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Dividend Kings represent the pinnacle of reliability and financial strength, having consistently increased their dividends for at least 50 consecutive years. These companies have demonstrated remarkable resilience, consistently delivering shareholder value through growing dividends even during volatile economic periods.
Investors looking for stable income streams often gravitate toward Dividend Kings due to their proven track records. Here’s an updated look at four Dividend Kings that analysts believe are poised for growth, offering stability and potential upside in today’s market.
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Procter & Gamble (NYSE:PG)
Procter & Gamble (P&G), a global leader in consumer goods with a diverse portfolio of household brands, continues its impressive streak of 68 consecutive years of dividend increases. Currently, P&G offers a dividend yield of 2.36% with an annual payout of $4.03. Analysts rate it as a consensus Buy, and the three most recent analyst ratings released by Barclays, JP Morgan and RBC Capital implied -0.55% downside based on price targets. That may reflect some dimming in sentiment after the company missed sales targets.
P&G’s strong brand presence and consistent demand for consumer staples position it well for continued growth, even in uncertain economic conditions. On the earnings call, CEO Jon Moeller noted that the company is balancing cost-cutting with innovation: “We’re taking targeted steps to reduce overhead as we digitize more of our operations. Next, constructive disruption of ourselves and our industry, a willingness to change, adapt and create new trends, technologies, and capabilities that will shape the future of our industry and extend our competitive advantage.”
PepsiCo (NYSE:PEP)
PepsiCo, known for its global beverage and snack empire, has increased its dividend for 52 consecutive years. It currently has a dividend yield of 3.08% and an annual payout of $5.42. Pepsico’s three most recent analyst ratings came from Barclays, Morgan Stanley and Barclays, and there’s an implied 4.49% upside.
PepsiCo’s diversified product portfolio, strategic expansion into healthier snack options and global market penetration make it a strong contender for continued growth. The most recent quarter showed that while there is work to do on the Frito-Lay and Quaker Foods segments of the business, the beverage side continues to be strong. On the most recent analyst call, CEO Ramon Laguarta highlighted the company’s need to monitor consumer behavior: “There is clearly a consumer that is more challenged and is a consumer that is telling us. that in particular parts of our portfolio, they want more value to stay with our brands.”
Johnson & Johnson (NYSE:JNJ)
Johnson & Johnson, a leader in healthcare and pharmaceuticals, boasts a 63-year streak of dividend increases. Its current dividend yield is 3.01%, and its annual payout is $4.96. Analysts rate Johnson & Johnson a consensus Neutral. The two most recent analyst ratings were released by Cantor Fitzgerald and RBC Capital, with an implied 24.35% upside.
After spinning off Kenvue, J&J is focused on medical devices and pharmaceuticals. With its robust pipeline, these areas are expected to drive growth in the coming years. Acquisitions are also part of the story. It purchased Shockwave Medical and most recently struck a $1.8 billion deal to acquire V-Wave, a medical device company. On the most recent earnings call, CEO Joaquin Duato shared a vision for the company’s future growth: “Johnson & Johnson is laser-focused on advancing the next wave of medical innovation. We’re building on a strong foundation to unlock accelerated growth with a healthy balance sheet and industry-leading investments in the best science and innovation.”
Lowe’s Companies, Inc. (NYSE:LOW)
Lowe’s, a retail giant in home improvement, has increased its dividend for 62 consecutive years. Its dividend yield is 1.84%, and its annual payout is $4.60. Lowe’s is a consensus Buy among analysts. The three most recent analyst ratings were released by Gordon Haskett, Wells Fargo and Morgan Stanley, with an implied 3.87% upside. After the most recent earnings report, which showed Lowe’s is feeling the impact of a lack of consumer spending on big-ticket items, several analysts dropped their price targets.
A lack of home improvement spending has dragged Lowe’s down in recent months. However, cycles tend to shift, and lower interest rates could set the table for renewed interest in the housing market. Lowe’s is well-positioned for future growth, particularly as consumers continue to invest in home improvement projects. As CEO Marvin Ellison told analysts on a recent call, it’s all about preparing for that inflection point: “So rather than sitting back and waiting, we’re aggressively working in this downturn leveraging our balance sheet to do these aggressive investments and position ourselves so when it happens, whenever the macro inflection occurs, we just want to be ready to take advantage of it, and we think we will be.”
Real Estate as a High-Yield Alternative
While Dividend Kings provide reliable income, investors seeking higher yields might consider alternative investments, such as real estate funds. Two noteworthy options in this space are the Cityfunds Yield Fund and Arrived’s Single Family Residential Fund.
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Cityfunds Yield Fund: This fund targets a 7-8% annual yield (APY) by investing in a diversified pool of real estate-backed loans, including home equity-backed and short-term mortgage notes. With quarterly distributions and a five-year term, it offers a stable income stream backed by real estate assets.
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Arrived’s Single Family Residential Fund: Launched in late 2023, this fund focuses on acquiring single-family rental properties in high-growth markets across the U.S. As of Q2 2024, the fund boasts a portfolio of 40 properties and offers an annualized dividend of 4%. Designed to be the REIT of the future, it aims to provide steady income while capitalizing on long-term appreciation potential in dynamic housing markets.
Dividend Kings are not likely to go out of style. They remain attractive for income-focused investors due to their consistent dividend growth and financial stability. However, those looking for higher yields may find value in exploring real estate investments such as the Cityfunds Yield Fund and Arrived’s Single Family Residential Fund, which offer the potential for higher returns through exposure to real estate assets.
Investors must conduct thorough research and align their investment choices with their financial goals and risk tolerance before making decisions.
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This article These Four Dividend Kings Could Thrive Even If The Consumer Falters originally appeared on Benzinga.com
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