3 Dividend Stocks to Double Right Now

The best dividend stocks have one thing in common. The companies behind the shares routinely increase their payouts. The data makes this abundantly clear. Over the past 50 years, dividend producers and originators have averaged an annualized total return of 10.2%, according to data from Ned Davis Research and Hartford Funds. It is much higher than companies that have not changed their dividend policies (6.7%) and those that have reduced or eliminated their payouts (negative 0.6%).

Verizon (See 2.75%), Johnson & Johnson (JNJ 0.78%)and NIKE (NKE -1.97%) they have a knack for growing their dividends. That’s one of the many reasons why they’re great dividend stocks to double up on right now if you already own stocks (or buy them if you haven’t added them to your portfolio yet).

Your connection to an attractive and ever-growing dividend

Verizon stock currently offers a dividend yield of over 6%. It is several times larger than S&P 500his average (less than 1.5%). The main reason for Verizon’s high yield is its cheap valuation. The telecom giant trades at 15 times earnings (and less than 10 times forward P/E). That’s well below the S&P 500 multiple of 24 times earnings and the P/E ratio of 23 times.

On the one hand, Verizon is worth trading at a lower valuation multiple because of its weak growth profile. Its revenue rose 0.6% over the past year, while adjusted earnings per share fell 5% in the second quarter. Its operating cash flow has also declined. However, the company generates substantial and growing free cash flow. Its free cash flow rose $500 million in the second quarter to $8.5 billion. That was more than enough to cover its $5.6 billion in dividend expenses.

Verizon’s growing free cash flow should allow it to continue raising its dividend. It posted its 17th consecutive annual dividend increase at the end of last year. This is the longest current streak in the US telecommunications sector.

A very healthy dividend

Johnson & Johnson shares currently offers a dividend yield approaching 3%. The healthcare giant has increased its payout for 62 consecutive years. That kept her in the elite group Dividend kingscompanies with 50 or more years of consistent dividend growth.

Premium companies like Johnson & Johnson typically trade at a premium valuation. However, this is not the case nowadays. It sells for 11 times earnings and about 17 times forward earnings. That company trades at a cheaper multiple after last year’s spinoff of its consumer healthcare business, Kenvue.

The healthcare company is in a great position to continue growing its dividend. It has a fortress-like balance sheet and is a free cash flow machine. It had $25 billion in cash and marketable securities on its balance sheet at the end of the second quarter. It produced $7.5 billion in free cash flow during (easy covering its $3 billion quarterly dividend expense). The company has used its financial strength to make acquisitions, which, along with its organic growth drivers, should allow Johnson & Johnson to continue to increase its payout.

In the bargain bin (for now)

Nike currently has a dividend yield of nearly 2%. The footwear and sportswear giant has increased its payout for 22 consecutive years, including by 9% last November.

Nike has become a bit of an underdog in recent years. The company’s footwear sales lagged because of strategic missteps that allowed rivals to gain market share. However, the company is taking steps to return to its winning ways.

Meanwhile, Nike stock is on sale. It trades at about 22 times earnings. That put Nike in the bargain bin compared to the premium valuation the stock was getting.

While the company’s sales have been sluggish, its profits are improving. Meanwhile, it generates a lot of money. It ended its 2024 fiscal year with $11.6 billion in cash on its balance sheet, up $900 million from the previous year, despite paying out $2.2 billion in dividends (an increase of 8%) and bought $4.3 billion. of actions. The company continues to use its excess free cash to gobble up its cheap stock, which could help boost its valuation once its business make a comeback.

A great time to add

Verizon, Johnson & Johnson and Nike were top dividend stocks over the years. They are currently trading at attractive valuations and dividend yields. That makes now a great time to double down on these elite dividend stocks while they’re still bargains.