by Alyssa Oursler | August 26, 2013 8:52 am
For the most part, our lives are simply piles of mundane tasks: brushing our teeth, feeding ourselves, commuting to and from work, and so on.
As a result, the world of Wall Street — whether you think of men in high-end suits or robots performing high-frequency trading — seems like it couldn’t be any more different from our daily routines.
But our day-to-day chores actually are tied pretty tightly to the trading floor. The big-name corporations providing our basic staples are traded on those same HFT-ridden exchanges — and often rank among some of the steadiest bets on Wall Street.
More importantly, by investing in a few of those companies, you can also pocket a little guaranteed income in the form of dividends — money that should help you meet your day-to-day needs once you hit retirement.
So, let’s take a look at five dividend stocks providing products or a service most of us rely on consistently, and that we might rely on for a little extra cash:
Dividend Yield: 2.9%
While Tesla (TSLA) stock has been hot lately, most folks still use traditional cars to get from Point A to Point B … and that means using traditional oil to fuel those cars. The name that obviously comes to mind as a result: oil exploration and production giant Exxon Mobil (XOM).
Beyond helping you fill up your tank, Exxon also can help you fill out your wallet. While its stock performance has been flat year-to-date, the company’s longstanding dividend makes up the lost ground.
As Dividend Growth Investor recently noted, Exxon has been paying a dividend since 1911 and has increased that payout for 31 straight years. In fact, the annual dividend payment has improved by 9% per year during the past decade — that rate doubles the payout every eight years. That’s nothing to sneeze at.
Right now, XOM’s 63-cent payout is good for a yield of 2.9% and leaves plenty of room for growth.
Dividend Yield: 3%
If you didn’t realize that Procter & Gamble (PG) provides an absurdly long list of everyday products, here’s a quick look at some of its brands: Braun, CoverGirl, Head & Shoulders, Gillette, Tide, Tampax, Charmin, Swiffer, Pepto-Bismol, Febreze, Comet and Old Spice.
In that sampling alone, you have enough to clean your house, clean yourself and more — and that helps make its stock one solid investment.
The main appeal, beyond its diversified portfolio, has to be its steady dividend. PG has been rewarding investors since 1891, and its steadily climbing payout has nearly tripled in the last decade alone. Right now, it’s sitting at 60 cents per share — good for a yield of roughly 3%.
That yield’s especially impressive in the face of PG’s recent outperformance. Year-to-date, this supposedly sleepy pick is outpacing the broader market with an 18% climb.
For the cherry on top, Procter & Gamble boasted nearly $15 billion in operating cash flow last year and has $6 billion in its war chest — plenty of reason to believe that payout will keep coming for at least another century.
Dividend Yield: 3.5%
After you’ve just finished cleaning your house, the next inevitable step is (hopefully) getting rid of your waste. The company that’s probably responsible: Waste Management (WM) — the largest environmental solutions provider in North America.
While Waste Management is slated for mediocre earnings growth over the next few years and has been struggling to meet earnings expectations of late, it remains one of my personal favorite picks. The main reason: Not only does it serve a day-to-day need, but it serves a need that theoretically should keep growing at least as fast as our population does.
WM has paid a dividend since 1998, and since 2004, that payout has increased every year to nearly double overall. The current 37-cent dividend is good for a solid 3.5% yield, even in the face of a 24% climb for 2013.
Dividend Yield: 3.8%
My personal favorite day-to-day necessity: food. And while there are countless names you could pick to cover the food pyramid — whether grocery stores like Safeway (SWY) or cheap dining options like McDonald’s (MCD) — I’m drawn to Kraft Foods (KRFT) for this list.
Why? Well, whether you’re looking for dinner, dessert, a snack or a sip, the giant company has you covered — and that’s even after spinning of Mondelez (MDLZ). A few brands still in Kraft’s wheelhouse: Maxwell House coffee, Oscar Mayer meats, Planters nuts, Kraft cheese, Philadelphia cream cheese, A1 steak sauce and more.
And if your mouth isn’t watering from that list, just wait until you get a whiff of its dividend. The company’s current 50-cent payout is good for a delicious 3.8% yield. While there’s not much of a history to work with thanks to the aforementioned spinoff, Kraft’s current payout represents less than half of its earnings, meaning the company still has room to keep stretching its dividend.
KRFT also is beating the market so far this year thanks to a 17% climb, and that’s despite some recent weakness.
Dividend Yield: 4.38%
Zooming in on society here in the states, another once-luxury has arguably become a necessity (or maybe an addiction): our cell phones. And whether you have an Apple (AAPL) iPhone or a Samsung (SSNLF) Galaxy doesn’t matter — a telecom has to provide the service behind-the-scenes.
One such company, of course, is Verizon (VZ). The company is already the largest mobile provider in the U.S., and has been eagerly eyeing expansion into Canada of late. That’s likely part of the reason why analysts expect double-digit annualized growth from the stock over the next half decade, and why median price targets give it 17% upside.
Still, regardless of whether such expansion happens, investors can rest easy with the company’s solid dividend. Verizon began rewarding loyal shareholders in 1984 and has boosted its quarterly payout by 34% over the past decade.
Right now, the 51-cent dividend rings up a 4.4% yield. Plus, Verizon’s solid business has grown revenues for 10 straight quarters and cranks out $31 billion in annual operating cash flow — both good signs the payouts will keep coming.
As of this writing, Alyssa Oursler was long MCD. Follow her on Twitter: @alyssaoursler.
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