the largest global automotive parts network. Due to its enviable position, Genuine Parts can navigate economic downturns more smoothly than peers, ensuring steady income and, by extension, a reliable dividend payout. It has had 67 consecutive years of dividend increases and yields 2.66% currently.

The recent earnings report highlighted Genuine Part’s resilience. Despite supply chain disruptions and fluctuating demand, the company delivered solid results. It achieved sales of $23.1 billion in 2023, a 4.5% growth. Diluted EPS increased 12.3% to $9.33.

Additionally, it generated free cash flow of $923 million. These healthy cash flows enabled Genuine Parts to return $788 million to shareholders via buybacks and dividends. Management expects revenue growth to continue in 2024 and predicts an increase of between 3% and 5%.

The company continues to pursue expansion through organic growth and opportunistic expansion. For example, in 2023, Genuine Parts acquired Gaudi and entered the Spanish market. Also, the company continues to roll out its National Automotive Parts Association (NAPA) brand across Europe. Given this growth and healthy profitability, the company will remain one of the best dividend stocks for the foreseeable future.

Coca-Cola (KO)

Synonymous with refreshment and quality, Coca-Cola (NYSE:KO) has turned its brand into a global powerhouse. It dominates the soft drink market globally with a diverse product portfolio, which includes over 200 brands.

In terms of performance, Coca-Cola is one of the most stable businesses. Through its unparalleled brand equity and extensive global distribution network, it has captured consumer tastes for decades. That’s why it has been a mainstay in Berkshire Hathaway’s (NYSE:BRK-A, NYSE:BRK-B) portfolio since 1988.

Over the past two years, Coca-Cola has demonstrated remarkable pricing power and increased prices globally. For instance, in 2023, the company raised prices by 10%. Yet, despite these price hikes, consumers continued buying its brands, leading to 2% volume growth for the year. As a result, organic revenues grew 12% in FY2023.

Coca-Cola will remain one of the top dividend stocks going forward. Over the years, the soft drink maker has shown an ability to shift its portfolio with changing consumer preferences. It has expanded into new beverage categories, such as healthy, low-sugar options, flavored alcohol beverages and coffee.

This adaptability, combined with a focus on operational efficiency, has been a hallmark of the company. With growing cash flows, it’s investing in research and development and rewarding shareholders. In 2023, it completed $1.7 billion in net share repurchases and paid $8.0 billion in dividends.

As an S&P 500 constituent, Coca-Cola has cemented its status as a dividend aristocrat. As of this writing, it has a 3.1% dividend yield and a 61-year dividend growth record. Its legacy of delivering shareholder value through consistent dividend increases continues.

Johnson & Johnson (JNJ)

Johnson & Johnson (NYSE:JNJ) has been in the spotlight for facing litigation and regulatory scrutiny. Despite these challenges, it ranks among the best dividend stocks. The company has increased its dividend for 61 years and currently yields 3.04%.

This leading healthcare company is one of the most defensive businesses, with products spanning pharmaceuticals and MedTech. In 2023, its pharmaceuticals segment, led by major drugs like Stelara, Tremfya and Darzalex, generated $54.8 billion in sales, a 6.5% growth.

Its MedTech business is also well diversified, serving several end markets like interventional solutions, orthopaedics, surgery and vision. The orthopedics portfolio includes products that remedy knees, trauma, spine, hips and sports injuries, while vision includes intraocular lenses for cataract surgery and contact lenses. Altogether, the segment grew reported sales by 10.8% in 2023 to $30.4 billion.

This diversification across different healthcare end markets has enabled steady revenue and earnings growth. Adjusted diluted earnings per share grew 11.1% in 2023 to $9.92.

In terms of dividends, the company has paid out a $1.19 per share quarterly dividend in the last four quarters. In total, it paid out $11.8 billion in dividends in 2023. According to management’s guidance, revenue will grow 5% to 6% this year. With revenue growth intact, more dividend increases are likely.

This post originally appeared at InvestorPlace.

On the date of publication, Charles Munyi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Category: Dividend Stocks To Buy?