Dividend Stocks

7 Dividend Kings to Buy With Your Roth IRA Money in 2024

Investing in Dividend Kings through a Roth IRA presents a special opportunity. Not only do you benefit from the tax-free growth and withdrawals that a Roth IRA offers, but you also harness the power of compounding dividends from some of the most dependable companies in the market. This strategy can significantly compound your retirement savings over time.

However, not all Dividend Kings are great buys for your Roth IRA. Some companies hike up their dividends to keep up the record while their businesses underperform. It is best to avoid such companies and put your money into the stickiest names out there while also allocating some money to solid dividend stocks with upside potential. Here are seven to look into.

PepsiCo (PEP)

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PepsiCo (NASDAQ:PEP) needs no introduction. I believe PepsiCo is one of the most compelling Dividend King stocks you can buy right now for your Roth IRA, if not the most compelling one.

In Q1 2024, PepsiCo repeated the consistency and stability that I love about this company. Net revenue grew a solid 2.26% year-over-year to $18.25 billion, beating estimates by nearly $146 million. Earnings per share also impressed at $1.61, exceeding expectations by 9 cents.

What really caught my attention was the stellar performance of PepsiCo’s international businesses. International sales have reached a staggering $36 billion and are growing at an impressive high single-digit rate with robust profitability.

PepsiCo’s omnipresent snack and beverage portfolio gives it one of the stickiest, most resilient sales profiles around.

With a 3.25% forward dividend yield and 53 consecutive years of dividend increases, PepsiCo is a cornerstone holding for steady long-term returns. I view any pullback as an attractive buying opportunity for this Dividend King.

AbbVie (ABBV)

Closeup of AbbVie (ABBV) building corporate office, an American biopharmaceutical company with its headquarters in Lake Bluff, Illinois, USA

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AbbVie (NYSE:ABBV) is a biopharmaceutical company. I must say, the latest earnings report from AbbVie is very encouraging. And if I were to recommend one big biopharma stock right now, it would have to be ABBV. The biopharmaceutical industry may not be the most stable, and a lot of the growth relies on new drug discoveries and hinges on approval from the FDA. However, I think big biopharma companies are still pretty safe. The medical industry is growing very fast and will likely keep growing even faster as the population ages and, unfortunately, becomes more unhealthy.

The company reported Q1 adjusted EPS of $2.31, beating expectations by 8 cents, on revenue of $12.31 billion that grew 0.7% YOY and also surpassed estimates by an impressive $374 million. This solid performance shows that the company is successfully navigating the U.S. loss of exclusivity for Humira.

Looking ahead, I’m increasingly confident that AbbVie’s pipeline positions it strongly for sustained long-term growth.

With the stock offering an attractive 3.62% forward dividend yield and an unmatched track record of 52 consecutive years of dividend increases, income investors should find a lot to like here.

All things considered, AbbVie looks like a high-quality biopharma giant that dividend growth investors can count on to deliver reliable income and capital appreciation for years to come.

Consolidated Edison (ED)

Con Edison electricity gas and steam power company truck vehicle van parked on Manhattan street.

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Consolidated Edison (NYSE:ED) is a regulated utility that provides electric, gas, and steam service in New York City and Westchester County, New York. I believe this Dividend King is a very attractive long-term buy for your Roth IRA, especially if you’re looking for a steady compounder with 51 straight years of dividend increases.

In Q1 2024, ED reported solid adjusted EPS of $2.15, up 17.5% YOY, driven by strong rate base growth. Management is investing heavily to protect their equipment from climate change and build a grid capable of delivering 100% clean energy. They also gained approval for a $1.2 billion project to meet growing electricity demand. This bodes well for future earnings growth.

While utilities may not be the most exciting sector, their stability is unmatched. Volatile commodity prices, like natural gas, have little impact on their bottom line since fuel costs are largely passed through to customers. This makes ED’s 3.7% dividend yield extremely reliable.

With management reaffirming their full-year 2024 adjusted EPS guidance of $5.20 to $5.40, I’m confident ED will continue its impressive dividend growth streak for many years to come. It’s a true sleep-well-at-night stock for your Roth.

Coca-Cola (KO)

Coca-Cola Consolidated sign outside of their building. COKE Stock.

