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3 Tried and True Dividend Stocks to Buy for Your Portfolio

Investing in income stocks can be a tricky task. Some companies may pay dividends only to reduce them later on, while others may prioritize stock buybacks over dividends. However, studies have shown that dividends contribute to about 35% of total returns for investors over time. Holding onto solid income stocks that consistently increase their annual payouts has proven to be a successful strategy.

Here are three dividend stocks that are worth considering for your portfolio:

1. PepsiCo (PEP)
PepsiCo is a well-known player in the non-alcoholic beverage and snack industry. With popular brands like Pepsi, Gatorade, Lays, and Doritos, the company has a diversified product line that generated $91.47 billion in revenue in 2023. PepsiCo has a strong track record of increasing dividends, with a 52-year streak of yearly raises. The current dividend yield is around 3%, backed by a payout ratio of approximately 65%. The company’s dividend quality grade is B+ and it holds investment-grade credit ratings. Despite a flat stock price in 2024, PepsiCo is expected to continue growing its earnings, making it a good buy for income investors.

2. Amgen (AMGN)
Amgen is a leading biotechnology company known for its innovative therapies in various medical fields. With revenue exceeding $28 billion in 2023, the company has been paying dividends since 2011 and has a 12-year streak of increases. The current dividend yield is around 3%, with a growth rate of about 10% per year. Amgen’s moderate payout ratio and strong free cash flow cover the dividend requirements, making it a safe investment for income seekers. The stock is undervalued and trades at a reasonable earnings multiple, making it an attractive buy for dividend growth investors.

3. Chevron (CVX)
Chevron is a major player in the integrated oil and gas industry, with total revenue of $196 billion in 2023. The company benefits from high energy prices and is expected to see revenue and earnings growth in 2024. Chevron offers a dividend yield of 4% and has a 37-year streak of dividend increases. The payout ratio is low at 46%, with strong free cash flow covering the dividend requirements. Chevron’s dividend quality grade is A, and it holds high-grade investment credit ratings. With an excellent yield, dividend growth, and reasonable valuation, Chevron is a recommended buy for income investors.

In conclusion, investing in dividend-paying stocks can provide a stable source of income and long-term growth potential. Consider adding these three dividend stocks to your portfolio for a solid income stream and potential capital appreciation.

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