Dividend stocks can be a great addition to your portfolio for investors of all preferences and risk tolerance levels. You can find dividend paying stocks across multiple different sectors. While a high yield may be the first thing that catches your eye, it's important to look beyond this metric.
Dividend yields are linked to the stock price. Therefore, it is not uncommon to see a high return from a stock that has been discounted by the market, while a stock that has performed well may have a below-average return while still generating a great total return.
As with any stock, you want to make sure you're investing in a high-quality company with a strong underlying business. With dividend payers, you should also look for companies that have an established history of raising and maintaining their dividends in a wide range of market environments.
In that regard, here are two of the best dividend stocks that fit the bill and that you should consider adding to your cart soon.
1. Johnson & Johnson
Johnson & Johnson (NYSE: GING) It continues to deliver steady growth and returns for shareholders with a business that has been a mainstay in the pharmaceutical industry for nearly 140 years and counting. the health care Giant pays a dividend of about 3.3% at the time of this writing.
These profits increased by about 80% over the next decade alone. It is also worth noting that the company belongs to the Sacred Stock Group – known as Profits Kings – With a decades-long history of paying its dividend and increasing its dividend every year. Johnson & Johnson has 62 consecutive years of dividend increases to its name at this point.
Johnson & Johnson's business currently revolves around two segments. These include the Innovative Medicine sector, which focuses on a wide range of disease areas including immunology, oncology and neuroscience concerns, and MedTech, which features devices in orthopedics, vision and various surgical specialties.
Last year, Johnson & Johnson finalized the process of splitting off its consumer health business into a new, publicly traded, dividend-paying entity called Kinview. While this divested the company of a much slower-growth business, Johnson & Johnson still retained significant ownership control through common stock and received a notable cash gain from the spinoff.
The first quarter of 2024 was excellent on multiple fronts for this tried-and-true business. Total sales for the three-month period exceeded $21 billion, up 2.3% from a year ago, a strong growth rate for a company of this size. While the company reported a net loss in the same quarter last year due to one-time charges related to both incidental litigation and ongoing talc litigation, net income was $5.4 billion in the most recent quarter.
Broken down by sector, Innovative Medicine generated $13.6 billion in net sales, up more than 8% from last year if we exclude the COVID-19 vaccine. The MedTech business accounted for $7.8 billion in net sales, up 6.3% on an operating basis compared to the same quarter in 2023, thanks to the resurgence of general surgery and the continued impact of the Abiomed acquisition.
This giant company generated operating cash flow of $23 billion over the past 12 months. For dividend investors, this business can deliver long-term growth and returns amid the market's highs and lows, and is a tempting buy in any market environment.
2. Procter & Gamble
Procter & Gamble Company (NYSE: PG) The yield is currently 2.5% for investors. Not only did Procter & Gamble increase its dividend by about 60% in the next decade alone, it boosted investor payouts every year for 68 years — also making it the dividend king. And to icing on the cake, this is the 134th consecutive year the company has paid a dividend since it was first founded.
The consumer goods giant has dealt with pressures from shifting spending by consumers, a challenging macro environment, and rising costs in the past few years. However, this business is about essential goods and products that consumers need no matter what happens in the state of the world.
Among some of Procter & Gamble's many brands are household mainstays including Pampers, Downy, Tide, Charmin, Always, Febreze and Swiffer. This gives the company significant pricing power even under difficult operating conditions.
Margins have certainly felt the pressure of shifts in consumer spending. However, the company remains profitable and continues to return its success to shareholders in the form of loyal dividends.
Procter & Gamble had total net sales of $20 billion last quarter. This represents an increase of approximately 1% over last year, which is not unusual for a company at this stage of maturity and a fairly record growth rate for this company. However, net profits rose 10% year over year to $3.8 billion, while operating income jumped 5% year over year to $4.5 billion.
The company also generated operating cash flow of $4.1 billion in the quarter while ending the three-month period with a cash reserve of $6.8 billion. Investors may find this reliable business a wise addition to their long-term buy-and-hold portfolio.
Should you invest $1,000 in Johnson & Johnson now?
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Rachel Warren He has positions at Johnson & Johnson. The Motley Fool has posts on and recommends Kenvue. The Motley Fool recommends Johnson & Johnson and recommends the following options: Long January 2026 $13 calls on Kenvue. The Motley Fool has Disclosure policy.
2 Dividend Charged Stocks to Buy and Hold for Years Originally published by The Motley Fool