4 Dividend Aristocrats To Own For The Next Decade

NYSE: JNJ | Johnson & Johnson  News, Ratings, and Charts

The world has been witnessing the nastiest pandemic in over a century, which has already triggered the worst recession in 75 years. The relentless health crisis also caught up with dividend stocks, forcing many companies to slash or discontinue payouts altogether. So, investors should turn to dividend aristocrats to secure a stable and reliable source of income as the historically low-interest rates kept the bond market unattractive.

Dividend aristocrats are an exclusive list of 65 stocks in the S&P 500 Index that have raised their dividends for at least 25 consecutive years. Historically, dividend aristocrats have outperformed the broader market in a struggling economy, as their business models are usually less cyclical than the economy as a whole. This is evident from ProShares S&P 500 Aristocrats ETF’s (NOBL) 7.7% gain in the past three months compared to SPDR S&P 500 ETF’s (SPY) 3.4% return in the same period.

Amid the rising spread of the coronavirus infections, staggered restrictions, higher jobless claims, and shrinking economic activity, the potential for a double-dip recession could lead to a stock-market crash unless the world can control the spread of the virus with the help of effective vaccines or treatments. Hence, for risk-averse investors, it may make sense to buy high-quality dividend stocks. Moreover, it is important to ensure the sustainability of a company’s dividend payment based on strong fundamentals, cash flows, and business model before betting on it.

Johnson & Johnson (JNJ - Get Rating), The Procter & Gamble Company (PG - Get Rating), Lowe’s Companies, Inc. (LOW - Get Rating), Carrier Global Corp. (CARR - Get Rating) are the four dividend aristocrats that not only hold immense price appreciation potential but could also be a steady source of income as they are expected to return more capital to their shareholders over the coming years through dividends.

Johnson & Johnson (JNJ - Get Rating)

JNJ researches, develops, manufactures, and sells various products in the healthcare field worldwide and is popularly known for its consumer products such as baby care, women’s health, and wound care. The company has operations in the pharmaceutical, consumer, and healthcare devices segments. JNJ is working on a potential COVID-19 vaccine and has recently initiated the second global phase 3 clinical trial of its Janssen vaccine candidate.

JNJ has uniformly increased its dividend payout for 58 years now. Over the past ten years, the dividend payout for JNJ grew at a CAGR of 6.9%. The current annual dividend of $4.04 translates into a 2.81% yield. The company has already declared a cash dividend of $1.01 per share for the fourth quarter. JNJ generated $7.65 billion as free cash flow in the third quarter and returned $2.66 billion to its shareholders in the form of dividends.

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