These seven dividend stocks have stood the test of timeGiven the meteoric rise in interest rates over the last… These seven dividend stocks have stood the test of time. Given the meteoric rise in interest rates over the last year, many investors may be taking a closer look at bonds, which now offer meaningful yields for the first time in more than 15 years.
But for investors who may not want to totally ignore the capital appreciation potential that the stock market offers, established dividend stocks are an attractive middle groundPassive investors especially should seek out solid, established companies with long track records, strong competitive positioning and sustainable payouts with room to grow.
The following seven large-cap stocks all fit that bill.
Here, pharmaceutical giant Abbvie is in elite territory: It’s a “dividend aristocrat,” which means it’s one of the rare S&P 500 companies that has increased its dividend payout for at least 25 straight years.
With sales of blockbuster arthritis drug Humira set to wane due to a loss of patent protection, analysts see overall revenue slipping 6.7% in 2023That said, it has other up-and-coming drugs on the market like immunology medications Skyrizi and Rinvoq, which saw year-over-year sales growth of 75.4% and 53.5%, respectively, in the third quarter of 2022. Sector: Health care Dividend yield: 3.8% Market capitalization: $270 billion The Coca-Cola Co.
(KO) Famously a favorite of Warren Buffett, who holds it as one of his top portfolio components at Berkshire Hathaway Inc.
With 60 years of dividend increases to brag about, few income stocks are more reliable.
(COST) Founded in 1976 and based in the humble town of Issaquah, Washington, Costco has come a long way from its humble rootsNow a sprawling $200 billion membership warehouse retailer, Costco is the cream of the crop in its industryIts simplistic business model of charging a modest membership fee and then selling goods in bulk at near-cost has proven incredibly profitable.
Those membership fees add up quickly, with COST raking in $4.3 billion in membership dues in the 12 months through Nov20, 2022Although a 0.7% dividend yield won’t change your life, its $3.60 per share annual payout is up ninefold since being initiated at 40 cents in 2004Costco shares are off to a good start in 2023, rising 5.7% through Jan.
12 on the heels of news that December same-store sales rose 7.3%, excluding gasoline and foreign exchange fluctuations. Sector: Consumer defensive Dividend yield: 0.7% Market capitalization: $200 billion Johnson & Johnson (JNJ) Next up is arguably the prototype for all blue-chip dividend stocks, Johnson & Johnson.
Buying JNJ shares is almost like buying a diversified exchange-traded fundThe company’s business is spread across three divisions: pharmaceuticals, medical devices and consumer healthAnother member of the elite dividend aristocrats club, like Coca-Cola, Johnson & Johnson has roots going back to 1886 and has now grown its dividend annually for six decades and counting.
Consumer brands include dozens of trusted global names like Benadryl, Listerine, Pepcid, Tylenol, Sudafed and Band-Aid, to name just a fewJNJ’s pharmaceutical segment, however, is both the largest of its three divisions and the fastest growing, advancing 9% in the third quarter of 2022 as drugs like Darzalex (multiple myeloma), Tremfya (plaque psoriasis/arthritis) and Stelara (inflammatory diseases) drove results. Sector: Health care Dividend yield: 2.6% Market capitalization: $450 billion United Parcel Service Inc.
(UPS) Headquartered in Atlanta and founded in 1907, UPS is a dominant player in transportation, logistics and package delivery on a global scaleRegardless of how digitized the economy becomes, folks will still need raw, physical goods to get from point A to point B, and UPS’ long-standing freight infrastructure and know-how make it an established player in an oligopolistic industry with relatively high barriers to entry.
Don’t let this staid, boring business mislead you: UPS grew from $66.6 billion in revenue in 2017 to an expected $101 billion in sales in 2022Although its final 2022 numbers aren’t out yet, if analyst estimates are correct, its 2022 earnings per share of $12.92 will reflect a roughly 130% jump from the $5.61 in EPS it reported for 2017.
Trading at less than 15 times earnings, UPS has a payout ratio (the percentage of earnings that it pays out in dividends) of just 44%, reflecting plenty of room for future increases. Sector: Industrials Dividend yield: 3.3% Market capitalization: $150 billion PNC Financial Services Group Inc(PNC) Although its $65 billion market cap makes it the smallest company on this list, regional bank PNC isn’t small by any measure of the imagination.
Pittsburgh-based PNC was formed all the way back in 1852It has managed to survive and thrive throughout some of the toughest times in American history, escaping the Civil War and Great Depression and the many other crashes and recessions that hampered businesses over the last 170 yearsWith bank stocks beaten down in 2022 as investors anticipated another recession, PNC should be in great shape if the economy manages to make a soft landing.
Even if it doesn’t, the indefatigable PNC looks like a value stock, trading for just over 10 times forward earnings despite analyst expectations for roughly 10% revenue and earnings growth in 2023. Sector: Financial Dividend yield: 3.6% Market capitalization: $65 billion Cisco Systems Inc(CSCO) Last but not least is Cisco, the sprawling communications equipment company that provides much of the proverbial plumbing that makes the modern internet and technological world hum.
As a tech stock, the company’s history dates “only” back to 1984But Cisco managed to quickly establish itself as a vital part of the world’s information technology infrastructure and, perhaps even more impressively, stay thereSure, Cisco won’t break any growth records these days — analysts expect both top- and bottom-line growth between 5% and 6% in fiscal 2023 — but after the 2022 tech sector sell-off, long-term investors have a chance to get into Cisco at reasonable levels.
Shares currently go for less than 14 times earnings, and the company’s conservative 54% payout ratio shows that profits could be nearly cut in half without putting the dividend at risk. Sector: Technology Dividend yield: 3.1% Market capitalization: $195 billion 7 dividend stocks to buy and hold forever: — Abbvie Inc.
(ABBV) — The Coca-Cola Co(KO) — Costco Wholesale Corp(COST) — Johnson & Johnson (JNJ) — United Parcel Service Inc(UPS) — PNC Financial Services Group Inc(PNC) — Cisco Systems Inc(CSCO) More from U.SNews 9 Highest Dividend-Paying Stocks in the S&P 500 7 Dividend ETFs for Retirement Investors 7 of the Best High-Dividend ETFs 7 Dividend Stocks to Buy and Hold Forever originally appeared on usnews.com Update 01/13/23: This story was previously published at an earlier date and has been updated with new information.