Investors seeking a steady stream of passive income from dividend-paying stocks have the option of focusing on high initial yields or exploring companies with smaller yields but robust dividend growth potential. Here are three dividend-growth stocks that may not offer the highest yields but have a history of consistent annual dividend increases, making them attractive for long-term investors.
1. Altria Group (NYSE: MO)
Overview:
- Despite declining cigarette sales, Altria Group’s Marlboro brand in the U.S. remains highly valuable.
- Strict regulations limiting the introduction of new brands allow tobacco giants to raise prices, offsetting volume declines.
Financial Strength:
- Cigarette volumes in the U.S. declined by 8%, but total revenue fell only 1.4% with price increases and non-combustible product sales.
- Altria’s strategic moves, including the acquisition of NJOY, contribute to diversified growth.
Dividend Details:
- Current Dividend Yield: 9.4%
- Dividend Payout Stability: Raised dividends for the 58th time in 54 years, demonstrating resilience.
- Recent Increase: A 4.3% raise, contributing to long-term inflation-beating returns.
2. Realty Income (NYSE: O)
Overview:
- Realty Income is a leading Real Estate Investment Trust (REIT) with a vast portfolio of over 13,000 buildings.
- Primarily leases properties to retail clients, with a focus on businesses resistant to e-commerce competition.
Financial Strength:
- A3 credit rating from Moody’s provides advantageous borrowing costs and financial stability.
- A well-diversified tenant base, particularly in recession-resistant sectors, adds to stability.
Dividend Details:
- Current Dividend Yield: 5.4%
- Consistent Growth: Raised monthly payouts for the 123rd time since its IPO in 1994.
- Stable Outlook: Strong financials and a strategic tenant focus contribute to ongoing dividend reliability.
3. Coca-Cola (NYSE: KO)
Overview:
- The Coca-Cola Company boasts 61 consecutive years of annual dividend raises.
- Despite changing beverage trends, worldwide popularity of sugary sodas, especially Coca-Cola, remains strong.
Financial Strength:
- Leverages brand strength to support price increases, contributing to robust revenue growth.
- Strong pricing power and economies of scale make Coca-Cola’s business highly profitable.
Dividend Details:
- Current Dividend Yield: 3.1%
- Consistent Growth: 61 years of consecutive annual dividend raises showcase reliability.
- Financial Flexibility: Strong free cash flow and a reasonable payout ratio support future dividend increases.
In conclusion, these dividend-growth stocks—Altria Group, Realty Income, and Coca-Cola—offer investors the potential for a reliable and increasing stream of passive income. Their strong financial positions and histories of dividend growth make them appealing choices for long-term portfolios.
