Income investing is all about buying boring dividend stocks that pay a dependable dividend … but you probably aren’t going to get much share price appreciation, right?
In the bull market of 2014, there’s a horde of dependable dividend stocks that also continue to deliver gains huge enough to satisfy even the most insatiable momentum investors.
From a medical device maker to an auto parts distributor to a furniture company, the diversity of these three InvestorPlace Dependable Dividend Stocks killing it on the share price appreciation front year-to-date is indeed impressive. And though 2014 is nearly in the books, it’s not too late to get in on these stocks that have more than proved their commitment to their dividends.
We should point out that this isn’t a list of high-yielding stocks. It is, however, a list of stocks that can return on both appreciation and income fronts — and when it comes to the latter, you’re talking about payouts that will slowly but surely grow as you hold.
So, here are three of the most most dependable dividend stocks to buy in December.
3 Dependable Dividend Stocks: Medtronic, Inc. (MDT)
YTD Gain: 29%
Dividend Yield: 1.7%
Medical device maker Medtronic, Inc (MDT) is one of the biggest companies in the clinical and home medical equipment space. The company is about to get even bigger, too, once its merger with rival Covidien plc (COV) is officially complete.
In mid-November, MDT shares hit a series of new all-time highs right around the time when the company reported strong fiscal Q2 earnings of 96 cents per share on revenue of $3.67 billion. Both EPS and revenue were up from the same quarter a year ago, and both were in-line with Wall Street estimates. The company also reiterated its full-year earnings guidance.
The Covidien deal and strong earnings are two big drivers for Medtronic, but perhaps the bigger driver was recently explained by my InvestorPlace colleague John Persinos.
In his Nov. 19 article, Persinos concluded that one likely modification to the Affordable Care Act, aka Obamacare, that’s almost certainly in the cards is alterations to the medical device tax:
“There’s one part of the sweeping bill that is despised by both sides of the aisle: the medical device tax. This potential source of accord is rare news on Capitol Hill — and great news for medical device marker Medtronic.”
The existence of the medical device tax is about the only reason not to like MDT as one of the most dependable dividend stocks, and if this part of Obamacare gets wiped off the books, you’ll definitely want to be long MDT.
3 Dependable Dividend Stocks: Genuine Parts Company (GPC)
YTD Gain: 23%
Dividend Yield: 2.2%
Automotive replacement parts distributor Genuine Parts Company (GPC) is perhaps best known for its retail chain NAPA Auto Parts. Yet in addition to NAPA stores, the company also distributes industrial supplies in the U.S. and Canada, as well as electrical parts and office products.
The combined operations for GPC have helped the company become one of the most dependable dividend stocks around, with the shares up nearly 24% through the first 11 months of the year.
In October, GPC reported Q3 earnings of $190.5 million, which translated into EPS of $1.24. That number was up 9.7% over the same quarter a year ago. On the revenue front, GPC reported a top line of $3.99, an 8.2% increase over last year. The bottom line was in step with consensus estimates, while the top line bested consensus for just $3.93 million. The company’s July acquisition of safety-equipment maker Impact Products added to its recent quarterly earnings beat.
For Genuine Parts, the boom in auto parts sales, as well as the diversity from its other segments, means plenty of strong payouts going forward. It also likely means many more months of strong upside on top of the outstanding total return in 2014.
3 Dependable Dividend Stocks: Leggett & Platt, Inc. (LEG)
YTD Gain: 36%
Dividend Yield: 3%
Furnishing, fixtures and industrial materials aren’t exactly what you think of when searching for dependable dividend stocks, yet that’s precisely what you get with Leggett & Platt, Inc. (LEG).
The diversified firm operates more than 20 different segments that sell an extreme variety of products that make a home, office, automobile, etc., habitable. Whether its living room furnishings, bedding or office furniture, you can bet that LEG makes it—and makes big profits selling it.
In early November, LEG reported Q3 net income of $48.2 million, or adjusted EPS of 51 cents. That metric bested expectations for adjusted EPS of 50 cents, although the top line of $997.4 million in Q3 missed forecasts slightly.
Despite the mild shortfall on the revenue, LEG shares continue to soar. The stock is up nearly 7.7% in just the past month; and so far this year LEG shares are up an astounding 36%.
That big move higher also comes with a dividend yield of nearly 3%, and that’s the kind of combined track record that makes LEG one of the most dependable dividend stocks to buy in December.
As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.
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