Four Shares Yielding Dividends Function as Cash-Generating Devices
In the world of business, few names carry as much weight as Coca-Cola, ExxonMobil, Johnson & Johnson, and Kinder Morgan. These companies have proven time and again that they are cash-producing powerhouses, reinvesting in their businesses and paying attractive dividends to their shareholders.
Over the last 15 years, Coca-Cola (KO) has distributed nearly $100 billion in cash dividends, a testament to its financial stability and commitment to its shareholders. This consistency has earned Coca-Cola the title of a Dividend King, a company with at least 50 years of consecutive annual dividend increases. In 2020, Coca-Cola produced $10.8 billion in free cash flow and paid out $8.5 billion in dividends, demonstrating its ability to generate and distribute cash.
Coca-Cola's dividend payment has steadily increased, with a 5.2% raise earlier this year. The company plans to convert 90% to 95% of its growing earnings into free cash flow, which should support continued dividend increases. Coca-Cola's iconic portfolio of soft drinks, water, teas, and other beverage brands continues to organically grow its revenue by 4% to 6% annually, driving annual growth in earnings per share in the mid to high single digits.
ExxonMobil (XOM), on the other hand, runs a large-scale global energy business. In 2020, Exxon generated $55 billion in cash flow from operations, marking its third-best year in a decade. The company returned $36 billion to shareholders via dividends and share repurchases. In 2021, Exxon produced $20 billion in free cash flow, after spending over $17 billion on research and development.
Johnson & Johnson (JNJ) is another Dividend King, having matched Coca-Cola's 63rd annual dividend hike earlier this year. Johnson & Johnson paid out $11.8 billion in dividends in 2024 and holds a AAA credit rating. The company made over $32 billion in strategic acquisitions over the past year and a half. Johnson & Johnson produced $20 billion in free cash flow in 2021, after spending over $17 billion on research and development.
Kinder Morgan (KMI), a company that owns natural gas infrastructure assets, expects to produce $5.9 billion in cash flow from operations in 2025. Kinder Morgan has over $9.3 billion of growth capital projects in its backlog, expected to be completed through 2030. The company's dividend has increased for eight straight years.
These companies are great foundational stocks to anchor any portfolio. Prominent institutional investors like The Vanguard Group Inc., SSgA Funds Management Inc., and BlackRock Fund Advisors are often major shareholders in large US companies and are known to hold significant stakes in Kinder Morgan.
In conclusion, Coca-Cola, ExxonMobil, Johnson & Johnson, and Kinder Morgan continue to impress with their consistent dividend payments, robust cash flow, and commitment to reinvesting in their businesses. These companies are a testament to the power of long-term, sustainable growth and are a valuable addition to any investment portfolio.
