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3 Dividend Stocks That Are Too Good to Ignore: Q1 Edition

Dividend stocks are an ideal way to build wealth. Whether you are just starting your investment journey or looking for ways to enjoy steady returns on your investment, investing in dividend stocks is a smart move. There are several dividend-paying companies in the industry, but not every company will reward you equally. You must look beyond the dividend yield and pick stocks that show long-term growth and can sustain the dividends. The right stocks will not only offer a chance to grow your money but will also help build a passive income stream. Look for profitable companies with a solid history of dividend increases and steady cash flow generation. Here are my picks of the three dividend stocks too good to ignore this quarter.

Dividend Stocks to Buy: Chevron (CVX)

Source: Jeff Whyte / Shutterstock.com

The tight monetary policy has had a strong impact on oil prices, and I think this is a smart opportunity to load up on Chevron (NYSE: CVX). Warren Buffett’s favorite stock, CVX is down 5% in the past year and is trading for $154 today. Prices of crude oil are much higher than they were in 2020, and CVX stock has almost doubled from the lows of 2020.

The company has a solid balance sheet and has been making generous dividend payments over the years. It has a dividend yield of 4.22% and a dividend payout ratio of 54%, much higher than the industry average. Chevron sustains the dividends with steady growth in cash flow and reported $35.6 billion in operating cash flows in 2023. It is aiming for an annual free cash flow growth of 10%, helping to increase dividend payouts.

The company raised its dividend by 8% after a stellar 2023. If oil prices continue to stay where they are right now, we could see Chevron hit new heights in the coming quarters. However, the company can handle a decline in oil prices as well. The oil and gas company has a strong presence across the industry, and its acquisitions can help it achieve a high production year after year. Its acquisitions of PDC Energy and Hess (NYSE:HES) put the company in a strong position.

RBC Capital analyst raised the price target of CVX to $190 with a Buy rating, while Bank of America (NYSE:BAC) also raised the price target to $196 with a Buy rating. As a market leader today, Chevron can be a strong addition to your portfolio and will continue to grow in the coming years.

PepsiCo (PEP)

Pepsi (PEP) Factory in Samara, Russia. Pepsi logo on a blue warehouse.

Source: FotograFFF / Shutterstock

While the stock market has been hitting new highs, global giants like PepsiCo (NASDAQ:PEP) haven’t been able to hit a new 52-week high. PEP stock dropped 4% in the past year and is flat year-to-date. Trading at $169 today, the stock dropped after the company reported a dip in volume in the recent quarterly results. However, it still raised its dividend, taking the company to 52 years of consecutive dividend increases.

The company has a dividend yield of 2.98%, and it can sustain the same. If you are looking for one stock to buy and forget about, it has to be PepsiCo. It is so much more than a beverage company and has a wide umbrella of products that meet the changing demands of consumers today.

Its results aren’t as bad as the market makes it seem. The company saw a 4.5% year-over-year (YOY) rise in organic revenue growth to hit $1.3 billion in the quarter. PepsiCo also hiked the prices of its products and yet managed to see organic growth, showing it has pricing power.

However, the company saw a decline in volume in North America, one of its largest markets, but I believe this is temporary and could stop the company from future price hikes. The combination of a price hike and volume decline shows that the company has stretched its pricing power too much, and it is now time to stop.

This was a rare revenue miss for the company. It has enough cash flow to keep the dividends strong, and it is one company that never fails to reward investors. Its dividend yield is attractive for long-term investors, and PEP is one stock that will keep growing steadily over the years.

Johnson & Johnson (JNJ)

A red Johnson & Johnson (JNJ) sign hangs inside in Moscow, Russia.

Source: Alexander Tolstykh / Shutterstock.com

One of the largest companies in the healthcare industry, Johnson & Johnson (NYSE:JNJ) has been expanding its market share with a diversified product line. The company has a strong presence across multiple sectors and is focusing on Medtech and innovative medicines to generate steady revenue. The company has proved time and again that it can stay ahead of industry trends, and its pipeline of drugs has achieved immense success in the past.

JNJ is a dividend stock that has increased its yield for 62 consecutive years. It enjoys a dividend yield of 2.94%. Fundamentally, Johnson & Johnson is a stable business, and it reported a revenue of $21.4 billion in the recent quarter with a $2.29 EPS. For the full year, the company reported revenue of $85.2 billion, up 7% YOY.

The company saw a significant rise in the pharmaceutical and medtech segments. The management is aiming for sales growth in the range of 5% to 7% between 2025 and 2030 from its 25 blockbuster drugs. The company is also making acquisitions to enhance its growth and will buy Ambrx Biopharma (NASDAQ:AMAM) for $2 billion.

Trading at $161 today, JNJ stock is up 3% in the past year and is trading in the range of $145 to $164 in the past six months. JNJ is a solid buy and is one company that can sustain dividends. Its financials are proof that the company is in the right direction and has enough liquidity to keep paying dividends.

On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.

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