Stocks that pay dividends give investors a regular share of the company’s profits but not all companies reward investors in this way.
Investors in growth stocks such as Amazon hope for a capital increase on their investment over and above what they might expect through investing in a dividend paying stock.
Generally, the returns these investors can expect will be relatively higher compared to dividend stocks, but it comes at a higher risk; the stock price of growth companies are more volatile and experience heavier falls than the broader market when prices are down.
Well-established, slower growing firms will attract investors through paying dividends, and they aim to do this even during bearish markets.
Firms that have consistently increased their dividend payment every year for the previous 50 years are colloquially referred to as Dividend Kings. Dividend Aristocrats are those firms which have consistently increased their dividends for the previous 25 years.
Most American dividend stocks pay investors a fixed sum every three months, and the best ones enhance their payouts over time so that investors can build a steady stream of cash similar to an annuity.
Investors can also choose to put dividends back into the stock market if they don’t need the income.
Most companies that pay dividends have been around for a long time, so dividend stocks may also give your portfolio some stability.
That’s one reason we put them on our list of low-risk investments. Stocks that pay dividends can be good for investors who want a steady income. Look at our list of stocks with high dividends and learn how to buy them.
Best Dividend Stocks
1) Lumen Technologies Inc. (NYSE: LUMN)
Lumen Technologies serves individuals and organizations worldwide as a global technology and communications company.
Network assets, security solutions, cloud connectivity, collaboration, and voice tools are part of an integrated platform that makes it easier for companies to use their data and implement cutting-edge technology.
2) American Express (NYSE: AXP)
Investors can also find top dividend stocks in consumer and business lending, and American Express is one of the best in this category.
Despite not being a Dividend Aristocrat, AmEx has a long history of increasing or maintaining its dividend in any economic climate.
Dividend investors should commend AmEx for maintaining high-quality lending standards and focusing on higher-income consumers who are less likely to default on their borrowings.
AmEx’s strict lending criteria make the firm a safe investment for long-term investors and a reliable source of dividends.
3) New Residential Investment Corp. (NRZ)
The New Residential Investment (NRI) (REIT) is a mortgage real estate investment trust. The industries of mortgage and financial services benefit from their capital and expertise.
The company invests in long-term cash flow-generating assets. Mortgage servicing assets, residential mortgages, non-agency securities, and other related investments are part of its investment portfolio.
New Residential Investment announced Q1 dividends on 21 March for all investors who hold common and preferred stock on 4 April.
They will receive a common share dividend of $0.25 per common share.
4) Microsoft (NASDAQ: MSFT)
One of the world’s largest corporations, Microsoft has steadily increased sales and is particularly attractive to dividend investors because of its focus on recurring or subscription-based revenue sources.
Because of the company’s strong financial position and low payout ratio, there is ample room to raise the dividend.
Some analyst expect Microsoft to join the ranks of Dividend Aristocracy members based on its 19-year track record.
5) Johnson & Johnson (NYSE: JNJ)
Among the many great brands that Johnson & Johnson owns are those that produce goods that people need, particularly in the healthcare industry.
Over the past 58 years, Johnson & Johnson has increased its dividend every year thanks to its pharmaceuticals and medical device operations and Band-Aid, Neutrogena, Tylenol, Zyrtec/Benadryl, and Johnson’s brands (and many others).
One of the most significant sources of profit in the healthcare industry is the wide variety of pharmaceuticals, consumer health brands, and medical devices.
6) Walgreens Boots Alliance (NYSE: WBA)
One of the world’s largest retail pharmacy operators, Walgreens, is undergoing a significant turnaround.
Reduced costs, increased digital sales, and, most importantly, the addition of good healthcare clinics in hundreds of retail locations are all part of the company’s long-term plans.
Increasing its profitability by becoming a more organized health company is expected to raise its dividend to even higher levels.
As of this writing, Walgreens shares have a dividend yield of more than 3% and have increased their payouts annually for 45 years.
Even the most stalwart dividend stocks can undergo significant volatility in a short period.
It’s impossible to keep up with all of the market forces that can affect them over a short period, many of which have nothing to do with the underlying company.
Investors should avoid focusing on the day-to-day stock price movements. Instead, look for companies with solid operations, consistent cash flow, and a long history of paying out dividends.
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Disclosure: The author is not a licensed or registered investment adviser or broker/dealer. They are not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.
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Tim Thomas has no positions in the stocks, ETFs, cryptocurrencies, or commodities mentioned.
This post was produced and syndicated by Tim Thomas / Timothy Thomas Limited.
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