Whether you are a beginner or a professional investor, a small amount can go a long way. Investing in dividend stocks can not only help build a strong portfolio, but also generate steady passive income for you. Several companies have raised their payouts in the third quarter, and as the economy improves, we could see better numbers in the coming years. This is great for investors, but the trick is to look for companies that steadily pay dividends and are generous with their payout. Reinvestment of these dividends can also generate significant gains for you in the years to come. With that in mind, here are the three dividend stocks with steady payouts to hold through the good and bad.
Coca-Cola (KO)
If you are a regular customer of Coca-Cola (NYSE:KO), it is time to become a shareholder now. This company is unstoppable when it comes to rewarding shareholders, and the business has the potential to thrive in all the market ups and downs. The stock is down 6% year to date and this dip is a good chance to buy.
Coca-Cola has survived high inflation, the pandemic and supply chain issues without letting it impact the business significantly. This shows the strength of the company. When you look at the bigger picture, you can see that Coke has paid dividends and raised the payout for the past 61 years. I do not think there is any end to this. The current quarterly dividend payout is 46 cents.
When investing in dividend stocks with steady payouts, you need to consider the sustainability and not just the payout. With Coca-Cola, the dividends are sustainable because of its successful business model. It is a diversified business with a range of products under its umbrella and this ensures steady cash flow. The free cash flow stood at $7.9 million year-to-date while the net revenue was $12 billion in the third quarter.
The globally recognized brand is resilient and can survive tough times without letting them impact the dividend.
Chevron (CVX)
Chevron (NYSE:CVX) is Warren Buffet’s favorite stock and an elite dividend stock worth an addition to your portfolio. The company enjoys a dividend yield of 3.98% and pays a quarterly dividend of $1.51. CVX has increased the dividend payout for 36 consecutive years.
One big reason to bet on this stock is that the company will never run out of business. While it may see a few ups and downs like any other company, it will always remain in demand. It has a solid balance sheet and manages to generate strong cash flow year after year.
It has a very smart business model that generates cash flow in all market conditions and has enough cash to cover the dividend payout for the next few years. A recent report states that the world demand for oil will rise faster than expected and this could benefit Chevron. Falling oil prices can also lead to a boost in consumption.
This makes the business resilient and one that can thrive even in tough times. It has entered into an all-stock deal with Hess (NYSE:HES) for $53 billion which will give it access to some important assets shortly. With stronger cash flow, we will see higher dividend payouts.
Johnson & Johnson (JNJ)
Global giant Johnson & Johnson (NYSE:JNJ) is already making the right moves to ensure steady revenue growth and consistent dividend payouts. After the spin-off of the consumer segment business, JNJ looks stronger than ever. It is focusing on innovative medicine and medical technology which will drive growth in the coming years.
Johnson & Johnson has a history of paying dividends for 51 years and it has managed to reward shareholders even in tough times. It enjoys a dividend yield of 3.04% and has paid a quarterly dividend of $1.19.
It has enjoyed a strong quarter and reported a revenue of $21.4 billion, up 6.8%. The separation of the consumer segment unit has helped the company focus on its medicine and MedTech segment which will ensure consistent growth in the years to come.
The company expects 25 new drugs to drive sales between 2025 and 2030. Besides the stalwarts in its portfolio, it has several drugs under the trial phase, and it expects about 5% to 7% growth in sales. It has 10 drugs with a sales potential of $5 billion and another 15 drugs with a sales capacity of at least $1 billion. I think Johnson & Johnson has a bright future and it is undoubtedly one of the top stocks to own right now.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.