If you are looking to boost your dividend income, you can never go wrong if you invest in Kings of ProfitsThese are stocks that have increased their dividends for at least 50 consecutive years. Obviously, a company with such a stellar dividend record must have strong balance sheets and growth prospects, or it will not be able to sustain dividend increases over several decades.
coca cola (NYSE: KO), Philip Morris (NYSE: PM)and Real estate income (NYSE: O) There are three stocks worth buying right now, according to these fool.com contributors. Here’s why.
Flexible consumer brand
John Ballard (coca cola): Coca-Cola is a dominant global beverage brand and has paid increasing dividends for 62 consecutive years. The stock is up 21% year to date after strong financial results in the first half of 2024.
Consumers have cut back on spending, but the beverage industry has held up. Coca-Cola reported a 2% year-over-year increase in unit case volumes in the fourth quarter, and it also posted double-digit organic revenue growth and higher margins.
Coca-Cola has a diverse portfolio of tea, juice and soft drinks brands. Across these brands, the company generates a strong 21% operating profit margin, which management is working to increase by refranchising bottling operations. This profitable portfolio gives the company plenty of sales opportunities for a variety of occasions, while generating a healthy profit margin to drive increased dividends.
The company pays out about 75% of its annual earnings in the form of dividends. The current quarterly dividend is $0.485 per share, up 21% over the past five years. This makes the future dividend yield an attractive 2.71% compared to just 1.32% in 2015. Standard & Poor’s 500.
The stock’s performance reflects the strength of the brand and the opportunities for continued growth over the long term. Coca-Cola’s fastest growing markets in the second quarter were Latin America and Asia Pacific. The above-average return on the stock provides investors with great value with further growth ahead.
This long-standing profit driver is still heating up.
Jeremy Bowman (Philip Morris): Philip Morris may seem like an odd choice for a long-term dividend stock.
After all, everyone knows that smoking is on the decline, but these days, Philip Morris’ business is about more than just cigarettes. The company has diversified into next-generation products, including IQOS, a heat-not-burn stick that works like e-cigarettes but uses tobacco instead of e-liquid, and Zyn nicotine pouches, which it acquired after acquiring Swedish Match in 2022.
Thanks in large part to the success of these two products, tobacco stocks now generate about 40% of revenue from next-generation smoke-free products, and because these products generate higher margins than cigarettes, they now account for more than 40% of Philip Morris’s total profits. Demand for Zen products has been so strong that the company recently announced new investments to expand production capacity in Colorado and Kentucky.
Since Philip Morris only sells cigarettes in international markets, the company is still growing its cigarette category, with organic revenue from combustibles, which are primarily cigarettes, up 4.8% in the most recent quarter. Even cigarette shipments were up 0.4% in the quarter.
Overall, organic revenue rose 9.6% to $9.5 billion in the quarter, and organic operating income rose 12.5%, excellent numbers for a seemingly mature dividend stock.
Philip Morris also recently raised its quarterly dividend by 3.8% to $1.35. While the company isn’t technically a dividend king, if you add in its history as part of Altria, it has raised its dividend for the past 55 years.
Currently, the company is offering a dividend yield of 4.4%, and it looks set to increase its payouts in the coming years.
High yield monthly profits
Jennifer Seibel (Real Estate Income): There are few high-yield stocks on the market that can match Realty Income. It has everything a passive income investor could want in a stock: high yield, reliability, growth, and the company pays monthly, which is a plus.
Real estate income is Retail Real Estate Investment Fund (REIT), meaning it leases properties to retailers. However, it has expanded significantly over the past few years and is well diversified by industry. Commercial real estate still makes up 79.4%, and in retail, it caters to core categories like grocery stores, convenience stores, and dollar stores, giving it resilience during tough times like pandemics and inflation. Together, these categories account for more than 26% of the total portfolio.
Through two recent acquisitions and new property purchases, the company has doubled its portfolio over the past few years to 15,450 properties. The company has also entered the gaming and industrial sectors, which together account for approximately 18% of its portfolio and provide the diversification needed to offset the risk of concentration in one area.
REITs pay out most of their earnings as dividends, which is why they are typically excellent dividend stocks. Realty Income has paid a dividend for more than 50 years, and has raised it for 108 consecutive quarters. The yield is about 5% at the current price, which is higher than its average of about 4%, and about four times the average of the S&P 500. Realty Income stock fell when there was pessimism surrounding the real estate industry and rising interest rates, and the dividend yield rose as a result. But investors have become more confident, and the price has risen over the past few weeks.
Realty Income is a sure bet for lifetime passive income, and now is the time to buy before prices rise and yields drop again.
Should you invest $1,000 in Coca-Cola now?
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Jennifer Seibel He has no position in any of the stocks mentioned. Jeremy Bowman He has no position in any of the stocks mentioned. John Ballard The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a position in and recommends Realty Income. The Motley Fool recommends Philip Morris International. The Motley Fool has Disclosure Policy.
3 Dividend Kings to Add to Your Portfolio for Lifetime Passive Income Originally posted by The Motley Fool
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