Stocks that offer shareholders great dividends are pretty rare. While it is true that about three-quarters (75%) of companies in the benchmark S&P 500 index pay a dividend, the average yield is only 1.54%. Few companies raise their dividend payments consistently, and dividends may get cut when times get tough.
Right now, only 67 stocks in the S&P 500 are “dividend aristocrats.” These are stocks of companies that have raised their dividend payments for 25 consecutive years or longer. This is a select group of best-of-breed dividend growth stocks, most of which have a long track record of outperforming the broader market. For investors chasing yield or who prize the income they get from their investments, dividend aristocrats are where you want to allocate capital. Here are the three best dividend stocks to buy now.
J.M. Smucker Co. (SJM)
Bets known for its jams, peanut butter and maple syrup, J.M. Smucker Co. (NYSE:SJM) is officially a dividend aristocrat. In business since 1897, the company has now raised its dividend for 26 consecutive years, making it one of the newer dividend aristocrats in the S&P 500 index.
Earlier this year, CNBC host Jim Cramer singled J.M. Smucker out for its dividend, saying: “This is just a good, solid business that deserves to be considered in the top tier of packaged-foods companies. I don’t think it gets the respect that it deserves.”
J.M. Smucker is a company that is always growing and diversifying, often through acquisitions. Over the last decade, J.M. Smucker has expanded into pet food, adding Milk Bones and 9Lives to its portfolio of brands.
The company currently pays a quarterly dividend of $1.06 per share, which gives it a yield of 3%. That’s well above the average among companies trading in the S&P 500. SJM stock has declined 11% this year on mixed earnings, setting up a potential buying opportunity for investors.
Stanley Black & Decker (SWK)
Tool maker Stanley Black & Decker (NYSE:SWK) is more than a dividend aristocrat. The maker of drills and saws is a dividend king, one of the few publicly traded companies that has raised its dividend payment to stockholders for more than 50 years.
In business since 1842, Stanley Black & Decker has increased its dividend for 55 consecutive years. That is an extremely impressive feat. Today, SWK stock offers shareholders a quarterly dividend payment of 81 cents a share, giving it a yield of 3.50%.
With annual sales of $15 billion, Stanley Black & Decker is today one of the world’s largest industrial product manufacturers. While the company’s sales can be cyclical and trend up or down with the economy, its strong brand and popularity with contractors help to see it through most economic downturns.
This year, SWK stock has been on an upswing, having increased by roughly 20% since January. The company and stock have gotten a lift coming out of the 2022 bear market. This is one of the best dividend stocks around.
Colgate-Palmolive (CL)
Consumer products company Colgate-Palmolive (NYSE:CL) is another dividend king. Astonishingly, the company behind Colgate toothpaste, Speed Stick deodorant, and Irish Spring soap has paid its stockholders uninterrupted dividends since 1895. The company has also increased its dividend payout for 60 consecutive years.
Today, CL stock pays a quarterly dividend of 48 cents a share, which gives it a yield of 2.60%. Few stocks can match this company’s commitment to its dividend and rewarding shareholders.
With roots dating back to 1806, Colgate-Palmolive is one of the oldest companies and stocks in the U.S. Like the other names on this list, Colgate-Palmolive is a diversified company with sales in more than 200 countries. However, half of the company’s annual revenue of about $18 billion still comes from its signature toothpaste and other oral care products. More recently, Colgate-Palmolive has been focusing its growth on emerging markets.
CL stock has slipped 7% lower this year and looks attractively valued at current levels. Its ongoing dividend increases only strengthen the investment’s appeal.
On the date of publication, Joel Baglole 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.
