During recessions, safe dividend stocks offer investors steady income to buffer against falling stock prices, while also exhibiting lower volatility than growth stocks.

One of the best groups of safe dividend stocks is the Dividend Aristocrats, which are a list of 68 stocks in the S&P 500 Index with 25 or more consecutive years of dividend increases. With the S&P 500 Index yielding just 1.6% on average, investors can look to the Dividend Aristocrats for stronger payouts.

This article will discuss 3 of the top Dividend Aristocrats with safe dividend payouts, and market-beating yields.

Automatic Data Processing (ADP)

Automatic Data Processing is one of the largest business services outsourcing companies in the world. The company provides payroll services, human resources technology, and other business operations to more than 700,000 corporate customers. Automatic Data Processing was founded in 1949 and currently produces annual revenue of about $19 billion.

ADP posted second quarter earnings on January 31st, 2024, and results were quite strong. Adjusted earnings-per-share came to $2.13, which was three cents ahead of estimates, and up 9% year-over-year. Net earnings were up 8% to $878 million. Revenue was up 6.4% year-over-year to $4.67 billion, and $10 million ahead of estimates.

The company saw organic constant currency revenue rise 6%. Interest on funds held for clients rose 20% year-over-year to $225 million, as market rates remain high relative to recent history. Average client funds balances actually declined 2% to $32.6 billion year-over-year, while the yield on those funds soared 50 basis points higher to 2.8%.

Automatic Data Processing has compounded its adjusted earnings-per-share at a rate of more than 11% per year over the last decade, which we believe it can come close to matching moving forward. ADP has increased its dividend for 49 years and currently yields 2.2%.

Procter & Gamble (PG)

Procter & Gamble is a consumer products giant that sells its products in over 180 countries. Notable brands include Pampers, Luvs, Tide, Gain, Bounty, Charmin, Puffs, Gillette, Head & Shoulders, Old Spice, Dawn, Febreze, Swiffer, Crest, Oral-B, Scope, Olay and many more. Procter & Gamble has paid a dividend for 133 years and has grown its dividend for 67 consecutive years.

In late January, Procter & Gamble reported (1/23/24) financial results for the second quarter of fiscal 2024 (its fiscal year ends June 30th). It grew its sales and its organic sales by 3% and 4%, respectively, over last year’s quarter. Organic sales growth resulted from 4% price hikes, which offset a marginal decrease in volumes. Despite the headwind of cost inflation, earnings-per-share grew 16% thanks to price hikes, from $1.59 to $1.84, beating the analysts’ consensus by $0.14.

The firm sales amid strong price hikes are a testament to the strength of the brands of Procter & Gamble. The company reiterated its guidance for 4%-5% organic sales growth in fiscal 2024 and improved its guidance for growth of earnings-per-share from 6%-9% to 8%-9%.

Procter & Gamble’s dividend payout ratio of 63% is well within a reasonable range for such a high-quality firm. We believe that the company can keep growing its dividend at a rate roughly in line with earnings-per-share growth going forward. PG stock currently yields 2.3%.

NextEra Energy (NEE)

NextEra Energy is an electric utility with two operating segments, Florida Power & Light (“FPL”) and NextEra Energy Resources (“NEER”). FPL is the largest U.S. electric utility by retail megawatt hour sales and customer numbers. The rate-regulated electric utility serves about 5.8 million customer accounts in Florida. NEER is the largest generator of wind and solar energy in the world. NEE was founded in 1925. NEE generates roughly 80% of its revenues from FPL.

NextEra Energy reported its Q4 and full-year 2023 financial results on 01/25/24. The utility continues to deliver stable results, but the stock valuation has come down. For the quarter, the company reported revenues of $6.9 billion (up 11.6% year over year), translating to adjusted earnings of $1.1 billion (up 5.5% year over year). On a per-share basis, adjusted earnings climbed 2% to $0.52.

For the full year, the company generated revenues of $28.1 billion (up 34%) and adjusted earnings of $6.4 billion (up 12% year over year). Adjusted earnings per share were $3.17 (up 9.3%), exceeding the top end -- $3.13 -- of management’s estimate.

Between 2014 and 2023, NextEra Energy grew its EPS by 9.5% a year. The company’s future growth will be generated through organic investments and acquisitions. At the end of 2023, its backlog stood at ~20 GW. Its renewable projects should drive the segment’s profits going forward. NEE forecasts that its adjusted EPS will rise by about 6.4% a year through 2026.

NEE has increased its dividend for 28 years and the stock currently yields 3.3%.

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Bob Ciura has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.