Seeking Consistent Income? These Five Stocks Increased Their Dividends During the Past Four Economic Downturns.
Investing in the stock market is a fantastic method to accumulate wealth over the long term. With numerous strategies to choose from, the world of finance can be intimidating.
However, one strategy that gains recognition is purchasing shares of dividend-yielding companies. Over extended periods, these companies have demonstrated superior performance compared to non-dividend-paying peers.
A Hartford Funds study revealed that, spanning a 50-year period concluding in 2023 (covering the last four recessions), dividend-paying stocks yielded an annual return of 9.17%; non-dividend-paying stocks delivered 4.27% in return. Moreover, dividend payers exhibit less volatility, making them an alluring option for those seeking both growth and stability.
The report, titled The Power of Dividends: Past, Present, and Future, further indicated that companies boosting or initiating dividends perform even better, delivering an average annual return of 10.2% with reduced volatility.
In search of a consistent income flow and solid long-term growth, here are five distinguished dividend stocks that have witnessed increases in their dividends throughout the past four recessions or more.
S&P Global
S&P Global (SPGI 1.08%) holds an influential position in credit markets, evaluating the creditworthiness of companies, governments, and other entities.
Its standing in the credit-rating industry is primarily due to its long-established reputation and stringent regulatory barriers that deter new entrants. This market dominance allows S&P Global to maintain a 50% market share.
Beyond its ratings business, it also boasts a data and analytics business with a steady cash flow. Consequently, S&P Global's diverse income sources and proven cash management capabilities have made it a dependable dividend payer with an uninterrupted 52-year dividend increase streak.
Cincinnati Financial
Cincinnati Financial (CINF 1.65%) is a beneficiary of stable demand for its insurance services and has grown in tandem with the economy. Due to its pricing power, it can adapt to inflationary pressures, such as those during the recent years.
The higher interest rates benefit insurers because they can invest their cash in secure fixed-income investments with higher yields. In 2022, Cincinnati Financial's investment income saw a 21% increase compared to 2021.
Its pricing power and growth in various market conditions contribute to the company's ability to grow its annual dividend for 64 consecutive years, making it another dependable dividend stock.
Automatic Data Processing
Best known as Automatic Data Processing (ADP 0.92%), the company provides payroll, HR, talent management, time tracking, tax payments, and benefits administration services to numerous companies around the world.
By offering a comprehensive suite of services, ADP serves more than 42 million employees for over 1.1 million clients across 140 countries. Its excellent service quality creates an economic moat, proving its reputation as a reliable partner.
Thanks to its robust client retention, ADP benefits from a steady income stream, which has enabled it to raise its dividend annually for an impressive 50 consecutive years, making it a new member of the exclusive Dividend Kings club.
Chevron and ExxonMobil
Chevron (CVX 1.20%) and ExxonMobil (XOM 0.34%) are key players in the oil and gas industry, subject to fluctuations in crude oil and natural gas prices.
By expanding their operations across the value chain (from exploration and production to transportation and refining), they aim to smooth out earnings and reduce vulnerability to market fluctuations.
The demand for oil and gas is projected to persist, with the International Energy Agency expecting oil demand to reach 2.6 million barrels daily by 2030.
Investors seeking stable energy exposure and dividend payments can take advantage of Chevron's 37-year consecutive dividend increase record and ExxonMobil's 42-year history of dividend hikes.
Implementing a diversified investment portfolio that includes dividend-yielding companies can help ensure financial stability and growth over the long term. For instance, S&P Global, a credit ratings agency, has a 50% market share and a 52-year dividend increase streak due to its robust data analytics business with a steady cash flow.
Investing in companies that consistently increase their dividends, such as Cincinnati Financial, which has 64 years of uninterrupted dividend growth, can provide both income and growth prospects for investors seeking a steady stream of returns.
