Investing can be as simple or as complicated as you want to make it as an investor. Throughout the years of my investing journey, I have found that simplicity and conviction is a winning approach. Successful investors often see the big picture and know why they own their investments. They also have the discipline to hold on to their investment through good and bad times, provided the fundamentals of their investments are intact.
Here are two dividend-paying companies with well-known brands that could help you build meaningful wealth in the decades to come.
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1. Coca-Cola: A Warren Buffett favorite
Coca-Cola (KO +0.43%) is entirely focused on satisfying the various taste preferences of beverage consumers. Through its approximately 200 brands, including Dasani bottled water, Powerade sports drink, Minute Maid juice, and of course its namesake brand, the company has something for almost everyone.
Thanks to its diversified portfolio of billion-dollar brands, Coca-Cola's $258 billion market capitalization positions it as the largest non-alcoholic beverage brand on the planet. This is probably why Warren Buffett's Berkshire Hathaway owns a 9.2% stake in Coca-Cola worth more than $24 billion.
NYSE: KO
Key Data Points
Looking ahead, Coca-Cola has numerous potential growth opportunities. For one, the company's total addressable market was absolutely mind-boggling at $1.3 trillion in 2022. And with the global population expected to rise by nearly 500 million between now and 2030, the beverage maker anticipates that its total addressable market will grow at a mid-single-digit rate annually.
Further juicing its growth potential, the company should have the financial capacity to execute bolt-on acquisitions to grow its global market share over time. This is why analysts believe that the company's non-GAAP (adjusted) diluted earnings per share (EPS) will compound by 6% annually over the next five years.
And with a dividend payout ratio that is poised to come in around 70% in 2023, Coca-Cola should be able to build on its 61-year dividend growth streak. Yield-focused investors will also find that their thirst for income can be quenched by the stock's 3% dividend yield, which is almost double the S&P 500 index's 1.6% yield.
Investors can scoop up shares of Coca-Cola at a forward price-to-earnings (P/E) ratio of 21.6. That's just below the non-alcoholic beverages industry average of 21.9. Given the company's reputation, it deserves at least a slight premium to its peers in my opinion, not a slight discount.
2. Domino's Pizza: Serving up strong growth prospects
In my experience, even a bad pizza beats out most other foods. And countless people around the globe share that same sentiment. Combining great-tasting pizza with delivery to customers' doors has been a recipe for success for Domino's Pizza (DPZ 0.36%). The company's 20,000-plus stores as of March 26 earn it the distinction of being the largest pizza chain in the world.
NASDAQ: DPZ
Key Data Points
Yet, as large as Domino's has grown up to this point, more growth arguably lies ahead for the company. This is because, for one, population growth serves as a catalyst. More mouths to feed supports new store openings, which is how Domino's store count has grown by nearly 1,000 in the past year. This is almost sure to push sales and earnings steadily higher, which is why analysts believe the company's adjusted diluted EPS will grow by 11% annually through the next five years.
Domino's market-matching 1.6% dividend yield isn't particularly special. But with the dividend payout ratio set to clock in at 36% in 2023, there is plenty of room for double-digit annual growth in the years ahead. And the stock's valuation makes it even more attractive for dividend growth investors. Domino's forward P/E ratio of 19.9 is well under the restaurant industry average of 23.9.