Source: Jonathan Weiss / Shutterstock

Coca-Cola (NYSE:KO) is a global beverage company renowned for its iconic soft drinks. In my view, this dividend king deserves a prime spot in your Roth IRA thanks to its unbeatable brand and impressive growth potential. While Q1 2024 saw some mixed results across regions, Coca-Cola’s overall performance remained solid with 7% comparable EPS growth despite significant currency headwinds.

Its execution of an all-weather strategy is paying off, as evidenced by volume growth, margin expansion, and continued investments. It has been gaining momentum in key markets like Japan, South Korea and the Philippines. And although China’s recovery remains gradual, I believe Coca-Cola’s long-term prospects there are bright.

Looking ahead, analysts expect Coca-Cola to deliver around 5% annual sales growth and 6% annual EPS growth over the next decade. That’s impressive for a company of this size and maturity. Plus, there’s significant upside potential from a weakening U.S. dollar as interest rates eventually decline. Since 2018, dollar strength has reduced Coca-Cola’s earnings by a staggering 31%. But I anticipate this headwind turning into a tailwind in the coming years.

The stock comes with a 3% dividend yield, rising for 63 years straight.

Target Corporation (TGT)

tgt stock

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Target (NYSE:TGT) is one of America’s largest retailers. While many assume a mature company like Target would have a stable stock, it has experienced significant volatility in recent years due to the 2021 boom and 2022 bust. However, I believe Target presents a compelling investment opportunity right now, especially for dividend-focused Roth IRA portfolios.

The company is now focusing on AI, e-commerce and loyalty programs to drive future growth. They’re also investing in new stores and recent partnerships like the one with Shopify (NYSE:SHOP) and Ulta Beauty (NASDAQ:ULTA).

Once interest rate cuts kick in, I expect consumer discretionary businesses like Target to benefit. The recent dividend hikes have been very generous recently.

The 3% dividend yield and 54 consecutive years of dividend increases add to its solidity.

Q1 sales missed slightly. Nevertheless, EPS came in near the high end of guidance. Target affirmed its full-year outlook, and I’m confident they’re on track to deliver profitable growth in the years ahead.

Black Hills (BKH)

Natural Gas Combined Cycle Power Plant with sunset and light orange. Best natural gas stocks to buy.

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Black Hills (NYSE:BKH) is a diversified energy company that provides electric and natural gas services in eight states. While the stock has been battered in the post-pandemic era, being down 35.5% from its pre-COVID peak, I believe this presents an attractive entry point for long-term investors, especially those looking for reliable income in their Roth IRA.

The company has 54 years of consecutive dividend increases under its belt. Plus, the current yield of 4.86% is quite juicy and well above the broader market average. I think patient investors can park some cash here, collect that rock-solid payout, and wait for the eventual recovery.

On that front, they are seeing strong customer growth. Migration trends are to thank for that. Moreover, the ongoing data center boom is driving increased demand for electricity in their service territories. In fact, management is planning an additional 400 megawatts of renewable energy projects to meet this rising demand.

RLI Corp (RLI)

Man in suit with hands over paper cutouts of family, car and home. Represents insurance.

Source: thodonal88 / Shutterstock.com

RLI (NYSE:RLI) provides specialty insurance and surety solutions. Insurance companies like RLI tend to be some of the most stable and consistent dividend payers, and I believe RLI is the cream of the crop among insurance Dividend Kings. In Q1, RLI delivered stellar results with hefty beats on both revenue and earnings. Revenue surged nearly 22% to $445 million, blowing past estimates by $50 million. Meanwhile, EPS of $1.89 topped expectations by an impressive 28 cents.

Management emphasized that they’re leaning into opportunities where RLI has the expertise to shine while remaining disciplined in riskier areas. This balanced approach is paying off, with all segments posting double-digit growth and underwriting profits. RLI’s investment income is also on a tear, jumping 21% as its book yield and asset base expand.

With 50 consecutive years of dividend hikes under its belt, RLI’s 0.84% yield may not jump off the page. But don’t be fooled, this company’s impressive compounding power more than makes up for it. RLI shares have soared 62% in the last five years alone.

On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

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