Dividend Aristocrats That Could Triple: Every investor knows that the stock market has ups and downs, but that doesn’t make it any easier to watch portfolio balances plummet during tough economic times.
Thanks to a snowball effect, yesterday’s growth stocks have become today’s biggest losers. As share prices dropped, the remaining shareholders got anxious. That prompted them to sell, driving share prices down even more.
There are a few options for avoiding extreme volatility and protecting portfolios from the sorts of challenges currently facing the market. One method of increasing portfolio stability is to move away from higher-risk stocks that are tempting because of their higher reward potential. Common alternatives include established companies in dependable industries like energy, healthcare, and consumer staples.
Another method of growing wealth without taking on the risks associated with high-growth stocks is to change focus. Instead of a strategy that relies on stock price increases to generate returns, consider an income-based strategy that is centered on dividends.
Are Dividend Aristocrats A Good Investment?
There are two factors to consider in a dividend-focused strategy. First, how reliable is the dividend? After all, companies paying out large amounts to shareholders this quarter are under no obligation to do so in future quarters.
Second, how much is the dividend? If the figure is too low and the company isn’t growing much, there is no real benefit to buying the stock.
The answer to both questions can be found on the Dividend Aristocrats list. Very few companies achieve Dividend Aristocrat status because eligibility requirements include 25 consecutive years of increased dividends. At the moment, just 65 companies made the cut.
Becoming a Dividend Aristocrat doesn’t obligate companies to continue their annual dividend increases, and they don’t have to continue paying dividends at all if their financial situation changes.
As with anything else in the world of investing, there are no guarantees. However, the Dividend Aristocrats are an elite group that generally want to protect their position on the list. That makes them a more reliable choice when compared with companies that have a shorter dividend history.
These three high-yield Dividend Aristocrats are a smart choice to boost returns regardless of economic conditions. The strategy is simple. Buy these high-yield Dividend Aristocrat stocks, set up your brokerage account to reinvest dividends, and hold the stocks long-term to enjoy the benefits of compounding.
Nextera Energy
When it comes to reliable growth and dependable dividends, NextEra Energy checks all of the right boxes. It is a massive energy holding company that leads the industry by market cap. Its largest subsidiary is Florida Power & Light, which supplies electricity to roughly 10 million Florida residents.
Other subsidiaries include NextEra Energy Partners, NextEra Energy Services, Gulf Power Company, and NextEra Energy Resources. These companies produce energy from a variety of sources, including solar, wind, natural gas, oil, and nuclear energy.
Energy stocks are especially attractive when the market is down because demand for energy doesn’t fluctuate much. If anything, it increases steadily over time as the population expands and energy needs grow.
That sort of reliable demand and steady growth is a plus for NextEra Energy because it can plan expansion and infrastructure projects well in advance without any fear of a drop in profits. That’s good news for investors who can feel confident that dividends will keep rolling in.
NextEra Energy has increased its dividends every year for the past 26 years. Today, its dividend yield totals 2.17 percent, making NextEra Energy one of the best Dividend Aristocrat stocks to buy.
Chevron
There are only two oil and gas companies in the world that are bigger than Chevron when measured by market cap, and like its larger peers, Chevron is bringing in massive profits as a result of the sudden rise in oil prices. The Russian invasion of Ukraine has disrupted energy supplies, and Chevron is hard at work increasing production to meet the increased demand.
Chevron’s business model is uniquely positioned to benefit from current world events because it has operations to manage oil production from start to finish.
The company has a business unit dedicated to drilling and exploration, along with units that manage pipelines, chemical plants, and refineries. Chevron can ramp up production, increase output, and boost profits when a need arises anywhere along this chain.
Reliable profits make it easy for Chevron to demonstrate a consistent commitment to shareholders. The company has achieved Dividend Aristocrat status with 35 consecutive years of increasing payouts. Today, Chevron’s dividend yield is 4.18 percent.
In addition, management is focused on buying back stock to improve earnings per share and further reward shareholders for their continued support. The combination of these factors makes Chevron stock a buy.
Walgreens Boots Alliance
The list of Dividend Aristocrats isn’t exclusively made up of energy companies. A variety of other industries are also represented. For example, Walgreens Boots Alliance, a healthcare company, has paid dividends every quarter for 89+ years, and the dividends have increased annually for 46 consecutive years.
Investors might notice that Walgreens Boots Alliance stock is down 30 percent year-to-date, but that’s not a reflection of the company’s strength. In fact, the US-based Walgreens pharmacies and UK-based Boots pharmacies are both growing steadily, and the company’s most recent earnings report exceeded expectations.
The primary reason for the drop in the Walgreens Boots Alliance stock price is related to complications with a restructuring effort.
Walgreens had intended to divest the Boots pharmacy chain and its No7 Beauty brand so that it could put all of its efforts into building a best-in-class US pharmacy and healthcare business.
Rising interest rates made the sale of Boots and No7 Beauty too tricky, so the alliance will remain intact for now. However, investors didn’t appreciate the temporary state of uncertainty which caused share prices to go down. That’s an excellent opportunity for investors to buy Walgreens Boots Alliance stock at a reduced price so they can take advantage of the 5.18 percent dividend yield that comes with those shares.
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