Fast-moving growth stocks are always a lot of fun to play with.
Still, if there’s one thing the go-nowhere market has reminded us since stocks hit a wall in the middle of last year, it’s that a little bit of reliable income is never a bad thing either. With quality dividend stocks, at least we’re getting paid something when the market is just marking time.
With that as the backdrop, here’s a closer look at some of the market’s best dividend stocks to buy and just keep tucked away for the times when capital appreciation opportunities aren’t to be found.
In no certain order…
Best Dividend Stocks: General Motors Company (GM)
Not that you have to own every stock Warren Buffett does, but the fact that Warren Buffett still owns General Motors Company (GM) certainly makes it easier to stick with in the shadow of its 25% slide since late 2013. There are still no real signs of life even as of today, mostly thanks to concerns of so-called “peak auto,” meaning car sales may have already gotten as good as they’re going to get this cycle.
Thing is, with GM shares now valued at a trailing P/E of 4.4 and a forward-looking P/E of 5, it’s safe to say the premise of peak auto has more than been baked into the stock’s price.
In the meantime, the lull from General Motors has made it one of the market’s more compelling blue-chip dividend stocks, yielding a payout of 5.2% that has been paid like clockwork since the carmaker started paying dividends again in 2014.
Best Dividend Stocks: Bunge Ltd (BG)
Food supplier Bunge Ltd (BG) isn’t exactly a name income seekers tend to think if when on the hunt for yields. Aside from a relatively anemic dividend yield of 2.5%, profit margins are generally paper thin, leaving no real hope for any sudden, sweeping increased in payouts. Over the course of the past four quarter, Bunge has only cleared 1.84% of its revenue as a profit.
Where Bunge turns into a standout, however, is in its stunning consistency of dividends, and dividend growth. BG is now into its 14th straight year of measurably higher (increases of over 10% per year) payouts, with no end in sight.
That said, for income investors looking for just a little more juice from Bunge, it recently announced a deal to buy 2/3 of European food name Walter Rau Neusser. That scale-up may well help widen the company’s profitability.
Best Dividend Stocks: Weyerhaeuser Co (WY)
Many investors have never even heard the name Weyerhaeuser Co (WY), let alone considered it as one of the market’s better dividend stocks. That doesn’t change the fact, however, that it has got an impressive track record of payouts that could get even better real soon.
Weyerhaeuser is a timber company, cutting down trees to use in everything from building houses to making paper. Like all commodity-oriented business, earnings ebb and flow for WY, though not as much as one might expect. Better still, Weyerhaeuser loves to pay a reliable (and reliably increasing) dividend, yielding around 4% right now.
The kicker: The company recently acquired peer and rival Plum Creek. As the merger logistics are worked out and synergies are found, investors may find a relatively bigger bottom line that translates into even healthier quarterly cash payments.
Best Dividend Stocks: Apollo Investment Corp. (AINV)
If you’re looking for all-out yield and don’t mind taking some risk (and dealing with a little volatility) to get it, then Apollo Investment Corp. (AINV) may be for you. It’s paying out a hefty 14.7% of its value as annual dividend income right now.
Apollo Investment is a closed-end fund (think ETF), serving as a business development company, and built from the ground up to extract and distribute as much cash flow as possible from its portfolio. It can and will do a great number of things to make this happen, and this flexibility has served it well.
It should be noted that AINV didn’t do as well as expected in its most recently completed quarter, largely on the heels of weak results of its oil/energy holdings (again). It has all been baked into the stock’s price, however, and crude oil’s rebound effort will eventually provide the stock with a much-needed boost.
And speaking of oil…
Best Dividend Stocks: Exxon Mobil Corporation (XOM)
It’s admittedly tough to add any oil company to a list of stocks to buy right now, whether or not the current yield is compelling. Many of the industry’s decent-sized players continue to implode in the shadow of an oil rout, and there’s no particular guarantee the bigger names in the space will be able to sidestep a similar fate.
As the old saying goes though, nothing lasts forever. Crude oil prices are up more than 50% since February’s low, and though odds are good we’ll see some sort of commodity pushback in the foreseeable future, the worst seems to all be in the past. Going forward, it will get at least marginally better.
