Dividend stocks are those that provide regular dividends to their shareholders. Moreover, these companies tend to be well-established, have stable earnings and a solid track record of distributing a portion of their profit in the form of cash or additional stock to their shareholders.
Such stocks could prove a useful source of income, as well as provide investors with an opportunity to grow their wealth over the long term. The fact that these stocks provide both appreciation and capital gains makes them a great hedge against inflation as well.
However, when it comes to picking dividend stocks, many investors prefer stocks with a history of raising their dividends. According to Morgan Stanley, companies that consistently raise their dividends, contribute to portfolio returns in the long term, especially when the market is volatile.
Investors also look for “yield” when it comes to picking dividend stocks. Yield is the ratio of annual dividends per share and the current share price. The typical dividend yield of the S&P 500 currently is about 1.7%, but for the higher-paying dividend stocks, this ratio is above 3%.
Another useful measure that investors look for is the dividend payout ratio (DPR). It shows the percentage of net income that the company is paying in the form of dividends.
However, when it comes to picking the best dividend stocks of all time, we don’t need to limit ourselves to just yield and DPR. Instead, we need to look at the whole picture, i.e., examine the past, present and future of the dividend stocks.
It means that we need to focus on dividend stocks with robust track records of stable profits and cash flows. Additionally, we should consider companies that have successfully navigated past economic crises, as these stocks are more likely to prosper through future volatility as well.
In this article, we will analyze the best dividend stocks of all time.
Best Dividend Stocks of All Time
These are a few of the best dividend stocks of all time:
Verizon
Founded in 1983 and headquartered in New York City, Verizon offers communications, information, and entertainment products and services. It is the largest U.S. wireless provider.
Verizon Communications Inc. (NYSE:VZ) is a regular dividend payer, and it declared a dividend of $0.65 for the quarter ending December 2022 (annual dollar dividend payment of $2.61 and a current dividend yield of over 6%).
Verizon reported a net operating cash flow of $8.94 billion for Q4 2022. Although it represents a drop from the previous year, there is an increase if we compare it with the revenue in the same quarter last year. Moreover, the company reported cash and cash equivalents of more than $3.9 billion last year.
Apart from being a regular dividend payer, another point that got Verizon a place on our list is that it operates in a stable industry that is recession-proof. This is because people will need their phones irrespective of economic conditions. Moreover, the telecom industry tends to evolve slowly, ensuring long-term cash flows from the assets.
One may argue that telecom stocks have slumped in recent years, but it is mainly due to a heavy investment cycle in 5G and other related infrastructure investments. In fact, these investments should start to bear fruit in the coming years, and could even lead to higher dividends from the company for many years to come.
Verizon’s 2023 consensus earnings target even supports the idea of higher dividend payouts in the future. Verizon’s 2023 consensus earnings target of $4.70 a share means the company is paying only about 55% of its earnings ($2.61 annual dividend payment). It suggests that Verizon’s payouts are not just sustainable, but could grow in the future as well.
As of the close of Q4 2022, 447 hedge funds owned investments in Verizon, compared to 469 in the previous quarter. Verizon stock is down over 1% year-to-date, bringing its one-year return to around -27%.
Altria Group
Founded in 1919 and headquartered in Richmond, Va., Altria Group makes and sells cigarettes. Altria Group Inc (NYSE:MO) boasts of a history of more than 50 consecutive years of dividend increases.
Moreover, the dividend from the company continued to grow despite slow growth in sales. In 2022, the company paid a dividend of $3.64, while it has a current dividend yield of 8.15.
Altria Group reported a net operating cash flow of $2.62 billion for Q4 2022, and cash and cash equivalents of more than $4 billion last year.
Although there isn’t much potential growth in the sector in which Altria Group operates, there is no denying that it dominates the U.S. market with Marlboro cigarettes, Black & Mild pipe and cigar products, as well as smokeless tobacco like Copenhagen and Skoal. Apart from cigarettes, the company also has a wine business, adding further strength to its cash flow.
