Dividend aristocrats have been favorites with investors and fund managers for decades due to their high returns, providing people with additional income in their portfolios.
Additional income is beneficial for investors, especially retirees. Dividend aristocrats are the stocks of companies that have provided 25 consecutive years of dividend growth. These companies are not only high quality stocks, but are also companies that have strategies to increase their dividend yields every year.
AbbVie (ABBV) – Get a report, ExxonMobil (XOM) – Get a report and IBM (IBM) – Get a report are dividend aristocrats investors should own, writes Real Money contributor Bob Ciura in a recent column titled 3 High-Yield Dividend Aristocrats to Buy.
These companies offer a dividend yield of at least 4% and are well above the average yield of the S&P 500 Index of 1.3%.
Best of all, these dividends are often well hedged, which should allow years of future growth, ”he writes.
Pharmaceutical giant AbbVie focuses on treating diseases in immunology, oncology and virology and has generated sales of nearly $ 46 billion. The company has two major drugs that are expected to hit “peak sales” as Humira loses patent protection in Europe and the United States. Rinvoq, a medicine for moderate to severe rheumatoid arthritis, and Skyrizi, a medicine for moderate to severe plaque psoriasis. , together are expected to generate $ 15 billion in sales by the middle of this decade.
“With a low payout ratio and the potential for strong revenue growth from its pipeline, AbbVie will in all likelihood continue to increase its dividend and enter the proprietary Dividend Kings Index,” Ciura wrote.
Exxon Mobil and IBM are both among the largest companies in their sectors, respectively energy and software and hardware.
Exxon has retained its dividend last year despite declining returns from its competitors and has increased it over the past 38 years. Exxon’s return is higher at 6%, which should “attract more risk-tolerant investors,” he wrote.
IBM is now focused on the fastest growing areas of technology and has increased its dividend yield for the past 26 consecutive years.
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“Stocks are returning 4.6% for now, a solid supply as investors await the spin-off of the company’s legacy businesses and a transition to a new, possibly higher-growth IBM,” Ciura said. .