Five Reliable Dividend Stocks with Decades of Raises
Procter & Gamble (PG) has set the gold standard for dividend reliability with 70 consecutive years of dividend increases and 136 years of consistent payouts. This impressive track record has earned it a spot in the Dividend Kings club. Other companies like Johnson & Johnson (JNJ), Coca-Cola (KO), ADP (ADP), and Lowe’s (LOW) share this reliability, each boasting long streaks of dividend raises backed by strong cash flow and manageable payout ratios.
Johnson & Johnson, yielding 2.05%, has raised its dividend for 64 straight years. Its annual dividend uses about 61% of trailing GAAP EPS, and free cash flow covers the payout comfortably. The company’s diverse product portfolio and commitment to returning capital to shareholders make it a strong dividend performer, despite risks like declining sales of its drug Stelara.
Procter & Gamble offers the highest yield in this group at 2.94%. Its dividend is backed by growing free cash flow, which rose 12.7% to $15.84 billion. The company plans to spend around $5 billion on buybacks while maintaining its dividend increases. However, it faces headwinds from commodity, energy, and transport costs, which could impact future earnings growth.
Coca-Cola (KO) yields 2.43% and has a solid dividend safety profile, with free cash flow covering the payout about 1.24 times. The company’s strong organic revenue growth and volume growth in its flagship product, Trademark Coca-Cola, make it a reliable income stock. However, ongoing IRS tax litigation poses a risk that could affect dividend growth.
ADP (ADP) yields 2.58% and has a longstanding commitment to growing its dividend. Its operating cash flow rose 10%, providing ample coverage for dividends and buybacks. The company’s high client retention rates and steady cash flow make it a stable dividend stock, though soft hiring trends could slow future revenue growth.
Lowe’s (LOW) offers the lowest payout ratio in the group at 41% of trailing EPS. Its free cash flow yield is about 2.9 times its dividend yield, providing strong coverage. Despite a weak balance sheet, Lowe’s shares are trading at a low multiple, making it an attractive valuation play. However, do-it-yourself spending remains under pressure, which could impact future performance.