One thing that you can not ignore when choosing a dividend stock for your pension portfolio is the company's ability to continue to pay you, no matter how badly or badly the economy is doing.
If a dividend stock consistently pays dividends, you have an ATM at your disposal that you can use to multiply your assets by composing and dividend reinvestment.
We have selected two top dividend stocks to explain this phenomenon and help you expand your cash flow generating portfolio over time.
Microsoft has the power to defend his enterprise
Many investors confuse Microsoft (NASDAQ 🙂 for a pure technology exchange in a great growth mode, which can be chosen for quick profit. But in our opinion, Microsoft is a great revenue source that you should buy in order to maintain in the long run.
The company has undoubtedly rewarded its investors over the last five years with shares that have risen by about 180% because it benefited from a wave of technology investments, its search for cloud computing and the power of Office core products. But if you analyze Microsoft deeper, you will realize that it is a great cash cow business, with a sustainable advantage over its competitors.
Microsoft Weekly
The company has a market share of 82% in the market for desktop operating systems and generates huge amounts of recurring cash for this company. Office, which is now a subscription-based service for millions of Microsoft users at home and for businesses, remains a powerful source of revenue. In the past fiscal year, these two units drove more than half of Microsoft's total revenue.
If you are an income investor, you need to find companies such as Microsoft that you can store in your portfolio. These are the giants who have the power to defend their business and pay you for the rest of your life.
Microsoft has an excellent reputation when it comes to rewarding investors. Since 2004, when it first started paying a dividend, the payment of the company has dropped almost five times. Dividend growth was supported by a low payout ratio and strong underlying businesses.
With an annual dividend yield of 1.7%, Microsoft pays a quarterly dividend of $ 0.46 per share. This return may seem small for many investors, but do not forget that Microsoft is still growing, while it also offers great upside potential. Including dividend payments, Microsoft has delivered 217% of total returns over the past five years
P & G is great at being boring
Most investors focus on high-flying stocks that have yielded remarkable returns over the past decades. But what about the maker of Crest toothpaste, Tide detergent and Bounty paper towels?
Procter & Gamble (NYSE 🙂 is one of those boring stocks that are barely crammed on the press batches. But just like Microsoft, P & G has taken a dominant market position
& # 39; The world's largest consumer product company is one of the largest dividend payers in the industry. The maker of Dawn detergent and Pampers has increased his dividend for 62 consecutive years. In the past 128 years, it has never stopped paying profit, earning money during recessions, wars and droughts.
With a current dividend yield of 2.87%, P & G shares pay approximately $ 0.72 per share each quarter. This remarkable history of payouts makes this consumer stock a reliable player if you are looking to earn income for the rest of your life.
Another advantage of P & G's possession is that in times of extreme volatility, when very cyclical growth stocks are most troublesome, slower consumer goods beat stocks. Since October, when markets were faced with periods of extreme volatility, the P & G shares performed at a large margin, with more than 20% when they rose slightly.
P & G Weekly
Bottom Line
Microsoft and P & G are the kind of stocks you can rely on for a consistently growing income. The only secret of this revenue-generating strategy is that you buy shares with a wide moat, a term conceived by Warren Buffett to define companies with a sustainable competitive advantage, recurring cash flows and a history of rewarding their investors. If you buy and hold these shares, you can expect to be paid.
