If you are here to build a portfolio that thrives in all seasons, consider dividend stocks. They can generate steady returns and provide stability to your investments. While wealth cannot be built overnight, you can consider dividend reinvestments to build a retirement portfolio. But all dividend stocks do not offer the same returns, and while some may have a high yield, not all will be reliable either.
Only a few companies can deliver steady returns through dividend payout increases, and if you are looking for reliable, steady income, here are the three dividend stocks to cling to this year.
Johnson & Jonhson (JNJ)
As one of the most recognized healthcare brands in the world, Johnson & Johnson (NYSE:JNJ) has a massive market to cater to. It is known for some of the biggest brands in the industry, and the company’s future looks bright after the spin-off of the consumer wellness goods segment. The company is driven by med tech and innovative medicine, and these two segments generate impressive revenue and growth.
Trading for $157 today, the stock has been moving between $145 and $173 for the past six months. Despite the strong quarterly results, the stock is down 8% in the past six months. However, I believe this dip is temporary and doesn’t speak for the company’s potential. JNJ stock is one that you can buy and hold forever. It is a strong dividend stock with a history of raising dividends for more than 62 consecutive years. JNJ enjoys a dividend yield of 3.01% and is one of the most stable stocks to own.
In the fourth quarter results, the company saw a jump in the medical devices and pharmaceutical sales segment. Its EPS came in at $2.29, and the revenue stood at $21.40 billion. The net income came in at $4.13 billion in the quarter wherein the medical devices segment saw a 13.3% YOY growth, and the pharmaceutical business saw a 4.2% YOY growth. It expects sales ranging between $87.8 billion and $88.6 billion for 2024 and an EPS of $10.55 to $10.75.
Johnson & Johnson has a few dynamic drugs in its portfolio which will continue generating revenue in the long-term. Its massive portfolio makes it one of the best businesses in the industry. Known for making acquisitions to enhance its portfolio, Johnson & Johnson has made strong moves that will ensure steady growth throughout 2024. Buy the stock while it is trading at a discount.
Another global giant, Coca-Cola (NYSE:KO) is one of the biggest beverage companies right now. It sells some of the most popular drinks and has shifted towards healthier drinks considering the changing preferences of consumers. With a market of over 200 countries, Coca-Cola is one of the best businesses out there.
It has solid brand loyalty and enjoys high recognition. Its consumers are loyal towards the company and this can be seen from the fact that it enjoyed an 8% organic growth despite the price hikes. When a company sees volume growth despite price hikes, it speaks about the ability of the business to withstand any market situation. Coca-Cola is a resilient stock that will continue to reward you for years. There is a reason it remains Warren Buffet’s favorite stock.
Coca-Cola is a stable business that enjoys a high gross margin. It has produced $7.9 billion in free cash flow in the first three quarters of 2023 and spent $5.3 billion in dividends in the same period. It enjoys a dividend yield of 3.07% and has paid a quarterly dividend of $0.46. For the year, the company expects EPS growth in the range of 7% to 8%, up from the prior forecast of 5% to 6%, and expects an organic revenue growth of 10% to 11%. The company reports results this week, and it could give a push to the stock.
Trading at $59 today, the stocks look undervalued to me. However, do not expect the stock to show immediate returns, it is an ideal dividend stock, but you shouldn’t expect market-beating returns from it. It is a predictable business, and you will be able to enjoy passive income at low risk.
If you want to buy a dividend stock below $100, consider Starbucks (NASDAQ:SBUX). It is a millionaire maker stock with a strong history and a massive market. People resonate coffee with Starbucks and the company has built a global brand today. It is on an aggressive expansion spree and aims to open two new stores each week in India.
The iconic coffee chain has more than 38,000 stores today and aims to reach 55,000 stores by 2030. It generates billions in free cash flow every year and distributes the same to the shareholders. SBUX stock has a dividend yield of 2.39% and pays a quarterly dividend of 0.57%.
The recent quarterly results didn’t impress investors as the company reported a drop in sales due to the slowdown in China. However, many are missing the bigger picture here. Starbucks has immense potential for global domination and it has a lot working in its favor. Its results aren’t as bad as it looks.
The company reported a revenue of $9.43 billion and a net income of $1.02 billion. Net sales increased by 8% while the global same-store sales saw a 5% jump. While the management has lowered the guidance for the second quarter, it reiterated the full-year guidance of EPS growth in the range of 15% to 20%.
SBUX stock is trading at a discount, and this dip is a good chance to own the stock. For a stock trading at $95, an annual dividend of $2.28 isn’t bad, and most importantly, this dividend is sustainable.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.