If you want to live entirely off dividends, you need a shockproof stream of income — here are 3 top stocks that have hiked their payouts for at least 60 straight years

If you want to live entirely off dividends, you need a shockproof stream of income — here are 3 top stocks that have hiked their payouts for at least 60 straight years

For people who thought stocks would only go up, 2022 has delivered a blunt reality check. The benchmark S&P 500 Index is down 16% year to date, while the Nasdaq Composite plunged 29%.

But you don’t necessarily need a rallying market to make money in stocks — you can also collect dividends.

Healthy dividend stocks have the potential to:

• Offer a plump income stream in both good times and bad times.

• Provide much-needed diversification to growth-oriented portfolios.

• Outperform the S&P 500 over the long haul.

To be sure, if you want to live 100% off dividends, you should look for more than just the highest-yielding names. Dividends are not carved in stone. When times get tough, dividends can and do get cut.

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But some companies have the ability to return generous amounts of cash to investors through thick and thin.

Better yet, some companies have consistently raised their dividends over time.

Here’s a look at three of them. Wall Street also sees upside in this trio.

Coca-Cola (KO)

Coca-Cola is a classic example of a recession-resistant business. Whether the economy is booming or struggling, a can of Coke is affordable for most people.

The company’s entrenched market position, massive scale, and portfolio of iconic brands — including names like Sprite, Fresca, Dasani and Smartwater — give it plenty of pricing power.

Add solid geographic diversification — its products are sold in more than 200 countries and territories around the globe — and it’s clear that Coca-Cola can thrive through thick and thin. After all, the company went public more than 100 years ago.

More impressively, Coca-Cola has increased its dividend for 60 consecutive years. The stock currently yields 2.8%.

UBS analyst Peter Grom has a ‘buy’ rating on Coca-Cola and a price target of $68 — roughly 9% above where the stock sits today.

Johnson & Johnson (JNJ)

When it comes to delivering recession-proof returns, few companies have done a better job than healthcare giant Johnson & Johnson.

The stock has been trending up for decades and for good reason. Johnson & Johnson’s business grows consistently through economic cycles.

Many of the company’s consumer health brands — such as Tylenol, Band-Aid, and Listerine — are household names. In total, JNJ has 29 products each capable of generating over $1 billion in annual sales.

Over the past 20 years, Johnson & Johnson’s adjusted EPS has increased at a steady pace of 8% annually.

And that means shareholders can look forward to higher dividends every year.

JNJ announced its 60th consecutive annual dividend increase in April and now offers an annual dividend yield of 2.6%

Raymond James analyst Jayson Bedford has an ‘outperform’ rating on JNJ and a price target of $185 — around 5% above the current levels.

Procter & Gamble (PG)

Procter & Gamble has an even longer dividend growth track record than Coca-Cola and Johnson & Johnson: the company has raised its payout to shareholders for 66 consecutive years.

That streak is a testament to its entrenched position in the consumer staples market. P&G has a portfolio of trusted brands like Bounty paper towels, Crest toothpaste, Gillette razor blades and Tide detergent.

These are products that households buy on a regular basis, regardless of what the economy is doing. As a result, the company can deliver reliable dividends even in tough times.

The latest dividend hike was announced in April, when the board of directors approved a 5% increase to the quarterly payout to 91.33 cents per share. The stock currently yields 2.5%.

Jefferies analyst Kevin Grundy has a ‘buy’ rating on Procter & Gamble and recently raised his price target from $149 to $164. That implies a potential upside of 12%.

Looking for a bigger idea?

Of course, not every investor needs steady income. Some people want juicier upside — and they want it outside of the stock market.

There’s an overlooked ‘passion asset’ that has outperformed the S&P 500 by 131% over the past 26 years — with lower volatility.

According to Forbes, it’s a “compelling option” for those looking to diversify.

And Wall Street giant Goldman Sachs says it can “protect purchasing power” when inflation is hot.

Investing in this shockproof asset used to be an option only for the ultra-rich. But now you can unlock access too.

To find out all about this $1.7 trillion opportunity, sign up to the MoneyWise investing newsletter today.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.