If you're looking to grow your $1,000, you can do that by investing in stocks that probably will deliver share performance. But you can boost your opportunities for gains if you invest in stocks that also pay you just for investing in them: dividend stocks. Even better, scoop up companies that truly are committed to growing these payments.
Where to find these investment jewels? On the list of Dividend Kings. These are companies that have increased their dividends for at least 50 straight years. This shows rewarding shareholders is important to them. So, there's reason to believe they won't break their long streak of dividend increases. Let's check out two top Dividend Kings to buy now. With your $1,000, you can invest in a few shares of each.
1. Abbott Laboratories
First, let's talk about Abbott Laboratories' (NYSE: ABT) business and earnings. You may know of Abbott because of its enormous COVID-19 testing business. But even without those products, Abbott is impressive.
What I like about Abbott is its diversification, with medical devices, diagnostics, nutrition, and established pharmaceuticals businesses. This diversification means if one area sees a slowdown, another business may compensate.
Abbott has grown annual revenue, net income, and free cash flow considerably over the years. And as a healthcare business, even in tough economic times, Abbott's revenue continues to grow. Patients still need their diagnostic tests, surgeries, and medicines. Right now is the perfect time to look at Abbott's revenue growth. In the most recent quarter, the company posted double-digit organic revenue growth. This is if we exclude coronavirus testing revenue -- the fair thing to do since we're heading toward a post-pandemic situation.
Now let's talk dividend. Abbott pays an annual dividend of $2.04 at a dividend yield of 1.88%. The company's cash-dividend payout ratio shows it paid out 42% of free cash flow in dividends over the past year.
ABT Free Cash Flow data by YCharts.
Considering Abbott's growth in free cash flow, it's likely this top healthcare stock will continue boosting its dividend. This and Abbott's steady earnings growth make it a fantastic long-term stock for any portfolio.
2. Target
Like other retailers, Target(NYSE: TGT) has struggled through these days of higher inflation and economic woes. But there still are plenty of reasons to be positive about the stock.
First, Target is taking steps to manage the difficult times. For example, it's limiting inventory on discretionary items, which have seen lower demand. And at the same time, it plans on expanding collections in 10 of its high-growth owned brands this year.
Second, it's important to look at the big picture. Target has grown in leaps and bounds over the past few years, and that growth will benefit the company over the long term. The fourth quarter of last year represented the 23rd consecutive quarter of comparable sales growth. And since 2019, total revenue has increased by more than $30 billion.
Target also continues to grow market share across all merchandise categories. And the company wins in efficiency too, with stores fulfilling 95% of all sales, including online sales. The company continues to revamp stores and launch new stores designed to best suit their local communities. All of these elements should help Target succeed over time.
Meanwhile, you're sure to benefit from passive income. Target pays an annual dividend of $4.32, representing a yield of 2.74%. This is well above the average dividend yield for the retail industry.
All of this means Target has what it takes to deliver share-price performance over the long run, and this top retail company will pay you while you wait.
10 stocks we like better than Abbott Laboratories
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Adria Cimino has positions in Target. The Motley Fool has positions in and recommends Abbott Laboratories and Target. The Motley Fool has a disclosure policy.
