3 Stocks with a Bright Future — and Growing High-Yield Dividends to Match

Core Insights - The article emphasizes the importance of dividend growth stocks for long-term wealth building, highlighting three specific stocks that combine growth potential with increasing dividend income [2][3]. Group 1: Johnson & Johnson (NYSE: JNJ) - JNJ has raised dividends for 63 consecutive years, showcasing resilience and reliable income [7]. - The company operates in three segments: pharmaceuticals (45% of revenue), medical devices, and consumer health, providing diversification against cyclical risks [8]. - In Q3 2025, JNJ reported a revenue growth of 6.8% year-over-year to $24 billion, with earnings per share rising 15.7% to $2.80, driven by new drug approvals and innovation [9]. - JNJ holds a AAA credit rating, indicating strong financial health, with a payout ratio near 50%, allowing for dividend growth [10]. - The annual dividend is $5.20 per share, with a yield of approximately 3.05% and a recent increase of 4.8% [12]. Group 2: Procter & Gamble (NYSE: PG) - PG has a record of 69 consecutive years of dividend increases, reflecting strong management and commitment to shareholder value [16]. - The company’s diverse portfolio includes brands in fabric care, baby care, grooming, oral care, and personal health, which helps cushion earnings during economic cycles [17]. - In fiscal 2025, PG achieved 2% organic sales growth and 4% core earnings per share growth, aided by innovation and supply chain improvements [18]. - PG maintains a payout ratio of around 62%, with a dividend yield of approximately 2.5% and consistent annual hikes of 5-6% [19]. Group 3: Realty Income Corporation (NYSE: O) - Realty Income is known for 664 consecutive monthly dividends and over 30 years of dividend growth, providing predictable income [24]. - The REIT focuses on retail and commercial properties under triple-net leases, ensuring steady demand from tenants [25]. - Recent quarterly earnings showed a 5% increase in funds from operations, supported by strategic acquisitions and rent escalations [26]. - Realty Income's dividend yield is around 4.5%, backed by consistent FFO growth [28]. Group 4: Investment Strategy and Mindset - The article advocates for a long-term investment mindset, emphasizing the importance of patience and the compounding effect of reinvesting dividends [33][35]. - It suggests a three-step research process for building a dividend growth portfolio, focusing on dividend history, financial health, and competitive advantages [35].