Producing sustainable and growing income over time from dividend stocks can be accomplished in a variety of ways. One way that many investors may not think of right away is Dividend Reinvestment Plans, or DRIPs.

A DRIP is a way for investors to simply and automatically reinvest their dividends from a stock back into buying more shares of that stock. Over time, this means that dividends turn into a larger number of shares for the investor, which then produces ever-higher dividend income over time.

We believe the best DRIP stocks are those that offer no-fee DRIP plans, as well as long streaks of growing dividends. The Dividend Aristocrats and Dividend Kings. In this article, we’ll take a look at 3 Dividend Aristocrats for no-fee DRIPs.

3M Company (MMM)

3M is a highly diversified global industrial conglomerate that produces a broad portfolio of products. The company makes products in safety, healthcare, transportation, electronics, and consumer markets. Its large and diversified portfolio has led to steady revenue and earnings growth over time. In turn, 3M has rewarded shareholders with over 60 consecutive years of dividend increases. 3M is on the Dividend Kings list in addition to the Dividend Aristocrats list.

3M has a high current yield of 4.7%. Its high yield and consistent annual dividend increases make it an ideal DRIP stock.

As a global industrial, 3M has been impacted by the strong dollar and weak economic growth. Revenue declined by 3.8% in the third quarter, year-over-year. However, organic growth (which excludes currency and divestments) increased 2%. By operating segment, Safety & Industrial had 1.7% organic growth while Transportation & Electronics had organic growth of 3.0%. Separately, Consumer product revenue increased 1.5% and Health Care grew 1.7% year-over-year.

3M’s adjusted earnings-per-share of $2.69 compared to $2.45 in the prior year and beat estimates by $0.10. Its consistent earnings growth allows the company to keep raising dividends each year.

For 2022, 3M management expects adjusted earnings-per-share of $10.10 to $10.35, which easily covers the dividend payout.

Johnson & Johnson (JNJ)

J&J is a diversified health care giant. Roughly half of its annual sales come from pharmaceutical products, with the remainder derived from medical devices and consumer products. In total, J&J generates annual sales in excess of $93 billion. Going forward, J&J is planning to spin off its consumer product segment into an independently-traded company.

In the third quarter, J&J reported operational revenue growth of 8% compared with the 2021 third quarter. Pharmaceutical sales once again led the way with 9% operational sales growth, followed by Medical Devices with 8% growth. Consumer sales increased 4.9% year-over-year on an operational basis. Adjusted earnings-per-share increased 5% operationally for the quarter. Results were better than expected on both revenue and profits.

Johnson & Johnson’s key competitive advantage is the size and scale of its business. The company is a worldwide leader in several healthcare categories. Its diversification allows it to continue to grow even if one of the segments is underperforming.

The company has increased its dividend for 60 consecutive years, making it a Dividend King. The stock has a 2.5% current yield.

Federal Realty Investment Trust (FRT)

Federal Realty Investment Trust is a Real Estate Investment Trust, otherwise called a REIT. As a Real Estate Investment Trust, Federal Realty’s business model is to own and rent out real estate properties. It uses a significant portion of its rental income, as well as external financing, to acquire new properties.

This helps create a “snowball” effect of rising income over time. Federal Realty primarily owns shopping centers. However, it also operates in redevelopment of multi-purpose properties including retail, apartments, and condominiums. The portfolio is highly diversified.

FRT continues to generate strong results in a difficult environment for real estate due to rising interest rates. In the third quarter, the company generated funds from operations per diluted share of $1.59 for the quarter compared to $1.51 for the third quarter 2021. FRT also generated comparable property operating income growth of 3.7% for the third quarter and 8.8% through the first three quarters.

Federal Realty’s competitive advantages include its superior development pipeline, its focus on high-income, highdensity areas and its decades of experience in running a world-class REIT. These qualities allow it to perform consistently, and even grow through recessions, when many other REITs struggle.

Steady growth allows the company to return cash to shareholders through dividends. The company has increased its dividend for over 50 consecutive years. Shares of FRT currently yield 3.9%.
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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.