High-quality dividend stocks, often dubbed "dividend titans," are reliable investments for income and stability. These stocks not only have the potential to pay you for life, but also strengthen your portfolio against market volatility.
A key strategy for identifying these dividend titans involves finding companies with a history of increasing dividends, and the ability to sustain that growth in the future. Notably, companies that emphasize dividend growth are typically well-established, financially sound, and have a consistent track record of profitability. By consistently raising dividends, these firms demonstrate confidence in their future earnings, and underscore their commitment to rewarding their shareholders.
Against this background, Coca-Cola (KO) and Procter & Gamble (PG) stand out for their solid history of uninterrupted dividend growth, spanning over 60 years each. Moreover, these companies are well-positioned to sustainably increase dividends in the coming years due to their solid financials and a growing earnings base. Let’s explore what makes these companies top income generators.
#1. Coca-Cola Stock
Coca-Cola (KO) is a reliable income stock with a strong track record of consistently paying and increasing dividends over the long term. Even during times of economic uncertainty, the beverage giant has upheld its tradition of growing its dividend.
Earlier this year, Coca-Cola raised its quarterly dividend by 5.4% to $0.485 per share, marking the 62nd consecutive year of dividend increases. This highlights the company’s commitment to returning more cash to shareholders.
In the first half of 2024 alone, Coca-Cola distributed nearly $2.2 billion in dividends, while in 2023, it paid out $8 billion. Since 2010, the company has delivered over $86 billion in dividends, making it a dependable investment for income investors.
Coca-Cola's focus on optimizing its portfolio, driving innovation, expanding its global footprint, and enhancing operational efficiency positions it to grow its market share and improve its financial performance. The company targets 4-6% annual organic revenue growth and expects 7-9% currency-neutral EPS growth. This outlook suggests that Coca-Cola is well-positioned to sustainably grow its dividends in the long term.
Further solidifying its position, Coca-Cola maintains a strong balance sheet, with a net debt leverage ratio of 1.5x EBITDA — well below its target range of 2-2.5x. This financial stability will enable Coca-Cola to invest in growth while increasing dividend payments.
Analysts are bullish on Coca-Cola’s future, assigning the stock a “Strong Buy” consensus rating. With a yield of 2.7% and a solid history of dividend growth, Coca-Cola is an attractive option for income-seeking investors aiming to strengthen their portfolios with a reliable dividend titan.
#2. Procter & Gamble Stock
For investors seeking a stock that can provide lifetime income, Procter & Gamble (PG) could be a compelling investment. This consumer goods giant has a solid reputation for paying and increasing its dividends for decades. Specifically, PG has paid dividends for 134 consecutive years, and increased its dividends for 68 years. This shows the stability of its payouts and its commitment to rewarding shareholders.
In fiscal 2024, Procter & Gamble distributed $9.3 billion in dividends to its shareholders, and the company is set to increase that figure to $10 billion in fiscal 2025. Beyond dividends, PG plans to repurchase $6–7 billion worth of shares, further enhancing shareholder value.
Procter & Gamble’s ability to maintain such generous payouts is supported by its defensive business model, which enables the company to generate steady organic sales and EPS growth. This solid foundation allows the company to continue returning cash to shareholders. The company’s financials are driven by a combination of its efforts to reshape its portfolio, investments in innovation, focus on growth markets, cost savings, and effective marketing campaigns.
P&G expects to continue expanding its organic sales, with productivity improvements driving core earnings growth. Management anticipates mid- to high single-digit earnings growth over the long term, which positions the company well to grow its future dividends.
PG currently pays a quarterly dividend of $1.0065 per share, reflecting a dividend yield of about 2.4%. The stock has a “Moderate Buy” consensus rating from the 26 analysts in coverage.
Given Procter & Gamble’s solid payouts and commitment to returning cash to shareholders, investors can reasonably expect further dividend increases in the coming years. This makes Procter & Gamble a solid choice for those seeking a reliable, income-generating stock for the long term.
The Bottom Line on Dividend Stocks
These two dividend titans — Coca-Cola and Procter & Gamble — offer compelling opportunities for investors looking to bolster their portfolios with reliable, income-generating stocks. With solid financials, strong growth prospects, and a commitment to reward shareholders, these companies are well-positioned to continue delivering value for years to come.
On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
