It’s no wonder people are attracted to dividend stock investments. Not only are the companies typically successful, profitable enterprises, but they usually have a long history of surviving various market cycles. Dividend stocks also handily outperform their non-income-generating brethren over time.
In 2013, J.P. Morgan Asset Management published a paper that explored this superiority. It found that companies initiating dividends and then raising the payouts over the 40-year period between 1972 and 2012 provided far superior returns for investors. Dividend stocks averaged 9.5% annually compared to just 1.6% for non-dividend-paying stocks.
Considering this dominance, it shouldn’t be a surprise that income stocks are usually contained in the portfolios of the most successful investors. The following three companies could be the best $1,000 dividend stock investments to make today.
Johnson & Johnson (JNJ)
Healthcare leader Johnson & Johnson (NYSE:JNJ) should be at the top of every dividend investor’s list of stocks to buy right now. It produces high-margin pharmaceuticals and is focused on finding the next big drug.
Arguably better known for its portfolio of consumer health products, including Band-Aid bandages, Tylenol pain reliever, and Listerine mouthwash, which was the smallest component of the company, and Johnson & Johnson just spun off its consumer health products business. Kenvue (NYSE:KVUE) is now a standalone company though the pharma giant still owns 91% of the business.
Johnson & Johnson is one of the best dividend stocks to buy because people cannot go without their medications. The pharma’s treatment for plaque psoriasis and psoriatic arthritis, Stelara, generated $9.7 billion in sales last year. Remicade, a therapy for Crohn’s disease and ulcerative colitis, generated $2.3 billion in sales. In all, it had $52.6 billion in pharmaceutical sales last year.
Johnson & Johnson also offers a variety of medical devices and healthcare services and products.
It has paid a cash dividend to shareholders every year since 1944. The shareholder payout has increased for 60 consecutive years and currently yields 2.9% annually.
Sysco (SYY)
Food distribution leader Sysco (NYSE:SYY) is also where to invest in dividend stocks this month. It might not be as well known as the pharmaceutical giant, but it is the leader in its industry. Sysco has a 17% share of the highly fragmented food distribution market. U.S. Foods (NYSE:USFD) is second with an 11% share.
Sysco operates 333 distribution facilities globally and serves approximately 700,000 customer locations. It generated $68.6 billion in sales in 2022. In the third quarter of fiscal 2023, revenue is up 11.7%. It generated the highest amount of operating income in the company’s history as net earnings surged 42% year over year.
The food distributor is also a Dividend King. It has increased its dividend for more than 50 years running. The payout yields a healthy 2.7% annually.
Despite this record of success, Sysco’s stock is cheap. It trades at just 16 times next year’s earnings estimates and a fraction of its sales. It has over $750 million in cash in the bank, and its free cash flow more than doubled to 980 million last quarter. With earnings expected to grow 16% a year for the next five years, Sysco is definitely a stock worth a $1,000 investment.
York Water (YORW)
Here’s something to try and wrap your head around. When York Water (NASDAQ:YORW) made its first dividend payment to investors, James Monroe — the last president of the country’s Founding Fathers — was in office. York hasn’t missed a single dividend payment for 205 years. Mind. Blown.
York is a small utility stock that provides clean water and wastewater services to 54 municipalities in south-central Pennsylvania. While it does grow by acquiring more customers, revenue increases generally result from rate increases authorized by regulators. It’s a sleepy little under-the-radar stock that deserves your attention. It may be the company people had in mind when they came up with utilities being “widow and orphan stocks.”
York is one of the best dividend stocks to buy because water treatment and wastewater elimination are essential. Just like people need the drugs, Johnson & Johnson makes or the food Sysco delivers, they also need clean water. The utilities providing it also typically operate as a monopoly or duopoly. With a captured audience, York is a reliable and dependable dividend stock.
You’re not going to see meteoric growth from York. What you get instead is a steady hand at the tiller. It’s ballast for your portfolio. The dividend currently yields 1.8% annually. It seems likely this patriarch of dividend stocks will be around for another 200 years and still pay a dividend year in and year out. It’s why York Water is one of the top companies to consider for your next $1,000 dividend stock investment.
On the date of publication, Rich Duprey held a LONG position in JNJ and SYY stock. He anticipates receiving shares of KVUE when they are distributed. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.