I asked ChatGPT for the most reliable dividend stock for a second income and this is what it said…
The hunt for good income shares in 2026 is already on. Yet, when trying to make a good second income, it’s not just about which stock has the highest dividend yield. That yield also needs to be sustainable and have a good track record. With a lot of factors at play, I turned to ChatGPT to see if it could offer any wisdom in this regard.
Revealing the pick
Interestingly, the AI chatbot decided to make a pick from across the pond in the US. It chose Johnson & Johnson (NYSE:JNJ) as the most reliable dividend stock right now. On the face of it, I can see why it made the choice. The company has a whopping 63 consecutive years of dividend increases. It has averaged an annual dividend growth rate of 5% for the past decade, with the share price up 44% in the last year.
In terms of reliability, it has a strong and diversified business model. This ranges from pharmaceuticals to everyday health products, with stable demand. As a result, the wide product spread reduces risk and makes earnings more predictable.
All of this sounds great, but ChatGPT missed one key point, namely the dividend yield. At the moment, the company’s yield is 2.51%. For comparison, the average yield of the FTSE 100 right now is 2.99%. If an investor could buy an FTSE 100 tracker that paid out the income from all the stocks in the index, why would they want to buy just one stock instead and get a 0.48% less annual yield in the process?
Of course, I’m not saying just go for super high-yielding stocks. But to pick a company with a low dividend yield just because it has been paying it for decades doesn’t seem like the best move.
The best of both worlds
Instead, I’d prefer to own a company with a strong track record and an above-average yield. For example, the Supermarket Income REIT (LSE:SUPR). It boasts seven years of consecutive dividend growth, with a current yield of 7.56%.
A plummeting share price isn’t causing the high yield. Instead, the stock has risen by 18% in the past year. The elevated yield is thanks to continued dividend-per-share increases, which is a good sign.
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The latest full-year results presentation showed a 7.3% annual increase in the net rental income, showing demand is strong. Only last month, it announced a £98m acquisition of three UK supermarkets. This move should act to boost income almost straight away, with an anticipated initial yield of 5.5%.
Such details, along with the consistent performance of everyday operations, make it an appealing and reliable income stock. Of course, there are risks, such as the debt exposure it takes on to fund new projects. If interest rates stay higher for longer this year, servicing its debt might become more expensive. Yet even with this, I think it’s a better stock for investors to consider than the pick from ChatGPT!
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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
