Investing in the stock market is a great strategy for accumulating long-term wealth. For those interested in generating passive income, dividend stocks can transform a portfolio into a source of regular cash flow. Additionally, companies that consistently provide dividends often outperform those that do not.
A study by Hartford Funds, in partnership with Ned Davis Research, indicates that companies paying dividends have historically surpassed their non-dividend-paying counterparts. Over a span of 50 years, investors in dividend stocks realized an average annual return of about 9.2%, significantly higher than the 4.3% return from stocks that do not pay dividends. Firms that steadily increase their dividends perform even better, yielding returns of 10.2% with less volatility.
If you are in search of reliable dividend stocks, consider these five options currently available.
Chubb
Chubb (CB -0.13%) is a significant entity in the global insurance industry, offering coverage for various risks, including property, casualty, life insurance, and reinsurance. The company is known for its conservative underwriting practices and a diverse range of insurance products.
Chubb has maintained consistent underwriting profits and prudent cash management, increasing its dividend for 32 consecutive years, which reflects its financial robustness. With a 17% payout ratio, Chubb is well-positioned to sustain and grow its dividend over time.
Cincinnati Financial
Cincinnati Financial (CINF 0.20%) exemplifies a stable insurance firm that has a proven track record. Its disciplined underwriting and effective capital management have enabled it to raise dividends for over 65 consecutive years, earning it a place among the prestigious Dividend Kings.
In addition to strong underwriting, Cincinnati’s investment portfolio is benefiting from elevated interest rates and equity investments, which can enhance returns during bullish markets. With a conservative balance sheet and consistent profits, Cincinnati Financial is a notable dividend growth stock to consider now.
FactSet Research Systems
FactSet Research Systems (FDS 0.31%) offers financial data and analytics to institutional clients, resulting in stable, recurring revenues and strong client retention. Its software-as-a-service (SaaS) and data-as-a-service (DaaS) models yield strong margins, allowing for consistent dividend increases over 27 years.
With an expanding global presence, FactSet is committed to product innovation while also rewarding shareholders, making it a worthy dividend stock to hold for the future.
Aflac
Aflac (AFL 0.43%) is a leader in the supplemental health and life insurance space, especially in Japan and the United States. Its conservative management and low payout ratio have facilitated over 42 years of dividend increases.
Aflac excels due to consistent premium income and effective capital deployment, including share buybacks. Emerging stronger post-COVID-19, the company has benefitted from reduced claims costs and higher interest rates, which enhance its net investment income.
S&P Global
S&P Global (SPGI 0.70%) plays a crucial role in financial markets, offering credit ratings, indexes, and data analytics. Its high-margin, recurring revenue streams allow for substantial dividends and aggressive stock buybacks.
With a history of dividend increases over 53 years and a strong competitive advantage, S&P Global compounds earnings while returning capital to its investors, making it an ideal choice for long-term dividend stock investors.
Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends FactSet Research Systems and S&P Global. The Motley Fool has a disclosure policy.
