Dividend Aristocrats (NOBL) are an excellent option for investors looking for a reliable way to earn income from their investments. These companies have a proven ability to consistently grow their earnings and cash flows across economic cycles, and pay higher dividends to their investors. As Dividend Aristocrats, these S&P 500 Index ($SPX) companies have increased their distributions for a minimum of 25 consecutive years.
Among the top Dividend Aristocrats are Realty Income (O) and Altria (MO), each offering yields of over 5%.
These companies have reliable payouts and are likely to continue to raise their dividends in the future. Let’s take a closer look at these two dividend stocks, which can help you collect a healthy yield of over 5% and boost the income potential of your portfolio.
#1. Realty Income
When it comes to dependable dividend-paying stocks, Realty Income (O) stands out as one of the most reliable Dividend Aristocrats. The REIT (Real Estate Investment Trust) recently announced an increase in its monthly cash dividend, raising it to $0.2635 per share from the previous $0.2630. This translates to an annualized dividend of $3.162 per share, up from $3.156, highlighting the company’s commitment to returning greater value to its shareholders.
Remarkably, this marks the 127th increase in Realty Income's dividend since it went public in 1994. Further, with a track record of raising its dividend for 30 consecutive years, Realty Income has solidified its status as a compelling choice for passive income investors.
The company’s payouts are supported by its solid real estate portfolio, which consistently generates significant earnings and cash flows. As of June 30, 2024, the REIT owned or had an interest in 15,450 properties leased to 1,551 clients across 90 different industries. This diversified portfolio comprises commercial properties under long-term net lease agreements, with an average remaining lease term of approximately 9.6 years. Such long-term arrangements provide a stable foundation for predictable and growing cash flows, ensuring that dividend payments remain secure.
Moreover, Realty Income has a high portfolio occupancy rate of 98.8%, which reflects the strong demand for its properties. Most of its properties are leased to retailers known for their resilient business models, which leads to a higher rent collection rate.
Wall Street analysts have a “Moderate Buy” consensus rating on Realty Income. Its high-quality assets, top-tier tenants, long-term leases, and high occupancy provide a solid base for earnings and dividend growth.
#2. Altria
Altria (MO) stands out as a leading Dividend Aristocrat, renowned for its strong history of dividend growth and attractive yield. This prominent tobacco company is committed to enhancing shareholder value through consistently rewarding investors with higher dividend payments.
Recently, Altria increased its quarterly dividend by 4.1% to $1.02 per share. This marked the 59th dividend hike in the last 55 years, reflecting the company's ability to grow its earnings in all market conditions and return cash to its investors.
With a strong foothold in the tobacco industry, Altria continues to see earnings growth, which supports its capacity to pay and raise dividends. Additionally, the company is exploring opportunities in the smoke-free product market, with plans for significant growth by 2028. Management anticipates a substantial increase in U.S. smoke-free volumes and expects net revenues from these products to double.
Altria forecasts mid-single-digit growth in adjusted earnings per share (EPS) through 2028. This anticipated earnings growth will lay the foundation for future dividend increases. Management also aims for a similar mid-single-digit growth rate in dividends. Furthermore, Altria is focused on reducing its debt, which will strengthen its balance sheet and position it to capitalize on new growth avenues.
Wall Street analysts have a “Hold” consensus rating on Altria stock. However, its growing earnings base, solid dividend payment and growth history, visibility over future payouts, and a compelling yield of 8.2% make it a powerful income stock.
