Value Alert: 2 High Quality Dividend Aristocrats to Buy Now?
Ali is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Many investors are left wondering where we can find the right balance of having some security and growth as the market continues to gyrate. Obviously, Treasury Bills, savings account, and/or certificates of deposits don’t look like a nice option when we see they give a negative real rate of return. Commodities are extremely volatile and real estate continues to be depressed. However, investing in stable, dividend-paying companies, such as these two below, should provide returns that outperform the market in the long-run.
Consumer products giant and well-known Motley Fool dividend aristocrat Proctor & Gamble (NYSE: PG) announced a dividend hike this past weekend making it 56 consecutive years! That means since 1956 and all the subsequent wars, economic cycles, technological changes, etc. the company still has been able to not only maintain its dividend, but reward investors with an increased payout annually. This is the type of company that grabs my attention in an otherwise unstable stock market. Add in the fact that the growth prospects continue to look bright with the growing middle-class in the so-called BRIC countries (Brazil, Russia, India, and China) and I think PG looks poised to continue these dividend hikes in the foreseeable future. If looking to diversify your position, Kimberly-Clark (NYSE: KMB) is a solid choice as it has a fantastic 4% dividend, great brand strength (this is the company that creates the very recognizable Kleenex facial tissue brand for example), and also benefits from overseas growth as well. Moreover, KMB has been fantastic in raising its dividend consistently as well and with it currently at 70%, investors can expect that trend to continue.
Beverage behemoth Coca-Cola (NYSE: KO) is another dividend aristocrat currently paying a healthy 2.8% and raising that annually for decades. The company earlier in the week reported impressive earnings and revenue projections going forward that pushed it to a new 52-week high and right near its all-time high. One would think that the valuations are stretched, but with the company habitually exceeding analyst estimates and sporting fantastic profit margins to give confidence that will continue, the 16.5x forward P/E looks reasonable and a “Foolish buy.” Its biggest competitor, Pepsico (NYSE: PEP), also should benefit from the growth overseas and pays an even better 3.1% dividend providing a great stock to diversify one's Coca-Cola holding. At just a 50% payout ratio, investors are definitely reasonable in expecting the dividend to not only be secure, but be hiked in the near future as Pepsico's management has been so great at doing.
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