In This Article:
Income investors walk a fine line.
They're looking to make money from investing, but they're also looking for a little more safety than most stocks can give them. That's why many turn to dividends, as they're usually the hallmark of a more mature company with cash left after paying the bills that it can give to investors.
Unfortunately, many dividend stocks are less stable than they might initially appear. That's why Dividend Aristocrats -- an elite group of dividend stocks that have raised their dividends for at least 25 consecutive years -- are so exciting.
Image source: Getty Images.
These companies have prospered through thick and thin. Keep in mind that every current Dividend Aristocrat hiked its dividend through the dot-com crash and the Great Recession.
Here are three of my favorites.
1. Johnson & Johnson: 56 years and going strong
Remember when I mentioned that Dividend Aristocrats had to have at least 25 consecutive years of dividend increases? Well, Johnson & Johnson (NYSE: JNJ) has notched 56 consecutive years of dividend increases -- an incredible record that speaks to the strength and durability of its underlying businesses. Plus, it's one of only two companies to currently hold a coveted AAA credit rating.
Johnson & Johnson's strength fundamentally comes down to the diversification across its businesses. In addition to its large and growing pharmaceuticals division, J&J earns almost half of its revenue from its sleepier (but more stable) medical devices and consumer products segments. That sort of diversification positions the business well to accept setbacks in one space while retaining stability and optionality elsewhere.
And its diversification even within each of its businesses is impressive. For example, Johnson & Johnson's pharmaceuticals division showed 7.9% year-over-year operational revenue growth despite Remicade -- its largest drug by sales -- losing patent protection last year and promptly watching its sales decline. The division is largely being buoyed by the 30%-plus year-over-year sales growth in three of its other best-selling drugs: autoimmune drug Stelara, blood cancer drug Imbruvica, and multiple myeloma drug Darzalex. All three are in phase 3 trials for additional indications, giving the pharmaceuticals segment plenty of options for growth from here.
That strength and underlying growth, combined with a 2.7% dividend yield, makes J&J a fantastic dividend aristocrat for any investor to own.
2: Federal Realty: The REIT that keeps giving
Federal Realty (NYSE: FRT) is a real estate investment trust (REIT) that acquires properties and then rents them out to tenants. Its primary area of focus is retail, although some of its properties also feature hotels, office space, and apartments.