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Buy These 4 Stocks For a Consistent Dividend Income
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Investing in dividend stocks is one of the most effective ways to cushion your investment portfolio from market volatility. These stocks provide a stable stream of passive income and are favorite for investors who want to build a steady retirement corpus.
Dividend-paying stocks generally represent stable companies with an established business. These organizations reward their shareholders in two ways, firstly, by stock price appreciation and secondly, through profit sharing, that is, via dividend. These dividends can be used for reinvestment, thereby enhancing one’s investment portfolio.
However, blindly choosing dividend stocks won’t serve the purpose as the payout can be discontinued if the company runs into financial trouble. Thus it is paramount to judiciously pick only those companies that have the resilience to withstand the economic uncertainties and are consistent in making dividend payments even amid crisis.
Although a company’s dividend history gives investors a fair enough idea about its economic health, it doesn’t guarantee a secure future. To be safe and sure, you have to cherry-pick high-growth companies that with convincingly robust revenue and earnings growth and a favorable dividend payout ratio (less than 60% is preferred).
Here we pick four stocks that promises a passive income:
A Diversified Player
3M Company (MMM - Free Report) together with its subsidiaries operates as a diversified technology firm that has to its credit a 57-yearlong divided growth story. The company with a market capital of $111.5 billion has a dividend yield of 3.1%. The company’s vast operations spread across Safety & Industrial, Transportation & Electronics, Health Care and Consumer segment provide sufficient diversification to maintain earnings stability.
Its Healthcare is likely to see higher sales of healthcare equipment as elective procedures are returning with the waning of COVID-19. The company’s industrial segment is set to gain from an improving economy, which should drive demand for its abrasives, electrical materials and automotive aftermarkets.
In the long haul, 3M intends to become more competent on the back of a solidified product portfolio.
In addition, the company is planning to strengthen its marketing capabilities by investing in global programs, using digital platforms and available data. These strategic moves will likely help 3M benefit from the growing opportunities in home improvement, healthcare, e-commerce, automotive electrification and personal safety arenas.
For 2021, the company expects sales growth to be 5-8%, indicating an improvement from the year-earlier reported figure with organic sales growth of 3-6%. Adjusted earnings are expected to be $9.20-$9.70 for the year. It compares favorably with $9.25 reported in 2020.
McDonald's Corp. (MCD - Free Report) needs no introduction. Its brand name resonates with one and all. It holds a dominant position in the fast food market. The world’s largest chain is currently working on a new digital experience, which will be its growth engine. Its continuous focus on menu innovation attracts diners. McDonald’s is consistently trying to improve its performance in the International Operated Markets including Australia, Canada, France, Germany and the UK.
The company’s dividend has grown in the past 43 years. Despite a decline in cash flows over the past two years, we don’t expect the company to break its legacy of continued dividend growth.
The stock currently has a Zacks Rank #3 (Hold) and a Growth Style Score of A.
A Stable Insurer
An insurance company is a must component to provide stability to your portfolio. Insurance companies are stable performers even in times of economic slowdown. Aflac Inc. (AFL - Free Report) is a dividend aristocrat that has paid out the same for the past 38 years despite facing economic crisis. It has a sizable business in Japan where it sells its health and life insurance policies.
The aging demography of Japan provides the company with a wide market opportunity.
In the past year and a half, the company’s business in Japan has been affected due to investigation in misselling of policies and consequently, it drew flak for the same. Also, the COVID-19 outbreak dented the company’s sales and profits but it maintained its honesty with its shareholders.
As the COVID-19 seemingly subsides, operating conditions are looking to improve while sales in Japan show signs of recovery. Therefore, we have no reason to question the company’s future dividend stance.
The stock has a Zacks Rank of 3 (Hold) and a Growth Style Score of Bat present.
A Well-Known Name in Technology
International Business Machines Corporation (IBM - Free Report) has gradually evolved as a provider of cloud and data platforms.
IBM’s growth is expected to be driven, primarily by analytics, cloud computing and security in the long haul. A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will drive profitability. With the acquisition of Red Hat in 2019, the company expects to become the largest hybrid cloud platform provider.
IBM is a pioneer and an undisputed leader when it comes to providing blockchain technology. The company is poised to benefit from robust adoption and broad-based availability of IBM Blockchain World Wire, a blockchain-driven global payments network.
There is no doubt that the growing advancement in technology will drive an already-strong company. Thus with a solid business, the company’s dividend payments will be intact. IBM has been hiking its dividend for 26 years now.
The stock is currently Zacks #3 Ranked and carries a Growth Style Score of A.
Bottomline
Along with choosing a dividend aristocrat, selecting stocks across different sectors is an important investment strategy, which provides an opportunity to clock growth at all market cycles.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Image: Shutterstock
Buy These 4 Stocks For a Consistent Dividend Income
Investing in dividend stocks is one of the most effective ways to cushion your investment portfolio from market volatility. These stocks provide a stable stream of passive income and are favorite for investors who want to build a steady retirement corpus.
