Diving into Dividend Stocks: A Reliable Path to Long-Term Wealth
The stock market offers a solid way to enhance your wealth over time, but investing can be quite complex. Among various strategies, one of the most effective is buying shares of companies that pay dividends.
These dividend-paying stocks have shown impressive results. According to a study by Hartford Funds, from 1973 to 2023—spanning four recessions—dividend-paying stocks achieved an annual return of 9.17%. In contrast, stocks that do not pay dividends yielded only 4.27%. Moreover, dividend stocks tend to be less volatile, providing a safer alternative for investors who value both stability and growth.
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A closer look at the report, titled The Power of Dividends: Past, Present, and Future, highlights that companies increasing or starting dividend payments perform even better, boasting an annual return of 10.2% with lower volatility.
If you seek reliable income and solid returns over time, here are five standout dividend stocks that have raised their dividends during past recessions or longer.
S&P Global: A Leader in Credit Ratings
S&P Global (NYSE: SPGI) is vital in the credit markets, assessing the creditworthiness of various organizations.
The firm holds a significant competitive edge, with a 50% market share in credit ratings due to long-standing reputations and stringent regulatory barriers for new competitors. Besides ratings, S&P Global has a robust data and analytics division that provides consistent cash flow. With 52 consecutive years of increased annual payouts, S&P Global is a trustworthy dividend payer.
Cincinnati Financial: Resilient in Insurance
Cincinnati Financial (NASDAQ: CINF) benefits from ongoing demand for its insurance products, enabling its growth alongside economic expansion. The company has strong pricing power, allowing it to effectively address inflationary trends.
Due to rising interest rates, Cincinnati Financial can invest in fixed-income assets that yield higher returns. Last year’s investment income reached $894 million, up 21% from 2021. Its ability to adapt across various market conditions has allowed it to increase its dividends annually for 64 years, making it another excellent choice for dividend seekers.
Automatic Data Processing: A Dependable Partner
Automatic Data Processing (NASDAQ: ADP), known as ADP, provides a full range of human resources services, including payroll and benefits management.
ADP serves 42 million employees across over 1.1 million clients in 140 countries. Its strong service reputation grants it substantial economic security, allowing for a stable income stream. ADP has increased its dividend for 50 consecutive years, recently earning its place in the Dividend Kings club.
Oil Giants: Chevron and ExxonMobil
Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM) are giants in the oil and gas industry, closely tied to fluctuations in crude oil and natural gas prices.
To stabilize their earnings, these companies operate across the oil value chain—from exploration and production (upstream) to transportation via pipelines (midstream) and refining (downstream).
According to the International Energy Agency, oil demand is expected to rise beyond 2.6 million barrels per day by 2030. For those interested in energy investments with reliable dividends, Chevron has raised its dividends for 37 straight years, while ExxonMobil has done so for 42 years, making both appealing choices.
Investing in S&P Global: A Cautious Consideration
Before investing in S&P Global, keep this in mind:
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Courtney Carlsen holds positions in Chevron and ExxonMobil. The Motley Fool has positions in and recommends Chevron and S&P Global. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
