When the market is surging like it has been over the past three years, it’s easy to forget the importance of passive income. You’re probably more focused on the amazing gains from certain growth stocks that don’t pay dividends – and, don’t get me wrong, these types of stocks are great for a portfolio.
But that’s why adding some dividend players to the mix is ​​a good idea, too. First of all, who doesn’t love extra cash? You can easily collect these payments whether the market is rising or falling—the only thing you have to do is own a dividend-paying stock. Second, these payments may increase your gains during good times and limit your losses during hard times. They can help put you on the path to wealth in the long run.
Which stocks to buy? Dividend Kings made a smart choice, as they have increased their dividend payments for at least 50 consecutive years. This shows their commitment to their dividend strategy and their ability to pay those dividends over time. With that in mind, get ready to start the new year with passive income: Here are three dividend kings to buy now.
Image source: Getty Images.
you may know Coca Cola(NYSE:KO) The best is the namesake drink, but the company actually sells 200 brands covering a variety of beverage types – from sparkling drinks to water. As the world’s largest non-alcoholic beverage company for more than 130 years, it has had time to build a significant brand moat (fans often want just one Coke, not another) and a record of profitability.
So when you buy Coca-Cola stock, you’re buying a strong company. The company is also a dividend powerhouse, having been increasing payouts for more than 60 years. Today, Coca-Cola paid a dividend of $2.04, giving it a dividend yield of 2.9%. This exceeds the dividend yield S&P 500 Index. All of this makes Coca-Cola an effortless addition to any dividend portfolio.
KO dividend yield data provided by YCharts
Abbott Laboratories(NYSE:ABT) is a healthcare giant operating in four distinct areas of expertise: medical devices, nutrition, diagnostics and established pharmaceuticals. I like this business model because it provides investors with a certain sense of security – if one industry faces challenges, others may continue to perform and limit the negative impact on earnings.
Like Coca-Cola, Abbott has grown earnings over time, and the company has leadership positions in areas such as diabetes management and nutritional beverages.
In addition to this, Abbott has earned a spot on the Dividend Kings list by consistently increasing its dividends over the past 53 years. Abbott pays a dividend of $2.36 per share, giving it a 1.9% dividend yield, which like Coca-Cola has a higher dividend yield than the S&P 500.
Abbott, as a health care company, offers investors a level of security — patients will receive care no matter the circumstances — and passive income they can count on.
Target (NYSE:TGT) The company’s stock has been difficult to own in recent years — something I know firsthand — because of the various challenges the company has faced. But the retailer has been addressing problem areas and is even appointing a new CEO to guide its recovery – current COO Michael Fiddelke will take over early next year.
The company’s multibillion-dollar private label portfolio and its growing in-store fulfillment network are two major strengths that could support future growth. So today, trading at 12 times forward earnings, Target looks like a cheap recovery story buy.
TGT P/E ratio (forward) data provided by YCharts
On top of that, Target has increased its dividend payments for 54 consecutive years and now pays shareholders $4.56 per share, yielding 4.9%.
So heading into the new year, Target buys into a great recovery story at today’s valuation and is well-positioned to reward you with passive income growth.
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Adria Cimino works at Target. The Motley Fool has positions and recommendations at Abbott Laboratories and Target. The Motley Fool has a disclosure policy.
Start the New Year with Passive Income: 3 Dividend Kings to Buy Now Originally published by The Motley Fool
