The word “dividend” has always ignited above-average interest in the majority of investors searching for long-term stocks that pay out a fixed rate of income. This mixture of dividend stocks, most of which are listed on the Dow Jones Industrial Average, are appealing, but how can you tell the best dividend stocks apart from the merely good ones?
Surely, a dividend is always a nice additional incentive on top of the expected growth of the stock, but those two characteristics combined is not a prevalent characteristic. Below, I have listed 3 stocks that not only pay out a quarterly dividend, but also show promising signs of growth in the both, the short and long term.
Phillip Morris International –
Since 2007, tobacco use in the United States has been on a steep decline. Just six years ago, one out of every three people smoked tobacco in some capacity. Today, that number is one out of every five. However, Philip Morris International Inc. (NYSE:PM)’s business is focused on consumers outside the U.S. where tobacco use remains steady. Even though only 18.9% of U.S. adults are tobacco smokers today, The World Health Organization statistics estimate that number to be as high as 51% in the Western Pacific Region.
The company also just announced that it agreed to acquire the remaining 20% stake in its Mexican tobacco business from billionaire Carlos Slim’s Grupo Carso SAB for about $700 million. The deal, which is expected to be complete by Sept. 30, will add to earnings per share in the fourth quarter. I wouldn’t be surprised if PM decided to increase its quarterly dividend in the near future, which is already at 3.7%
The continued up trend of tobacco use in undeveloped countries only benefits Phillip Morris, and shows no signs of letting up anytime soon. With this focus on regions where tobacco use remains steady and other regions where use is increasing, the company is also in a unique position over other tobacco companies that derive their major revenues from U.S. consumers.
Historically, The Coca-Cola Company (NYSE:KO) as been notorious for its healthy dividend and continued uptrend, but that train hasn’t stopped yet.
With a current dividend yield of 2.75%, Coca-Cola offers an above-average return for shareholders. Warren Buffett, one of the largest shareholders of The Coca-Cola Company (NYSE:KO), currently owns 400,000,00 shares. With an annualized dividend payout of $2.27 per share, that means Warren Buffett’s quarterly dividend payment is over $17 Million per quarter! But the dividend is not the reason Buffett has invested so much capital into this beverage-giant.