Like dividend aristocrats, dividend stock champions can span various industries. They are generally considered companies that continue to raise dividends over time and have stable business models. Indeed, investors looking for dividend income don’t want to consider dividend cuts. These stocks provide the kind of stability many seek, with a stable track record of dividend growth over time.
It’s my view that generating a highly diversified portfolio of such evergreen dividend stocks is important. So, in this article, I’ll highlight three of my top picks in this space right now.
Without further ado, let’s dive in!
Coca-Cola (KO)
A world-class beverage giant operating for more than a century, Coca-Cola (NYSE:KO) is the kind of dividend stalwart long-term investors want to hold. The company’s recent performance has been strong, with KO stock continuing to hold relatively steady over the past year and on a year-to-date basis.
However, most investors own this stock mainly because of its dividend, which currently yields 3.3%. Supported by strong cash flows and a historical track record of dividend hikes, KO stock remains among my top picks for long-term investors looking for a core portfolio anchor.
Coca-Cola’s strong cash flows have enabled significant returns to investors through buybacks and a growing dividend, extending over 60 years. Despite a projected dip in cash flow for 2024 due to tax issues, long-term prospects remain favorable for steady dividend growth.
Coca-Cola met earnings expectations and exceeded sales estimates in Q4. Despite a slight stock dip, revenue was $10.85 billion, exceeding expectations of $10.68 billion. Earnings per share were 49 cents, as projected. Net income totaled $1.97B, with 2% unit case volume growth. North American volume dropped 1%.
Analysts forecast promising prospects for KO stock, projecting sales to reach $45.77 billion this year and $48 billion by next year. Yet, more optimistic estimates suggest $46.5 billion in 2024 and $48.78 billion in 2025.
Coca-Cola could benefit from consumer spending shifts despite potential labor market fluctuations. The company has been paying a 3.17% dividend yield for 63 years, standing out as a solid investment among other stocks.
Chevron (CVX)
As the world’s second largest oil supplier, Chevron (NYSE:CVX) made a noise when it announced Hess’s $53 billion offer. This followed its other big news that involved merging with Exxon. The news move strengthens Chevron’s future position, particularly with valuable assets in Guyana.
One of the advantages of holding some CVX stock is that Warren Buffett has also boasted about this company as a core holding for many years. The Oracle of Ohama owns about 16 million CVX shares, which places this company fifth in terms of position size in its portfolio. Indeed, that’s the sort of validation investors are looking for—this is a long-term holding worth buying right now.
Chevron Corporation and its partners allocated $24 million to enhance natural gas production at the Tamar reservoir off Israel’s coast, a vital energy source for the country, Egypt and Jordan. The investment expects to boost the company’s production capacity to 1.6 billion cubic feet per day through a two-phase plan.
Chevron holds a 25% stake in the Tamar field with other partners, including Isramco, Mubadala Energy and Tamar Petroleum. The consortium greenlit the second phase, laying a 150-kilometer pipeline and restarting compressors by 2025, with a total investment of $673 million.
This deal furthers the company’s mission to provide stable cash flows and puts Chevron in a good position to continue generating strong long-term returns.
Schwab US Dividend Equity (SCHD)
Or, instead of picking an individual stock, investors can always choose an exchange traded fund (ETF). The Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) is among my top picks for investors looking for dividend exposure in a highly diversified manner. This ETF currently provides investors with a yield of 3.5%, and is comprised of some of the best high-quality dividend payers in the market.
Indeed, whether you’re an active or passive investor, there are reasons to hold such index funds. For one, these ETFs provide broad diversification at a relatively low cost. Investors get access to a wide swath of companies, and if something goes wrong with an individual holding (there’s always an idiosyncratic risk), another company will fill the void and the hit will be small. That’s the value of diversification for long-term investors seeking stable income streams.
The SCHD ETF is known for its strong connections with big names in different sectors, from healthcare to technology industries. Its portfolio showcases strength, with an average price-to-ratio of 15.2%. This positions the ETF well for long-term capital appreciation, making this an excellent total return play in my book.
— Chris MacDonald
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Source: Investor Place
