Why are you investing? Most people know that the answer should be something like “For the most risky construction use of my money.” If we’re being honest, though, most of us find stock picking and monitoring our portfolio at least a little fun. all right.
As a reminder to investors looking for income, however, the best dividend stocks are usually relatively boring names that just keep paying cash regardless of the economic backdrop.
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Here’s a look at four boring dividend stocks that make it interesting to hold long-term income.
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It’s no more unusual than dishwashing soap, diapers, toothpaste, and laundry detergent. There is a bright side to being in this business though. These are the products that people buy again and again. The key to continued success in these markets is often just achieving enough scale and market dominance to keep your cost per unit of production low and your pricing power high.
Proctor and gambler(NYSE: PG ) It did exactly that. Its Sun laundry detergent accounts for about 40% of the US market, while Pampers diapers control about half of the domestic market. In fact, many of the products in its portfolio regularly lead their respective categories.
Perhaps the unsung hero in P&G’s enduring success, however, is its sheer size and what it means for marketing its products. Not only does the company have huge leverage it can use to ensure that its retail partners prominently feature its products, it simply gets a bigger checkbook to fund its promotional efforts. The company spent $9.2 billion on advertising alone last year. Its competitors just can’t do it.
Perhaps most importantly for income-minded investors, P&G has now raised its annual dividend payout for 69 consecutive years. You’ll come across this stock’s track record while the forward-looking yield stands at 2.6%.
There is nothing exciting about the investment management business. Fund managers pick stocks, and charge a quarterly percentage based on the amount of money they manage. Surprisingly enough, performance doesn’t mean much here. Perhaps this is because many of these managers ultimately underperform the overall market, while he does Break usually do not do it for a long time.
Still, it’s an ideal business model to support reliable, recurring dividend payments.
Meanwhile Brookfield Asset Management(NYSE: BAM) Not really structured any differently than any other name in the investment management business, it’s somehow an attractive position. It focuses only on industries with above-average long-term growth potential. Brookfield is the name behind it Brookfield Infrastructure Partners, Brookfield Renewable Energy Partnersand Brookfield Business Partners. This puts it in businesses such as water management, AI data centers, solar energy production, logistics, hydropower, and a number of other increasingly important industries.
It is also good at what it does – picking the right business in the first place and then managing it well. Based on its historical track record (this year’s quarterly dividend payout is 15% higher than its 2025 payout, for perspective), the company’s long-term earnings and dividend growth target of between 15% and 20% looks very achievable.
Automatic data processing(NASDAQ: ADP ) There is a payroll processor that you may know better as ADP (yawn!). One in six American workers receive their paycheck from this service provider.
This seems like a potential problem. Given all that artificial intelligence can do these days, it’s probably only a matter of time before AI negates the need for these companies’ services.
However, don’t count on automatic data processing just yet for a few reasons.
Chief among these reasons is the fact that ADP is much more than just a payroll processor. Employee time and attendance solutions, benefits management, recruitment, compliance (when and where needed), and more are all in its wheelhouse. These are all important and organization-specific HR functions that cannot be easily outsourced to an automated platform. Payroll tax is also an issue that many organizations are not ready to let AI handle completely, as fixing each error can be a significant headache.
For what it’s worth, automated data processing is Embracing artificial intelligence in areas and ways where it makes sense to do so, allows the company to offer more efficient and effective tools to its 1.1 million customers. Its 51-year streak of annual dividend increases isn’t in jeopardy — at least, not yet.
This stock yielded 3.2%, by the way.
How would you like to move on to a boring stock that has raised its dividend per share for 64 years? Big drink coca cola(NYSE: KO ) It did so, without a track record in sight.
The secret of its long-lasting dependence is not really hidden. Not only is its namesake cola one of the world’s most popular and beloved beverages, The Coca-Cola Company is also the parent of a number of other popular brands, including Gold Pack Tea, Minute Maid Juice, Glaceon Water, Costa Coffee, and Poweroid Sports Drink. It has something to sell customers despite their ever-changing preferences.
Even more compelling to income-minded investors is the core business model.
Contrary to popular belief, Coca-Cola no longer bottles much of its products. Like a rival PepsiCoit outsources much of this work to third-party bottlers, who also handle distribution duties. While it may seem like it doesn’t matter who does it, this model takes a great deal of cost-based risk off Coca-Cola’s books, allowing it to focus on what it does best. It markets these brands so well that they become a lifestyle choice.
Newcomers will go for an impressive yield of 2.6%, which isn’t great. However, this is based on a dividend that has only grown by nearly 90% in the last 10 years. It will soon grow into a powerhouse income generator.
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James Bromley holds positions at Coca-Cola and Procter & Gamble. The Motley Fool owns and offers positions in Brookfield Asset Management. The Motley Fool recommends Brookfield Infrastructure Partners, Brookfield Renewables, and Brookfield Renewable Partners. Motley Fool has a disclosure policy.
4 Boring But Beautiful Dividend Stocks Perfect for an Income-Focused Portfolio Originally Posted by The Motley Fool
