Knowing that no income stream is ever truly safe is something I keep in mind whenever I’m looking for dividend shares to buy.
That said, there are some companies that stand head and shoulders above others in terms of reliability.
McDonald’s
Let’s kick off with a stock from across the pond: fast-food giant McDonald’s (NYSE: MCD).
A regular trip to the ‘golden arches’ is a way of life for many people. And it’s this kind of brand power that has seen the company achieve healthy gains for investors over the years.
What I find particularly attractive however, is the US stock’s record of increasing dividends to shareholders. It’s done this every year for 46 consecutive years.
I don’t see this changing soon. Even if the nailed-on recession lasts for longer than expected, it’s the sit-down restaurants that will suffer the most.
Rising prices shouldn’t be an issue for the company either. McDonald’s simply picks up higher fees on products sold by its franchisees.
There’s just one problem. The shares have barely lost ground in 2023. As such, it could be argued that some of 2022’s biggest losers offer potentially more upside when markets recover.
fool_stock_chart ticker=NYSE:MCD]
Nevertheless, I’d buy this stock for income today if funds permitted.
Diageo
Returning to these shores, it’s hard for me to not think of premium spirits firm Diageo (LSE: DGE) when searching for reliable dividend shares.
Thanks to a bumper portfolio of brands that even the most dedicated teetotaller has heard of, the FTSE 100 juggernaut has consistently grown dividends year after year.
Again, I can’t see that trend reversing soon. Diageo offers just the sort of affordable treat that keeps people ploughing on. And those very same drinks will be in peoples’ hands when the good times return.
The downside here is that Diageo’s current yield is ‘just’ 2.3%. That’s lower than I could get from a bog-standard FTSE 100 tracker.
As a long-term investor however, I’d much rather own a company that has demonstrably grown peoples’ wealth over the years, as opposed to a basket of stocks that differ greatly in terms of quality.
So if I didn’t own the shares already through various managed funds, I’d be making Diageo a cornerstone of my portfolio today.
BAE Systems
One of the few winners in 2022 has been defence giant BAE Systems (LSE: BA).
It doesn’t take a market wizard to understand why. As awful as the resultant conflict has been on a human level, it was inevitable that investors would flock to the stock as Russian tanks rolled into Ukraine.
Sure, we could see some profit-taking in time. Since the war looks set to rumble on into next year however, I suspect this positive momentum might be sustained.
Regardless of what happens next, I’ve always regarded the company’s reliable dividend stream as the chief reason to own a slice of it.
Like the other dividend shares mentioned above, BAE consistently hikes the cash it returns to its owners every year. Analysts are already expecting a 7% increase in 2023.
Throw in the likelihood that this income will be covered over twice by profit and I remain convinced that this company is one I’d want to own if income were my sole objective.
