When it comes to dividend investing, some folks chase yield above everything else. But that can come with big risks, as some stocks that pay a significant yield at present are in risky sectors like mortgage-related financing or the cyclical business of energy exploration. If you're not willing or able to watch these stocks like a hawk, you can get burned when the market moves away from you – or even worse, when that once-juicy dividend is reduced or eliminated.
For a less flashy but also lower risk way of
investing, look to stable stocks with rock-solid business models that will withstand the test of time and continue to
support dividends for many decades to come. The following stocks all are $20 billion or larger, with dividend payouts of 2.5% or greater and the kind of slow-and-steady operations that will be around forever:
American Electric Power Co. Inc. (ticker: AEP). Midwestern electric utility AEP is headquartered in Columbus, Ohio, and has served the region by providing electricity for more than a century. It currently boasts about 5.5 million customers, and at roughly $48 billion in market value is one of the five largest publicly traded
utility stocks on Wall Street. There are few sectors more reliable than utilities, as there is strong baseline demand for power and energy which are as much of a necessity in the 21st century as food and water. In October, AEP just logged its 450th consecutive dividend – an amazing feat that means it has delivered a payment to shareholders every single quarter dating back to 1910. It's hard to imagine what the world will be like in another 110 years, but there's a very good chance AEP will still be here delivering income to shareholders.
Sector: Utilities
Dividend yield: 3.6%
Kellogg Co. (K). Everyone knows Kellogg, the company behind Froot Loops, Pringles, Pop Tarts, Cheez-Its and more. With some of the most popular brands on the planet, it's hard to imagine any economic environment where consumers drop Kellogg's offerings from their shopping lists. And while you might think that in an
inflationary environment like this one it can still be hard for a packaged foods company, management just boosted its full-year earnings and revenue expectations after a stronger-than-expected third-quarter
earnings report in November. That's because when you have premium brands, you can command premium prices to ensure a strong financial performance. The company is riding 17 years of consecutive dividend increases, and has paid dividends in some form since 1925.
Sector: Consumer staples
Dividend yield: 3.3%
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