Dividend investors need not live in fear that the companies whose shares they hold will decrease or suspend their payouts if the going gets rough. There are outstanding dividend payers out there that are unlikely to do so. Here are two great examples: Coca-Cola (KO +0.35%) and Johnson & Johnson (JNJ +0.92%). These two market leaders have outstanding dividend records, solid businesses, and strong competitive advantages, making them top buy-and-hold forever picks. Read on to find out more.
Image source: The Motley Fool.
1. Coca-Cola
Coca-Cola is one of those companies that needs no introduction. It is well-known worldwide for its beverage brands, some of which are among the most famous in their categories. Coca-Cola’s large portfolio of beverages, significant global footprint, and its position in the defensive consumer staples industry mean it can generate consistent revenue, earnings, and cash flow. The company has been doing so for decades, and part of its success comes from its wide moat. Coca-Cola’s competitive advantage stems from its brand name, which is one of the most valuable in the world and inspires trust and confidence. Thanks to this strong brand recognition, Coca-Cola can attract customers with minimal effort.
The company also commands significant shelf space in retail stores, something that isn’t easy for newcomers. Coca-Cola hasn’t just relied on its brand name, though. Over the years, the company has adapted to changing customer preferences. It has expanded its drink portfolio by introducing new drinks or new twists on classic favorites. Can the company continue to perform well moving forward?
Today’s Change
(0.35%) $0.28
Current Price
$80.59
Key Data Points
Market Cap
$347B
Day’s Range
$80.50 – $81.57
52wk Range
$65.35 – $84.04
Volume
866.8K
Avg Vol
15.8M
Gross Margin
61.82%
Dividend Yield
2.58%
My view is that the business’s underlying strength hasn’t changed, and Coca-Cola is still well positioned to deliver solid returns for patient investors, especially those who reinvest the dividend. Coca-Cola is a Dividend King, or a company with at least 50 straight years of payout increases. Even in this already impressive group, Coca-Cola is one of the standouts, with an ongoing streak of 64 consecutive years of annual payout raises. The company also currently offers a forward yield of 2.6%, higher than the S&P 500‘s average of 1.1%.
Coca-Cola’s business isn’t the most exciting on the planet, but it is one investors can trust to deliver consistency even in volatile and unpredictable times. That’s what allows the company to continuously raise its payouts over the long term, making it a top dividend stock to stick with for good.
2. Johnson & Johnson
Johnson & Johnson is one of the largest healthcare companies in the world, with a diversified portfolio of products across pharmaceuticals and medical devices. Several aspects of its operations make it a solid “forever” stock. First, the company’s business, especially its pharmaceutical division, tends to perform pretty well even during economic downturns. Nobody wants to stop taking life-saving medications, and, for the most part, third-party payers foot much of the bill anyway, allowing Johnson & Johnson to maintain consistent sales.
Second, Johnson & Johnson holds patents on its innovative drugs and medical devices, providing it with years of protection against lower-cost alternatives and granting it some pricing power. True, the legal monopoly granted by a patent doesn’t last forever. However, Johnson & Johnson also has a deep pipeline and earns new approvals pretty regularly. The company is showing its ability to overcome patent cliffs right now. Johnson & Johnson lost patent exclusivity for Stelara, an immunology medicine and an important growth driver, in Europe in 2024 and in the U.S. last year.
Today’s Change
(0.92%) $2.20
Current Price
$241.28
Key Data Points
Market Cap
$580B
Day’s Range
$238.76 – $243.02
52wk Range
$151.01 – $251.71
Volume
247.8K
Avg Vol
7.8M
Gross Margin
67.96%
Dividend Yield
2.17%
Yet, the company’s revenue and earnings continue to move in the right direction. Johnson & Johnson’s sales should slightly exceed $100 billion this year, according to management’s guidance. If it does, it will be only the second time in history that a biopharma company has crossed that milestone. Meanwhile, Johnson & Johnson is preparing to launch several important products that should eventually become growth drivers, including its robotic-assisted surgery device, the Ottava.
The company has faced some challenges of late, such as government-led drug price negotiations and the lawsuits related to its talc-based products that allegedly gave patients cancer. Johnson & Johnson’s ability to perform well throughout all that speaks volumes about its underlying business. Lastly, Johnson & Johnson is also a Dividend King, having increased its payouts for 64 consecutive years. The company’s dividend yield currently tops 2.2%. All great reasons why Johnson & Johnson is an outstanding forever income stock.
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