3 Dividend Stocks That Raised Their Payouts Through Both 2008 and 2020

There have been two periods over the last 20 years that have been very scary. It went beyond the financial markets and people's personal finances, but those were certainly affected.

The Great Recession, which ran from December 2007 through June 2009, was the longest downturn since World War II. The recession was notably severe, with high unemployment and a big shake-up in financial markets. The other major event occurred in 2020, marking the start of the COVID-19 pandemic.

However, even during these dark times, these three companies raised dividends. In fact, they've increased payments annually for decades. Even better, they remain in a position to continue doing so.

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1. Coca-Cola

Coca-Cola (NYSE: KO) has boosted dividends for 64 straight years. That makes the company a Dividend King, an exclusive group of companies that have raised payouts for at least 50 straight years.

In February, the board of directors approved about a 4% increase, raising the quarterly payout from $0.51 per share to $0.53 per share.

Despite consumers facing high overall prices, Coca-Cola continues to post gains in sales and earnings. Coca-Cola's third-quarter adjusted sales grew 7% year over year, largely due to higher volume. That drove a 9% increase in earnings per share.

The earnings translate into free cash flow (FCF), or operating cash flow less capital expenditures. Coca-Cola generated FCF of $11.4 billion. That easily covered the $6.8 billion in dividends that the company paid. Coca-Cola's stock has a dividend yield of 2.2%. That's double the S&P 500's 1.1% yield.

2. Realty Income

Realty Income (NYSE: O) is a real estate investment trust (REIT). The structure favors dividends since REITs must pay out at least 90% of their taxable income.

Beyond the structure, Realty Income has built an impressive dividend history. It regularly raises dividends quarterly. That includes a recent increase in the monthly payment from $0.2715 per share to $0.274. That marked 117 straight quarterly increases, and 137 since Realty Income's 1994 initial public offering.

Primarily owning retail properties, the company has maintained high occupancy rates and steady rental increases. Most recently, the occupancy rate stood at nearly 99% as of Sept. 30, and it received a 3.5% rental increase on expiring leases during the quarter.

A key performance indicator for REITs is adjusted funds from operations (AFFO). That's because it measures cash available for distribution. Realty Income's third-quarter AFFO per diluted share grew 3.7% compared to a year ago to $1.12.

The company's AFFO easily covers Realty Income's dividend. In the third quarter, dividends were 73% of adjusted AFFO. At the new monthly rate, the stock yields 5.5%.

3. Procter & Gamble

Procter & Gamble (NYSE: PG) has also earned its place as a Dividend King. The company has paid dividends for the last 136 years and raised them annually for the last 70. Earlier this year, the company increased the quarterly payment by 3% to $1.0885.

The company's underlying products produce steady results. That's because Procter & Gamble sells consumer staples like deodorant, detergent, razors, baby wipes, and diapers. Demand for these products doesn't tend to dip much during economic downturns.

P&G's fiscal first-quarter adjusted sales grew 4%, with the bulk, 2.4 percentage points, coming from higher volume. This covered the period ended on Sept. 30. Cost pressures, including commodity costs, weighed on earnings, which increased by 1%. Still, with popular products, the company should recover these higher costs over time.

Meanwhile, Procter & Gamble has ample earnings to cover dividends. It has a payout ratio, or dividends divided by earnings, of 65%. The shares have an above-average dividend yield of 2.6%, compared with the S&P 500.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.