3 Passive Income Powerhouse Dividend Aristocrats to Buy in June

2022 hasn’t exactly been an easy year for investors. Unlike the bear market of Q4 2018 or the pandemic-induced bear market of spring 2020, this bear market could be a long slog as the Federal Reserve raises interest rates to combat inflation, supply chains remain constrained, and geopolitical tensions are intensifying. Another worry for…

investors is valuations. The S&P 500 doubled between 2019 and the end of 2021 — so it’s still produced monster gains even if you factor in this year’s sell-off.

One tried and true strategy for outlasting a bear market is to invest in stable businesses you can count on to make it through tough times and possibly even gain market share in the process. Dividend Aristocrats, which are members of the S&P 500 that have paid and raised their dividends for at least 25 consecutive years, tend to have stable cash flows and strong balance sheets — traits that can be overlooked during a raging bull market, but that matter more than ever during an economic downturn.

Raytheon Technologies (RTX -1.38%)NextEra Energy (NEE -1.16%), and Emerson Electric (EMR 1.04%) are three Dividend Aristocrats that could be worth adding to your watch list in June. Here’s why.

The pick of the aerospace and defense sector

Lee Samaha (Raytheon Technologies): This company makes the Dividend Aristocrat list by stint of formerly being part of United Technologies. For reference, the aerospace business of the former United Technologies was merged with Raytheon Company in 2020 to create Raytheon Technologies.

It makes sense to buy shares in companies that have relatively secure growth prospects in uncertain times. While the pace of commercial aviation recovery is open to question, its ultimate progression is not. The industry is in the throes of a multi-year recovery in flight departures following the severe restrictions imposed due to the pandemic. That’s good news for Raytheon’s Pratt & Whitney aircraft engine and aftermarket sales. In addition, Raytheon’s Collins Aerospace (an all-purpose aerospace supplier) will see growth in its original equipment and aftermarket sales.

Meanwhile, recent events in Ukraine, the potential expansion of NATO, and geopolitical tensions have led to an increased awareness of the need to boost defense spending — and notably, in the areas that Raytheon Missiles & Defense and Raytheon Intelligence & Space specialize in.

Raytheon is definitely not immune from the supply chain issues and component shortages bedeviling the global economy right now. Still, its end-market demand looks more secure than many industrial peers. As such, you can feel confident that Raytheon’s customers will still be making orders when the economy gets back into gear. Moreover, with the stock sporting a 2.4% dividend yield and plenty of growth to come, it’s an attractive option for income-seeking investors.

Give your portfolio a jolt with this utility stock

Daniel Foelber (NextEra Energy): Utilities, along with healthcare and consumer staples, are commonly seen as some of the more recession-resistant sectors of the economy. The reason is that demand for utilities tends to be less vulnerable to economic cycles than, say, the consumer discretionary or industrials sectors.

Another reason investors seek out utility stocks is that they tend to pay above-average dividends. For example, the average stock in the utility sector has a 2.7% yield, which is right behind the average yield in the energy sector and the real estate sector. However, utility earnings and cash flows tend to be much more stable than those produced by oil and gas companies.

The main criticism of utility stocks is their lack of growth. NextEra Energy stands out as one of the few utilities that has a track record for producing market-beating results, growing its dividend, and growing its business through a combination of solar energy, wind energy, energy storage, hydroelectric, and natural gas. In fact, NextEra Energy is the largest renewable energy operator in North America.

NextEra was an early advocate of the need to shift away from coal and natural gas to renewable energy. In many ways, it has been the trendsetter, as virtually every major regulated electric utility is now following suit by investing heavily in renewable energy. When a company’s competitors start copying its game plan, that’s a good indicator that the company is doing something right.

NextEra’s experience in funding and operating renewable energy projects should give it a big advantage in the years to come. Its regulated cash flows and an extensive backlog of projects gives it a combination of predictability and growth that is rare in the utility sector. NextEra’s dividend yield of…

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