Long Live the Dividend Kings: 3 Top Picks to Build an Income Portfolio


  • There’s no better base for an income portfolio than the dividend king stocks.

  • Coca-Cola (KO): 61 straight years of dividend increases will not end anytime soon.

  • Altria (MO): Altria’s high-yield dividend is actually getting stronger.

  • AbbVie (ABBV): AbbVie is on the other side of a long battle that it has won.

Dividend King Stocks - Long Live the Dividend Kings: 3 Top Picks to Build an Income Portfolio

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Whether an investor seeks steady income or long-term growth, the dividend king stocks are a great option. Dividend bearing companies are generally stable, well-established and consistently profitable. All of those qualities are required in order to generate enough cash to pay increasing dividends to investors.

These dividend kings stocks are the elite of the elite in that regard: They’ve paid increasing dividends for 50 consecutive years.

Investors can depend on these firms to continue to pay dividends well into the future. That dividend income can be used as any other income, or reinvested to create compounding long-term gains. It’s that sort of win-win situation that continues to make the most reliable dividend king stocks so attractive.

The three shares discussed below would serve as an excellent base for any investor’s income portfolio.

Coca-Cola (KO)

coca-cola bottles and cans. coke is a blue-chip stocks
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In the investment world there are a few things as reliable as Coca-Cola (NYSE:KO) and its stock. Part of its reliability stems from the fact that it is very predictable. Its shares have a beta of 0.59, meaning that they move 59% as quickly as the broader market. When things start to go wrong, it’s much easier to judge where KO shares are going, lending it predictability.

The other part of its reliability is evident in the fact that the company last reduced its dividend 61 years ago. Potential investors can expect to receive an additional 3% as dividends moving forward. With a big enough position that equates to substantial income. it’s best used to reinvest in more KO stock but wouldn’t make a bad income source either. 

Coca-Cola is currently relying on price increases to grow its top line in the high single digits. Cash flows are also growing quickly, meaning that the company is in no danger of reducing its rock solid dividend anytime soon. 

Altria (MO)

Altria office sign in Virginia capital city tobacco business closeup by road street. Dividend King Stocks
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Altria (NYSE:MO) is the antithesis of Coca-Cola in some sense. I say that because many would look at its stock and judge it as the more risky dividend king of the two, simply based on its dividend yield.

The tobacco giant’s dividend currently yields 8.75% to investors. That’s outside of the range that most investors would consider as being healthy. Yet, Altria last reduced that dividend in 1970. It’s only as high as it is because the cigarettes that underpin the company’s business are waning in demand. That has brought share prices down over the past 6 to 7 years increasing the dividend yield in the process.

Many investors would look at that fact and assume that Altria is due to reduce its dividends sometime soon. I don’t believe that is the case based on recent information. In fact, investors should understand that Altria is going to boost its dividend program. The company recently sold $2.4 billion worth of Anheuser Inbev (NYSE:BUD) stock to repurchase some of its own stock.

AbbVie (ABBV)

ABBV Stock: Offering Oil Yield Without Oil's Risk
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The narrative concerning AbbVie (NYSE:ABBV) stock has long been about how the company will navigate the decline of Humira as it comes off patent.

It has recently become clear that AbbVie has emerged successfully from that battle. Consider that Humira’s best ever annual sales peaked at $21 billion. Skyrizi and Rinvoq — intended to replace its sales — should bring in $16 billion this year. Those two drugs are expected to account for $27 billion in sales by 2027

The company’s ability to successfully navigate that pivot makes its already dependable dividend that much more so. AbbVie has successfully passed a hurdle that has plagued the company for the last decade. The company’s dividend is not at risk anymore and currently yields 3.5% to its shareholders.

Further, the company grew that dividend by 10% over the past 5 years during a particularly tumultuous period due to Humira’s transition off patent. That makes it worth buying overall. 

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

Article printed from InvestorPlace Media, https://investorplace.com/2024/03/long-live-the-dividend-kings-3-top-picks-to-build-an-income-portfolio/.

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