If you want to get a good return on the markets without taking too much risk, you can consider investing in dividend stocks. These investments are generally backed by companies with strong financial positions. And they can give you not only long-term stability, but also recurring income over the years.
Three actions that earn you more than S&P500 average yield of 1.5% and are relatively safe long-term investments. Southern Company (NYSE: SO), Coca-Cola (NYSE:KO)And Bank of America (NYSE:BAC).
Southern Company: 4%
A utility company is often a great income-generating investment. The continued need for heat and electricity makes this a relatively resilient type of business to invest in. There is good recurring revenue to build on, and while there may be fluctuations – due to weather, for example – the overall financial performance should be relatively stable.
Southern’s net income totaled $3.1 billion in the first nine months of 2023, down about 14% year over year. But the utility says warmer weather played a role; In the most recent quarter, which ended in September, profit of $1.4 billion was much steadier and down just 3%.
Serving 9 million customers and being one of the nation’s leading utility companies, Southern can be a great income investment to keep in your portfolio. In most years, the company’s profit margin has easily exceeded 10% of revenue.
The stock’s 4% dividend yield tops this list. The company has also increased its payouts for 22 consecutive years.
Coca-Cola is one of the best dividend stocks you can own. There are many reasons to consider it for your portfolio.
This is one of Warren Buffett’s top investments, so you know the stock is already pre-screened by one of the best investors in the world. The company’s products are known throughout the world. Coca-Cola also has pricing power, without which its business would not experience organic growth of at least 10% in a context of inflation in 2023.
This is a solid investment to hold on to because of its simplicity and solid margins: Coca-Cola reported a profit of $10.8 billion on revenue of just a little more than $45 billion in the last 12 months. This means that $0.24 of every dollar was reflected in its financial results during this period. This is an impressive margin that suggests the company is in great shape.
To top it all off, it’s also a King of dividends, with Coca-Cola having increased its payouts for 61 consecutive years. And there’s no reason to doubt that the soft drink giant will continue to increase its payouts in 2024 and beyond.
Bank of America: 2.8%
Another Buffett stock is Bank of America; he occupies second place in the ranking Berkshire Hathaway wallet, behind only Apple. As one of the nation’s leading financial institutions, Bank of America’s success will be closely tied to the country’s overall success, making it a great way to “bet on America,” something Buffett believes investors don’t should not hesitate to do.
At around 30%, Bank of America has reported even higher profit margins than Coca-Cola over the past four quarters. Economic conditions may deteriorate in the coming months, but in the long term, Bank of America remains an exceptional dividend stock to buy and hold for the long term. The company has gone through many adversities over the years, including the financial crisis that took place about 15 years ago.
The stock’s modest payout ratio of just 25% also means the bank is not overleveraging its dividend, which adds a level of security for investors. Trading around its book value, Bank of America stock is also attractively priced for long-term investors.
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. David Jagielski has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Apple, Bank of America and Berkshire Hathaway. The Motley Fool recommends the following options: Long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.
3 High Dividend Stocks to Buy and Hold for Years was originally published by The Motley Fool