3 Dividend Kings to Add to Your Portfolio for a Lifetime of Passive Income

If you’re looking to increase your dividend income, you almost can’t go wrong investing in Dividend Kings. These are stocks that have increased their dividend for at least 50 consecutive years. Obviously, a company with such an outstanding dividend record must have strong financials and growth prospects, or it wouldn’t be able to sustain dividend increases over several decades.

Coca cola (K.O 1.44%), Philip Morris (P.M 0.88%)and Real estate income (A 1.53%) there are three dividend kings to buy right now, according to these fool.com contributors. Here’s why.

A durable consumer brand

John Ballard (Coca-Cola): Coca-Cola is a dominant global beverage brand that has paid 62 consecutive years of growing dividends. The stock is up 21% year-to-date following strong financial results in the first half of 2024.

Consumers tightened their spending, but the beverage industry remained resilient. Coca-Cola reported a 2% year-over-year increase in unit volume last quarter and also achieved double-digit organic revenue growth and higher margins.

Coca-Cola has a diversified portfolio of tea, juice and carbonated beverage brands. Across all these brands, it generates a robust operating profit margin of 21%, which management is working to increase by refranchising its bottling operations. The profitable lineup gives the company plenty of sales opportunities for different occasions, while generating a healthy profit to pay increasing dividends.

The company pays out about 75% of its annual earnings as dividends. The quarterly dividend is currently $0.485 per share, up 21% over the past five years. This puts the forward dividend yield at an attractive 2.71%, compared to just 1.32% for S&P 500.

The stock’s performance reflects the brand’s strength and opportunities for continued long-term growth. Coca-Cola’s fastest-growing markets in the second quarter were Latin America and Asia Pacific. The stock’s above-average return offers investors great value with more upside going forward.

This longtime dividend payer is still warming up

Jeremy Bowman (Philip Morris): Philip Morris might seem like an odd choice for a long-term dividend stock.

After all, everyone knows that smoking is on the decline, but these days, Philip Morris’s business is much more than just cigarettes. The company has successfully diversified into high-end products, including IQOS heat-and-no-burn sticks, which work like vapes but use tobacco instead of e-liquid, and Zyn nicotine pouches, which it acquired through its acquisition of Swedish Match in 2022.

Thanks in large part to the success of these two products, the tobacco stock now generates about 40% of its revenue from high-end smokeless products, and because these products generate even higher margins than cigarettes, they now generate more than 40% of gross profit of Philip Morris. Demand has been so strong for Zyn that the company recently announced new investments to expand capacity in Colorado and Kentucky.

Since Philip Morris only sells cigarettes in international markets, the company continues to grow its cigarette category as organic revenues from fuels, which are mainly cigarettes, rose 4.8% in the most recent quarter. Even cigarette shipments rose 0.4% in the quarter.

Overall, organic revenue rose 9.6% to $9.5 billion in the quarter, and organic operating income rose 12.5%, which are excellent numbers for a seemingly mature dividend stock.

Philip Morris just raised its quarterly payout by 3.8% to $1.35. While the company isn’t technically a dividend king, if you include its history as part of Altria, then it has increased its dividend for the past 55 years.

The company currently offers a dividend yield of 4.4% and looks poised to increase its payout for years to come.

High yield monthly dividends

Jennifer Saibil (Real Estate Income): Few dividend stocks in the market can match Realty’s earnings. It has everything a passive income investor could want in a stock: the dividend has a high yield, it’s reliable, it’s growing, and the company pays monthly, an added bonus.

Realty Income is a retail real estate investment trust (REIT), meaning it leases properties to retailers. However, it has expanded massively in recent years and is well diversified by industry. Retail properties make up another 79.4%, and within retail, it caters to core categories such as grocery stores, convenience stores and dollar stores, which give it resilience in times of stress like pandemics and inflation. Together, these categories represent more than 26% of the total portfolio.

Through two recent acquisitions, as well as the purchase of new properties, it has doubled its number of properties in recent years to 15,450. It entered gaming and industry, which together account for nearly 18% of the portfolio and provide the necessary diversification to offset the risk of concentration in one area.

REITs pay out most of their earnings in the form of dividends, which is why they are usually excellent dividend stocks. Realty Income has paid a dividend for more than 50 years and raised it for 108 consecutive quarters. It yields nearly 5% at the current price, which is higher than its average of about 4% and nearly four times the S&P 500 average. Realty Income stock fell when there was pessimism around the real estate industry and high interest rates, and dividend yields have risen as a result. But investors are growing more confident and the price has risen in recent weeks.

Real estate income is a sure bet for a lifetime of passive income, and now is a great time to buy before the price goes up and the yield goes down again.