3 Dividend King Stocks That Can Make You Money in Your Sleep


Imagine yourself sleeping soundly — not even worried about the stock market’s performance And money is coming in as soon as you sleep. Sound like a dream? Well, it doesn’t. There is actually a way to make this easy money every year – even when the market is down.

And that’s by owning dividend stocks. Buying Dividend Kings is a great way to start because these companies have a long track record of increasing payouts. This shows that rewarding investors is important to them. So they are likely to continue this policy. But before you go get some sweat, let’s take a look at three dividend king stocks to buy.

1. Coca Cola

coke (Huh -0.19%) A strong and stable player that makes a great addition to your portfolio — for its dividend paying and earnings track record.

Let’s look at dividends first. The world’s largest non-alcoholic beverage company pays an annual dividend of $1.76 per share for a yield of 2.77%. It has increased payments for the past 60 consecutive years. And the overall increase in free cash flow over time shows that the company has what it takes to keep dividend payments growing.

KO Free Cash Flow Chart

KO free cash flow data by YCharts

Now, let’s talk about income. Investors like Coca-Cola’s brand strength continue to grow in tough economic times. For example, in the third quarter of last year, Coca-Cola reported double-digit increases in net income and earnings per share. This was despite headaches such as unfavorable currency exchange and high inflation. And Coca-Cola has generally grown earnings over time.

Coca-Cola stock performance alone probably won’t supercharge your portfolio. But over the long haul, the steady gains and dividends you can count on can make it a valuable part of your holdings.

2. Goals

the target (Tgt 1.92%) has withdrawn its dividend for the past 51 years. The retail giant now pays an annual dividend of $4.32 per share. This represents a dividend yield of 2.90%. This means if you hold 100 target shares, the company will pay you $432. It’s welcome anytime — but it’s especially appreciated during tough market times

Of course, the earnings picture at Target can look a little murky these days. The company’s growth has cooled, and margins have shrunk amid today’s economic woes. Target said in the fall that rising inflation is weighing on its customers’ wallets — and that’s affecting how they shop at Target. For example, they focus on buying only necessities or things on sale.

Still, Target managed to increase comparable sales, gain market share across product categories — and launched a plan to improve Target efficiency that could cut costs by $2 billion to $3 billion. Also, today’s economic problems will not last forever. Target has the power to thrive on better days — and offers you solid returns.

3. Johnson & Johnson

Johnson & Johnson (JNJ -0.16%) Another top company that you can count on to pay you just for owning its stock. The big pharma player pays an annual dividend of $4.52. The dividend yield is 2.56%. That’s higher than the industry average yield of 2.15%, according to data collected by NYU’s Stern Business School.

So, buying J&J is a good idea for its dividend payout. But there’s another great reason to go to J&J right now. The company is spinning off its consumer health business — its lowest-growth business — this year. This means it will focus on its two higher growth businesses: pharmaceuticals and medtech. As it stands, J&J has grown revenue over time. This conversion will help you along that path.

J&J shares beat the bear market last year. But even after that performance, J&J shares remain reasonable at around 16 times forward earnings estimates. That looks like a great price for a company to start a new growth story — and investors ready to pay while they sleep.

Adria Cimino has positions at Target. The Motley Fool has locations and recommends targets. The Motley Fool recommends Johnson & Johnson and recommends the following options: Long Jan 2024 $47.50 Call Coca-Cola. Motley Fool has a revealing policy.


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