Altria’s product categories make it recession proof as well, and this was the reason why the company reported stable revenues during the COVID-19 pandemic. Altria reported revenues of $19.8 billion in 2019, $20.84 billion in 2020, $21.11 billion in 2021 and $20.69 billion in 2022.
As of the close of Q4 2022, 340 hedge funds owned investments in Altria Group, compared to 349 in the previous quarter. Altria Group stock is up almost 1% year-to-date, bringing its one-year return to almost -17%.
Procter & Gamble
Founded in 1837 and headquartered in Cincinnati, Ohio, Procter & Gamble is a multinational consumer goods company. The company has been consistently paying dividends for the past 132 years and has raised its payouts for 66 years in a row.
It was able to raise the dividend even when it was undergoing restructuring in the 2010s when it cut some product lines and sold off others.
For the most recent quarter, Procter & Gamble Co (NYSE:PG) was able to increase its dividend by 3% to $0.9407. The company has been able to grow its dividends at an annualized rate of 5.78% over the past five years, and 4.98% over the past ten years.
Procter & Gamble reported a net operating cash flow of $3.57 billion for Q4 2022, and cash and cash equivalents of more than $7.2 billion last year. It has been able to grow its revenue even during the COVID-19 pandemic. Procter & Gamble reported revenues of $67.68 billion in 2019, $70.95 billion in 2020, $76.12 billion in 2021 and $80.19 billion in 2022.
As of the close of Q4 2022, 535 hedge funds owned investments in Procter & Gamble, compared to 549 in the previous quarter. Procter & Gamble stock is down almost 1% year-to-date, bringing its one-year return to almost -8%.
Will Boeing Pay Stock Dividends Again?
Founded in 1916 and headquartered in Arlington, Va., Boeing is an aerospace company that makes commercial jetliners and defense, space, and security systems.
Boeing (NYSE:BA) stock has a strong history of delivering cash returns to investors, both in the form of dividend payouts and share repurchases. However, the company hasn’t paid out any dividends in the last two years, i.e., since the beginning of the COVID-19 pandemic.
Boeing stock had been consistently growing its dividend payout every year until its last payment in February 2020. The company has grown its quarterly dividend from $0.485 in 2013 to $2.055 in 2020.
We all know that COVID-19 hit the airline industry the hardest, but Boeing seems to be in a recovery phase now. After a dismal performance in the last two years, Boeing’s numbers are improving.
In 2022, the aerospace company posted modest revenue growth. More importantly, the company generated a positive free cash flow of $3.1 billion in Q4, leaving it with $2.3 billion in positive cash profits for the year. More free cash flow means the company can accelerate its debt paying capacity, and eventually return to earning GAAP profits again.
In fact, as per the analysts polled by S&P Global Market Intelligence, the company looks on course to report its first post-pandemic profit this year. Goldman Sachs also recently maintained coverage of Boeing stock with a Buy recommendation, and an average one-year price target of $230.70.
If the company goes on to perform as per the expectations, it could soon reinstate its dividend program. However, investors should not expect dividends from the company for two more years at least as the priority for the company should be on fixing its debt problem, and only then consider returning money to shareholders.
As of the close of Q4 2022, 355 hedge funds owed Boeing stock, compared to 334 in the previous quarter. Boeing stock is up almost 8% year-to-date, bringing its one-year return to almost 11%.
Final Words
Verizon, Altria Group and Procter & Gamble are undoubtedly the best dividend stocks of all time. These stocks not only have a robust history of distributing dividends but are poised well to pay dividends for many more years to come. Boeing stock is very likely to re-join this list soon as it is moving swiftly to regain its pre-pandemic status.
All the above-mentioned stocks suit portfolios of all sizes and investment objectives. Investors can forget about these stocks once they add them to their portfolios as these will automatically work to appreciate the value of investors’ portfolios.
