Some people care most about yield when it comes to investing in dividend stocks. But that can come with big risks since some stocks that pay big dividends are in risky areas like mortgage-related financing or the cyclical business of energy exploration. Suppose you don't want to or can't keep a close eye on these stocks. In that case, you could lose money if the market moves against you or, even worse, if that once-attractive dividend is cut or eliminated. Look for stable stocks with rock-solid business models that will stand the test of time and continue to pay dividends for many decades. This way of investing is less exciting, but it also has less risk.
American Electric Power Co. Inc.
AEP (American Electric Power), an electric company in the Midwest, is based in Columbus, Ohio, and has been giving electricity to the area for more than a hundred years. It has about 5.5 million customers right now. With a market value of about $48 billion, it is one of the five biggest utility stocks on Wall Street. There aren't many more stable industries than utilities. In the 21st century, power and energy are just as important as food and water.
Everyone knows about Kellogg (K), the company that makes Cheez-Its, Pringles, Froot Loops, Pop-Tarts, and more. Kellogg's makes some of the most well-known brands in the world, so it's hard to think of a time when people would stop buying their products. Even though you might think it's still hard for a packaged foods company to do well in an inflationary environment, the company's management just raised its earnings and revenue expectations for the whole year after a better-than-expected third-quarter earnings report in November.
Prudential Financial Inc.
When people think of financial stocks, most think of investment banks. On the other hand, PRU (Prudential) is a much safer and more reliable choice in the sector. It does offer wealth management services, but most of its money comes from selling life insurance and managing benefits for companies. When you help small businesses manage their 401(k) plans or offer disability insurance, you don't have the chance to hit huge home runs. Still, you're also much less likely to have problems.
Coke (KO) is one of the best consumer stocks out there. The company has been around for more than 120 years and has one of the best-known brands in the world. It is based in Atlanta. Its biggest shareholder is also Warren Buffett's company, Berkshire Hathaway (BRK/A, BRK/B), which owns more than 9% of the company and helps keep shares stable over time.
AbbVie was split off from ABT (Abbott Laboratories) in 2013. AbbVie (ABBV) took control of branded pharmaceutical products to make their way without the slow and low-margin businesses of medical devices and consumer health products. Since then, ABBV has grown more than three times and performs better than the rest of ABT's business.
AT&''T (T) is a good stock, and for the last 36 years in a row, its dividend has gone up every year. This well-known telecom recently streamlined its business by selling its stake in WBD (Warner Bros. Discovery Inc.) to pay down debt and focus on its main business, telecom. Since October, when shares were at their lowest, they have gone up about 35%, which shows that Wall Street likes what it sees as we head into the New Year.
Consolidated Edison Inc.
ED (ConEd) isn't the biggest utility stock on the market, but it's hard to beat regarding reliability. First of all, about 3.5 million customers in the New York City area get electricity and natural gas from it. In this dense part of the U.S., the need for energy is strong and stable. When you look at ConEd's history, you can see that it has raised its dividends for more than 48 years and has a track record of sharing the wealth with its stockholders.
Johnson &'' Johnson
There are many reasons to buy and hold JNJ (Johnson &'' Johnson) stock long-term. It is one of the ten biggest stocks on Wall Street, and along with Microsoft Corp. (MSFT), it is one of only two U.S. companies with a top AAA credit rating. But the most important thing for income investors is that it has increased its dividend for an amazing 60 years.
JPMorgan Chase &'' Co.
During the financial crisis, people who put their money in big banks lost a lot. So, in a world economy, they now see this sector as risky. But there isn't much to worry about with the megabank JPM (JPMorgan Chase), even though there is a risk with poorly run or aggressive businesses. This Wall Street landmark has been around since 1799, and it has been through many storms.