Dividend-paying stocks generally represent stable companies with an established business. These organizations reward their shareholders in two ways, firstly, by stock price appreciation and secondly, through profit sharing, that is, via dividend. These dividends can be used for reinvestment, thereby enhancing one’s investment portfolio.
However, blindly choosing dividend stocks won’t serve the purpose as the payout can be discontinued if the company runs into financial trouble. Thus it is paramount to judiciously pick only those companies that have the resilience to withstand the economic uncertainties and are consistent in making dividend payments even amid crisis.
Although a company’s dividend history gives investors a fair enough idea about its economic health, it doesn’t guarantee a secure future. To be safe and sure, you have to cherry-pick high-growth companies that with convincingly robust revenue and earnings growth and a favorable dividend payout ratio (less than 60% is preferred).
Here we pick four stocks that promises a passive income:
A Diversified Player
3M Company (MMM - Free Report) together with its subsidiaries operates as a diversified technology firm that has to its credit a 57-yearlong divided growth story. The company with a market capital of $111.5 billion has a dividend yield of 3.1%.
The company’s vast operations spread across Safety & Industrial, Transportation & Electronics, Health Care and Consumer segment provide sufficient diversification to maintain earnings stability.
Its Healthcare is likely to see higher sales of healthcare equipment as elective procedures are returning with the waning of COVID-19. The company’s industrial segment is set to gain from an improving economy, which should drive demand for its abrasives, electrical materials and automotive aftermarkets.
In the long haul, 3M intends to become more competent on the back of a solidified product portfolio.
In addition, the company is planning to strengthen its marketing capabilities by investing in global programs, using digital platforms and available data. These strategic moves will likely help 3M benefit from the growing opportunities in home improvement, healthcare, e-commerce, automotive electrification and personal safety arenas.
For 2021, the company expects sales growth to be 5-8%, indicating an improvement from the year-earlier reported figure with organic sales growth of 3-6%. Adjusted earnings are expected to be $9.20-$9.70 for the year. It compares favorably with $9.25 reported in 2020.
The stock currently has a Zacks Rank #3 (Hold) and a Growth Style Score of A (part of the Zacks Style Scores system). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Must Ingredient for a Portfolio
McDonald's Corp. (MCD - Free Report) needs no introduction. Its brand name resonates with one and all. It holds a dominant position in the fast food market. The world’s largest chain is currently working on a new digital experience, which will be its growth engine. Its continuous focus on menu innovation attracts diners. McDonald’s is consistently trying to improve its performance in the International Operated Markets including Australia, Canada, France, Germany and the UK.
The company’s dividend has grown in the past 43 years. Despite a decline in cash flows over the past two years, we don’t expect the company to break its legacy of continued dividend growth.
The stock currently has a Zacks Rank #3 (Hold) and a Growth Style Score of A.
A Stable Insurer
An insurance company is a must component to provide stability to your portfolio. Insurance companies are stable performers even in times of economic slowdown. Aflac Inc. (AFL - Free Report) is a dividend aristocrat that has paid out the same for the past 38 years despite facing economic crisis. It has a sizable business in Japan where it sells its health and life insurance policies.
The aging demography of Japan provides the company with a wide market opportunity.
In the past year and a half, the company’s business in Japan has been affected due to investigation in misselling of policies and consequently, it drew flak for the same. Also, the COVID-19 outbreak dented the company’s sales and profits but it maintained its honesty with its shareholders.
As the COVID-19 seemingly subsides, operating conditions are looking to improve while sales in Japan show signs of recovery. Therefore, we have no reason to question the company’s future dividend stance.
The stock has a Zacks Rank of 3 (Hold) and a Growth Style Score of Bat present.
A Well-Known Name in Technology
International Business Machines Corporation (IBM - Free Report) has gradually evolved as a provider of cloud and data platforms.
IBM’s growth is expected to be driven, primarily by analytics, cloud computing and security in the long haul. A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will drive profitability.
With the acquisition of Red Hat in 2019, the company expects to become the largest hybrid cloud platform provider.
IBM is a pioneer and an undisputed leader when it comes to providing blockchain technology. The company is poised to benefit from robust adoption and broad-based availability of IBM Blockchain World Wire, a blockchain-driven global payments network.
There is no doubt that the growing advancement in technology will drive an already-strong company. Thus with a solid business, the company’s dividend payments will be intact. IBM has been hiking its dividend for 26 years now.
The stock is currently Zacks #3 Ranked and carries a Growth Style Score of A.
Bottomline
Along with choosing a dividend aristocrat, selecting stocks across different sectors is an important investment strategy, which provides an opportunity to clock growth at all market cycles.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>