Dividend growth stocks can be ideal investment options whether you’re retired or a long-term investor. The types of companies that regularly increase their payouts tend to have a lot of consistency in their earnings from year to year, making them safe investments. That doesn’t mean all Dividend growth stocks are safe bets, but that’s true for many of them.
Three of the safer ones you can add to your portfolio today are: Abbott Laboratories (NYSE: ABT), Procter & Gamble (NYSE: PG)And Enbridge (NYSE: ENB). These are the reasons why these can be ideal investment options for investors who simply want to receive a steady dividend and not worry about anything.
Abbott Laboratories
Healthcare giant Abbott Laboratories has a strong track record of paying and growing its dividend. It belongs to the exclusive club of Dividend Kings, stocks that have increased their payouts for at least 50 consecutive years. But that’s not what makes Abbott a good choice for income investors. Instead, it’s the stability the company has through its diverse businesses and the promising growth opportunities ahead.
In the first half of the year, the company generated positive year-over-year growth in all segments except one: diagnostics, which declined due to a drop in COVID-19 testing. And the company’s results remain strong enough to support the dividend, with Abbott’s payout ratio coming in at about 67%. That leaves room for the stock to keep growing its dividend, which yields 1.9% today — slightly better than the S&P 500‘s average of 1.3%.
One area where I see a lot of room for growth for Abbott is diabetes care. The company’s continuous glucose monitoring devices have helped that part of its segment grow organically by more than 19% through the first two quarters of 2024. Diabetes is a major health care problem, and Abbott’s devices could be an effective way for diabetics to keep their glucose levels in check.
Abbott shares have an average beta of 0.7, indicating that it is a stable investment compared to the broader markets, making it an ideal option for risk-averse investors.
Procter & Gamble
Retirees can earn a slightly higher yield with Procter & Gamble stock, which pays 2.3%. Like Abbott, this is another dividend growth stock with an impressive streak. Procter & Gamble has one of the longest dividend growth streaks you’ll find, having increased its dividend for 68 years in a row.
What makes Procter & Gamble a solid option for income investors is the wide range of consumer brands in its portfolio. Whether it’s Head & Shoulders, Crest or Pampers, the company is loaded with recognizable and iconic brands that can provide the company with relatively stable results from year to year.
This is the kind of good, boring income stock you want to own. In each of the last three fiscal years (ending in June), P&G has reported at least $80 billion in revenue and more than $14 billion in profit. Its payout ratio is 64%, making the dividend very manageable for the company to maintain, while also making it likely that the payments will continue to grow in the future.
Enbridge
You could be a little greedy and buy a high-yielding stock like Enbridge, knowing that you’re not taking on much risk with this investment. While investors might scoff at the idea of ​​owning an oil and gas stock, given the long-term trend toward greener energy, that could be decades away — and even then, oil and gas will likely still play a critical role in meeting the world’s energy needs.
Retirees will also be more focused on the short term. And for at least the foreseeable future, Enbridge is still a rock-solid dividend play. The Canada-based pipeline company has raised its dividend payments for 29 consecutive years, and another increase could be on the way later this year.
This is another predictable investment to own. Last year, the company met its guidance for the 18th consecutive year. That kind of predictability is hard to come by in oil and gas, which is why the stock’s 6.7% yield isn’t as risky as it seems. With so many fixed assets, Enbridge’s depreciation costs are always going to be high, which is why its payout ratio can often be over 100%.
But the company relies on distributable cash flow (DCF) to gauge the safety of its dividend, which is an adjusted earnings calculation that excludes maintenance capital expenditures, interest expense, taxes and other items. Last year, the company’s DCF grew to CA$11.3 billion, up from CA$11 billion a year earlier.
In the first half of the year, the company’s DCF per share was CA$2.97, which is almost as high as its annual dividend payments of CA$3.66.
Enbridge is a solid, undervalued dividend growth stock for retirees to buy and hold. While there may be a bit more volatility because it’s an oil and gas stock, the underlying business is solid, and so is Enbridge’s payout.
Should You Invest $1,000 in Abbott Laboratories Now?
Before you buy Abbott Laboratories stock, you should consider the following:
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories and Enbridge. The Motley Fool has a disclosure policy.
3 Ultra-Safe Dividend Stocks for Retirees to Buy and Hold was originally published by The Motley Fool
