The company has built a strong portfolio of drugs and a robust pipeline through adept acquisitions, explains Morningstar’s Conover. Its lineup of patent-protected drugs, entrenched salesforce, and economies of scale underpin its wide moat rating. The company’s third-quarter results disappointed, with the stock selling off after posting customer losses that were deeper than one year prior. We nevertheless think Comcast is well positioned to limit broadband share losses and enjoy solid pricing power, says Morningstar’s Hodel.

The company has steadily raised its dividend amount, averaging 11.0% yearly increases over the last five years. Lack of diversification always exposes investors to increased volatility. Dividend-only investors can miss out on high-value growth in those sectors that might not be paying dividends or that pay uncompetitive dividends. Say you invested in an S&P 500 index fund starting in January 2000 and held your investment until September 2020. Your average annualized return based on stock price gains alone would have been 4.2%, for a cumulative return of 136%.

Stock Dividend Example

MMC has an “A” rating for financial health and has been growing EPS at more than 18% per year. That growth is expected to slow, but it should remain a respectable 11.1% per year on average for the next five years. The company has a strong history of increasing dividends and that is likely to continue.

  • A cash dividend typically causes tax liability in the calendar year in which it is paid out.
  • Once a dividend is announced on the declaration date, the company has a legal responsibility to pay it.
  • These funds will tend to hold companies with higher dividend yields than average and can be a way to generate higher income than a typical portfolio.
  • Companies may still make dividend payments even when they don’t make suitable profits to maintain their established track record of distributions.

The stock’s 15-year annualized total return beats the broader market’s performance by a couple of percentage points. The company joins the Dividend Aristocrats on Feb. 1, 2023 by dint of its 25-year streak of payout hikes. The most recent increase was announced in November 2022 – a 10.9% bump in the disbursement to 61 cents per share quarterly. Have a look at all 67 members of the S&P 500 Dividend Aristocrats index in the table below – and be sure to keep scrolling for more information on each and every one of these dividend stalwarts. “Dividend growth oriented companies have historically participated in up markets and helped to mitigate risk during periods of heightened volatility and market drawdowns.” That’s because regular dividend increases lift the yield on an investor’s original cost basis.

Tracing its roots back to a single drugstore founded in 1901, Walgreens Boots Alliance (WBA) has boosted its dividend every year for more than four decades. Brown-Forman (BF.B) is one of the largest producers and distributors of alcohol in the world. Jack Daniel’s Tennessee whiskey and Finlandia vodka are just two of its best-known brands, with the former helping drive long-term growth. Ecolab’s fortunes can wane as industrial needs fluctuate, though; for instance, when energy companies pare spending, ECL will feel the burn.

Using net income and retained earnings to calculate dividends paid

It renewed its Dividend Aristocrats membership card in April 2023 when it announced an 8% increase in the quarterly payout to $1.86 per share. In January 2023, the board of directors approved a 1.7% increase in the quarterly dividend to $1.18 a share. KMB generated $1.9 billion in levered free cash flow for the 12 months ended Dec. 31, 2022.

Stock Dividends Vs. Cash Dividends

The company’s Frito-Lay division is known for Doritos, Tostitos, Rold Gold pretzels, and numerous other brands. Automatic Data Processing (ADP) is the world’s largest payroll processing firm, responsible for paying nearly 40 million employees and serving more than 1 million clients across 140 countries. U.K.-based water-treatment company Pentair (PNR) whose divisions include Flow Technologies, Filtration & Process and Aquatic & Environmental Systems, is always looking to expand its capabilities.

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Medical devices maker Becton Dickinson (BDX) has bulked up quite a bit over the past few years. In 2015, it acquired CareFusion, a complementary player in the same industry. Then free general labor invoice template in 2017, it struck a $24 billion deal for fellow Dividend Aristocrat C.R. Bard, another medical products company with a strong position in treatments for infectious diseases.

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The healthcare giant has increased its payout for three decades and counting. The most recent hike came in April 2022 when JNJ increased the quarterly dividend by 6.6% to $1.13 per share. With its well-below-average payout ratio, income investors can count on Target to keep hitting the mark for dividend growth.

Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. Investors in the 10% to 15% tax bracket don’t pay taxes on these dividends. Those in the 15% to 37% tax bracket pay 15%, and those at the 37% tax rate pay 20%.

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