The Dividend Dynasty: 3 Stocks That Will Keep Your Pockets Lined for Years


  • Despite the buzz around AI stocks, dividend stocks offer a safe haven in uncertain times.
  • Cardinal Health (CAH): Cardinal Health increased its dividend, marking a 35-year streak.
  • Caterpillar (CAT): Caterpillar has a strong operational profit ratio and robust cash flows.
  • Realty Income (O): Realty Income’s monthly dividend and recent acquisitions bolster its portfolio.
dividend stocks - The Dividend Dynasty: 3 Stocks That Will Keep Your Pockets Lined for Years

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Dividend stocks are not on everyone’s radar right now, with Nvidia (NASDAQ:NVDA) moving past Apple (NASDAQ:AAPL) to become the second-most-valuable company in the world. And, a host of other artificial intelligence stocks, such as Advanced Micro Devices (NASDAQ:AMD) lead the pack for mega-cap stocks. But with a potential recession this year and no rate cuts thus far, dividend stocks are the safe haven investment you need in your portfolio.

BlackRock (NYSE:BLK) is concerned about the 2024 economy, citing macroeconomic volatility and fundamental inflation pressures even if inflation falls to 2%. Moreover, Morgan Stanley (NYSE:MS) and Morningstar analysts wrote that the U.S. equities market is overpriced after a significant gain by the end of 2023, and this was before Nvidia’s surge this year.

In these times, it’s better to pick up dividend aristocrat stocks analysts love, whose payouts have increased for 25 years and counting. Overall, the S&P 500 dividend aristocrat stocks have done better than the S&P 500 Index. Especially during a decade when average yearly stock returns were less than 10%.

Cardinal Health (CAH)

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Cardinal Health (NYSE:CAH) recently decided to increase its dividend to $0.5056 per share, helping maintain its 35-year dividend aristocrat streak. With this raise, the forward yearly dividend will be $2.02, giving CAH a forward yield of 2.05%, which is higher than the average yield in the healthcare sector of 1.58%. A payout ratio of 26% means the dividend is more than secure.

In addition, CAH’s second-quarter $250 million accelerated share buyback program brought fiscal 2024 share repurchases to $750 million.

Apart from the shareholder returns, the healthcare services company deserves credit for navigating some tricky waters. It recently reaffirmed its fiscal 2024 non-GAAP EPS forecasts despite its decision not to renew its contracts with OptumRx when they expire at the end of June 2024. Instead, CAH believes new customer wins and niche growth will make up for any revenue loss.

Recent numbers support this. Cardinal Health’s fiscal year 2024 third-quarter sales grew 9% to $54.9 billion, and CAH boosted its full-year non-GAAP EPS estimate. At-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight Logistics drove its Other business segment, which rose 14%.

The business is also expanding its network and delivery hubs to fulfill the demand for $2.6 billion in at-home solutions and is looking to create a larger Texas distribution facility with robots and modern technologies.

Caterpillar (CAT)

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Since its founding, Caterpillar (NYSE:CAT) has paid a cash payout every year, and since 1933, it has increased its dividends for 30 years; with a payout ratio of around 23%, CAT has a sustainable dividend model

Caterpillar earned $5.75 per share in Q1 2024, or $5.60 after adjustments. Company revenues and earnings stayed at $15.8 billion from Q1 2023. The operational profit ratio improved from 17.2% to 22.3%, and operating cash flow was $2.1 billion, with $5.1 billion for buybacks and incentives.

Caterpillar’s Cat Financial revenues grew 11% to $853 million owing to higher average lending rates and earning assets. Profit rose 12% to $229 million pre-tax. New retail business surged, and past-due accounts fell, showing a strong Cat Financial portfolio.

Caterpillar’s success is due to its agile operating strategy and a strong housing market. Starting in April 2024, 1.36 million privately held homes were seasonally adjusted, 5.7% higher than in March 2024. April 2024 had 1.62 million housing completions, 8.6% higher than March and 14.6% more than April 2023. Active listings show increasing home prices owing to low housing availability.

With potentially three rate cuts this year, all of these statistics are great news for CAT investors.

Realty Income (O)

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Since going public in 1994, Realty Income (NYSE:O) has increased dividends 125 times, with a 2.1% increase to $0.2625 per share, the latest of its hikes.

Due to its increasing dividend, paid monthly, O boasts a 5.8% yield, which is substantial even considering its REIT status and beats the real estate industry average of 4.5%.

After raising its AFFO outlook to $4.15–$4.21 per diluted share from $4.13–$4.21, O offered investors another reason to be hopeful.

O needs market trust following a lackluster earnings report. A market already suffering from rising interest rates was further soured by EPS falling over 40% short of expert estimates. However, a $129.7 million net income and $862.9 million AFFO for the first quarter of 2024 were still encouraging. Rent hikes and occupancy rates were maintained as the corporation invested $598 million at a 7.8% cash return.

Realty Income made initial cash yield investments in various property sectors totaling $598 million during the quarter. At an average cap rate of 7%, O has completed $1.67 billion in acquisitions.

The results arrive shortly after Realty Income closed on its purchase of Spirit Realty Capital for $9.3 billion, adding 61.6 million square feet to the portfolio, becoming the fourth-largest REIT in the process.

On the date of publication, Faizan Farooque 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 Publishing Guidelines.

Faizan Farooque is a contributing author for and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

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