Dividend cuts can be devastating to an income-focused investor. You lose a portion of your passive income, and a dividend stock's price tends to fall significantly leading up to and after a payout reduction. Because of that, it's best to avoid that situation at all costs.
The best way to do that is to focus on companies that have built a financial fortress around their dividend payments. Three super-safe dividend stocks that also offer above-average payouts are Johnson & Johnson (NYSE: JNJ), ExxonMobil (NYSE: XOM), and Realty Income(NYSE: O). That makes them great dividend stocks to buy in 2025 for those seeking income safety in the coming years.
A very healthy dividend
Johnson & Johnson has one of the strongest financial profiles in the world. The healthcare giant is one of only two companies with a AAA bond rating (higher than the U.S. government). The company, which had a more than $355 billion market cap, ended the third quarter with only $16 billion of net debt ($20 billion in cash against $36 billion of debt).
That's a very manageable amount for a company that produced $14 billion in free cash flow over the first nine months of last year. That easily supported the company's $8.8 billion dividend outlay during that period.
The healthcare behemoth has an elite record of growing its dividend. Last year was the 62nd year in a row that it increased its dividend. It qualifies as a Dividend King, a company with 50 or more years of consecutive annual dividend growth. That payout currently yields nearly 3.5%, well above the S&P 500's 1.2% yield.
Johnson & Johnson should have no trouble continuing to increase its dividend. It invests heavily in research and development ($11.9 billion through the first nine months of last year) and uses its strong balance sheet to make acquisitions. It deployed $18 billion into strategic inorganic growth last year.
It started 2025 off by making another acquisition, agreeing to buy Intra-Cellular Therapies in a $14.6 billion deal. These investments should enable Johnson & Johnson to continue growing its revenue, earnings, and free cash flow at healthy rates, which should support a growing dividend.
A well-oiled dividend-paying machine
An oil stock like ExxonMobil might not seem like the safest dividend stock, given the volatility in that sector and the global push toward cleaner alternatives. However, Exxon isn't just any oil stock. It's the undisputed leader of the oil patch.
It led all international oil companies in earnings during the third quarter ($8.6 billion) and cash flow from operations ($17.6 billion). After covering the capital spending needed to maintain and expand its global energy empire, it produced a massive $11.3 billion in free cash flow.
Exxon returned $9.8 billion of that money to investors via share repurchases and dividends. The company recently increased its dividend by another 4%. That was its 42nd consecutive year of dividend growth, a level only 4% of companies in the S&P 500 have reached.
Exxon also boasts an elite balance sheet. Its net leverage ratio was a mere 5% after adding in the $27 billion of cash on its balance sheet.
The energy behemoth recently revealed its plan to increase its earnings by $20 billion and cash flow by $30 billion by 2030. Several factors will fuel that growth, including structural cost savings, high-return capital investments, and contributions from its growing lower-carbon energy businesses. Exxon has proven it can navigate the oil market's challenges, which, when added to its balance sheet strength and visible growth, puts its more than 3.5%-yielding dividend on a super-safe foundation.
Built to pay durable dividends
Realty Income's mission is to deliver dependable monthly dividends that steadily rise. The real estate investment trust (REIT) has certainly achieved that goal, having raised its payout annually for 30 straight years (the last 109 quarters in a row).
The REIT owns a globally diversified portfolio of commercial real estate net leased to the world's top companies. That lease structure requires tenants to cover all operating costs, including routine maintenance, building insurance, and real estate taxes. It provides Realty Income with the stable cash flow to cover its nearly 6%-yielding dividend.
Realty Income complements its high-quality portfolio with a top-notch financial profile. It has a conservative dividend payout ratio for a REIT (about 75% of its adjusted funds from operations). It's also one of only eight REITs with at least two bond ratings of A3/A- or better. Those features give it tremendous financial flexibility to continue acquiring income-producing commercial real estate.
Very bankable dividends
Johnson & Johnson, ExxonMobil, and Realty Income pay some of the safest dividends around. The companies all generate tremendous cash flows and have elite balance sheets, giving them the financial flexibility to grow their businesses while increasing their high-yielding payouts. Those features make them some of the top dividend stocks to buy for those seeking super-safe income streams they can bank on over the long haul.
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Matt DiLallo has positions in Johnson & Johnson and Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
