Rising tides don't always lift all boats. The S&P 500 index reached new all-time highs several times since 2024 began, but many of its components have not participated in the rally.
With most investors focusing all their attention on the artificial intelligence (AI) revolution, plenty of reliable dividend payers aren't getting the attention they deserve. Since peaking in 2021, shares of Medtronic(NYSE: MDT) are down about 38% and poised for a rebound. Altria Group(NYSE: MO) and Realty Income(NYSE: O) hit highwater marks in 2022 and have since fallen about 28% and 30% from their respective peaks.
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All three of these stocks have decades of consecutive annual dividend raises under their belts. You wouldn't know it by looking at their stock charts, but there's a good chance that the high yields investors receive off the bat will keep growing for at least another decade.
Medtronic
Medtronic is the world's largest publicly traded medical technology company. At recent prices, it offers a 3.3% dividend yield.
With an enormous catalog to choose from Medtronic sales representatives find it relatively easy to engage with busy hospital purchasing managers. The company also uses its size advantage to acquire, develop, and launch heaps of new devices. Running its standard playbook led to one of the stock market's exceptional dividend-raising streaks. Last May, the company increased its payout for the 46th consecutive year.
Medtronic is already a giant, but investors can reasonably expect its payout to grow at a mid-single-digit percentage or better in the years ahead. In its fiscal third quarter that ended on Jan. 26, earnings rose 8% year over year to $0.99 per share. That's more than enough to cover dividend payments currently set at just $0.69 per share.
Altria Group
Altria Group is the tobacco giant that markets the leading Marlboro brand in the United States. Last August, the company raised its dividend payout for the 58th time in 54 years, but the stock market doesn't feel great about its future. At recent prices, its shares offer an eye-popping 9.6% dividend yield.
Last year, after the Food and Drug Administration banned flavored e-cigarettes, Altria sold Juul and acquired NJOY. Now, NJOY is one of three authorized e-cigarette brands in the U.S. and the only one with a pod-based system.
Despite declining combustible cigarette volumes and competition with an illicit market, Altria reported adjusted earnings that climbed 2.3% last year. Its dividend payout might not rise quickly, but investors can reasonably expect it to continue moving in the right direction for at least another decade.
Realty Income
Realty Income is one of the world's largest publicly traded owners of commercial real estate. At recent prices, it offers an appetizing 5.9% dividend yield and monthly dividend payments.
Realty Income is a real estate investment trust, which means it has to distribute at least 90% of earnings to investors as a dividend. Steadily growing a business when you have to return nearly every penny earned to investors is an enormous challenge, but Realty Income's raised its dividend payout for 105 consecutive quarters.
A secular shift toward e-commerce made commercial real estate investing a minefield over the past three decades. Realty Income produces steady gains because it's focused on tenants that are resilient to the e-commerce trend, such as Dollar General and FedEx.
Realty Income also benefits from an A3 credit rating at Moody's. An enviable rating means it can outbid competitors for new properties without sacrificing profit. A relatively low cost of capital combined with a diverse collection of resilient tenants will more than likely allow this legendary dividend raiser to maintain its streak.
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends FedEx, Moody's, and Realty Income. The Motley Fool recommends Medtronic. The Motley Fool has a disclosure policy.
