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Dividend Dynasties: 3 Stocks Set to Deliver Consistent Income

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Income-oriented investors often look to dividend stocks to generate a reliable cash flow stream. However, not all dividend payers are created equal. The most dependable dividend stocks belong to an elite group known as the Dividend Aristocrats. These are S&P 500 companies that have increased their dividends annually for at least 25 consecutive years. This remarkable track record demonstrates financial stability and a consistent commitment to rewarding shareholders.

Dividend stocks offer many appealing benefits, making them a popular choice for income investors. They provide regular quarterly cash payments that can be used to cover expenses without selling any shares. Dividend payers also tend to be less volatile than non-dividend-paying stocks. Additionally, high-quality dividend stocks often raise payouts over time, helping offset inflationary effects. Dividing stocks can be an excellent option for those seeking equity exposure and steady cash flow. The most consistent dividend payers maintain strong financials and remain committed to increasing their payouts year after year. When selected carefully, dividend stocks can provide reliable income for the long term.

T. Rowe Price Group (TROW)

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A sturdy financial foundation is key to consistent payout growth for income-oriented investors seeking reliable dividend stocks. T. Rowe Price Group (NASDAQ:TROW) epitomizes this connection, leveraging robust finances to increase dividends for 37 consecutive years since its 1987 IPO.

Specifically, in 2024, TROW extended its payout growth streak, announcing a 1.64% dividend hike to $1.24 quarterly. With a moderate 0.64 payout ratio, TROW can further expand dividends. Bolstering distribution capacity, TROW holds over $3 billion in cash reserves to complement $7.5 billion in equity on its fortress balance sheet.

Fueling these finances, TROW reported $1.45 trillion in preliminary assets under management this past December. These assets generated over $1.67 billion in revenues in Q3 2023 alone, allowing the company to cover dividend obligations easily. Furthermore, TROW maintains a 16% return on invested capital, far surpassing competitors.

TROW’s profit engine also keeps humming, with a 15.63 P/E ratio indicating continued earnings growth potential. Helping drive performance, TROW boasts an exceptional 95% portfolio manager retention rate over an average 22-year tenure to preserve institutional knowledge. In short, by leveraging robust financial resources and stability, T. Rowe Price Group has delivered nearly four decades of payout increases that income investors searching for consistent dividend stocks can rely on. Considering that TROW was founded in 1937 in Baltimore, investors can be confident that the company’s over 85 years of investment expertise will fuel its future dividend consistency.

Johnson & Johnson (JNJ)

A red Johnson & Johnson (JNJ) sign hangs inside in Moscow, Russia.

Source: Alexander Tolstykh / Shutterstock.com

Income investors focused on dividend stocks should consider Johnson & Johnson (NYSE:JNJ) as it exemplifies robust finances underlying enduring payouts. JNJ has increased dividends for 61 consecutive years since 1963 without a reduction, including a 5.3% dividend hike to $1.19 per share in 2023.

With a moderate 49% payout ratio, a 12.93 P/E ratio, and a gross profit margin of 68.23% for Q4 2023, JNJ retains ample capacity for further dividend growth. The company anticipates a 5-7% yearly sales expansion through 2030, fueling rising payouts.

JNJ’s growth investments also reinforce distribution capacity. The healthcare giant acquired cardiovascular device maker Abiomed for $16.6 billion in 2022 and is expected to pay $2 billion in cash for oncology specialist Ambrx in 2024. Plus, JNJ holds over $20 billion in cash and equivalents to supplement over $70 billion in shareholder equity.

Beyond these finances, JNJ’s 2023 $85.2 billion sales generated substantial free cash flow even after funding increased dividend payouts. This cash engine empowers both payout consistency and 3% dividend yields. In short, by underpinning dividends with sixty-one years of unbroken growth, fortress finances, and vigorous cash generation, JNJ remains a paragon of stability for income-focused investors looking for reliable dividend stocks.

Lowe’s Companies (LOW)

the front of a Lowe's store

Source: Helen89 / Shutterstock.com

When evaluating dividend stocks, consistency and reliability are paramount. Lowe’s Companies (NYSE:LOW) stands out with over six straight decades of never reducing its dividend payment. The home improvement retailer has maintained or increased its payout every single year since 1961 – an impressive span of 63 consecutive years without a dividend cut.

In May 2023, Lowe’s announced its 25th straight year of raising its dividend, continuing its stellar dividend growth streak. The company increased its quarterly dividend by 5% to $1.10 per share, marking a 25-year run of consecutive annual dividend hikes. Over the last 5 years alone, Lowe’s has grown its dividend at a rapid 16.92% annualized rate.

Lowe’s payout ratio sits at a healthy 31% of earnings, providing plenty of room for further dividend expansions. The company has steadily increased revenue every single year for over two decades. In 2022, Lowe’s generated over $97 billion in total sales. Strong and consistent profits have enabled Lowe’s to keep increasing its dividend, even during economic recessions. Lowe’s 63-year track record of dividend reliability is unmatched for income-focused investors evaluating dividend stocks. With a current forward yield of 1.98%, 25 years of dividend growth, a low 31% payout ratio, and six-plus straight decades without ever reducing its payout, Lowe’s has one of the most dependable dividends available.

On the date of publication, Andrea van Schalkwyk did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Andrea van Schalkwyk is a value investor who adheres to the principles of the renowned Warren Buffett and his mentor Benjamin Graham. He holds a Master of Engineering (MEng) from the University of Padua and an Executive MBA from the CUOA Business School.

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