To that end, although Exxon Mobil Corporation (XOM) has gained 32% from last August’s low, the dividend yield is still a healthy 3.3%, and there’s still plenty of room for the bottom line to grow back to its pre-2014 levels as crude continues to make a long-term recovery.
Best Dividend Stocks: Global Net Lease Inc (GNL)
No list of great dividend stocks to buy would be complete without at least one REIT, and Global Net Lease Inc (GNL) is one of the best of the best, with a yield of 8.2%.
That said, it’s not your usual real estate investment trust. GNL focuses on enterprise-level space, naming companies like FedEx Corporation, Family Dollar Stores, Inc. and Finland’s airline Finnair among its top tenants. Though in some regards this sort of rental business would seem like it’s cyclical, its tenants aren’t like an apartment renter or a hotel — they have to stick around in bad times as well as good.
As evidence of the idea, per the company’s latest quarterly report, it boasted a 100% occupancy rate.
That’s not the most compelling to reason to own GNL though. No, what makes Global Net Lease so interesting to income-seekers is that it makes its dividend payment on a monthly basis rather than a quarterly basis, allowing for full flexibility for those investors who live in dividend income.
Best Dividend Stocks: Microsoft Corporation (MSFT)
While Microsoft Corporation (MSFT) is a well-known and highly respected company, it’s not often categorized as a dividend stock. That’s mostly because it’s a constituent of the technology sector, where growth — capital appreciation — is the name of the game.
It might be wise to start looking at MSFT in a new light though.
It has been so slow and so philosophical that it has gone largely unnoticed, but Microsoft is undergoing a paradigm shift. The days of operating system revenue and CD/DVD software sales are fading. The advent of cloud computing means consumers and businesses perpetually “rent” software like Microsoft Office, and it has been giving away Windows 10 as a means of monetizing those users by providing services that also drive recurring revenue. It’s the kind of business model that lends itself to dishing out steady income streams to shareholders.
But the dividend yield for MSFT is a measly 2.8%? That’s true, but the quarterly dividend payout has quadrupled since 2006, and that pace of growth isn’t apt to change anytime soon.
Best Dividend Stocks: Verizon Communications Inc. (VZ)
The odds of Verizon Communications Inc. (VZ) ever being a grand-slam kind of investment are practically nil.
On the other hand, the odds of VZ ever being out of place on a list of the market’s best dividend stocks is also practically nil. The company is big, entrenched and well-funded…
… and it can also afford to pay a dividend even if its income should hit some sort of headwind. Of the $4.43 per share Verizon earned last year, it only paid out $2.23 of it as dividends. And, that’s been pretty typical for the company over the course of the past several years. Not that it has ever really needed to use it, but it has got a ton of wiggle room to maintain its status as a quality income stock even if hard times should hit.
VZ presently yields 4.4%.
Best Dividend Stocks: Wells Fargo & Co (WFC)
With a dividend yield of only 3% right now, Wells Fargo & Co (WFC) may not be an outright show-stopper. What it lacks in raw payout power, though, it makes up for in reliable quality — WFC is arguably the best of the big bank stocks, in terms of net margins and net income growth. Its net profit margins for the past four quarters have rolled in at an impressive 26.8%.
That’s why it’s one of Warren Buffett’s favorite holdings.
That being said, Wells Fargo may be on the verge of putting its bottom line growth into a slightly higher gear in the near future — it’s wading into the investment banking business.
It’s relatively unfamiliar territory for the bank, which had previously focused on traditional bank operations like consumer lending and credit cards. Given how well the company executes its core business strategy, though, it’s tough to imagine the company not finding success — and creating profits — soon with the new(ish) venture.
Best Dividend Stocks: Iron Mountain Inc (IRM)
Last but not least, contrary to popular belief, companies still store a massive number of physical documents, and those piles continue to get bigger every year. The sheer volume of these records has become so great, in fact, that many organizations have moved the storage of them off-site.
Enter Iron Mountain Inc (IRM), which warehouses all these documents … for a recurring fee, of course. Though not technically a REIT, in many ways it acts as one, collecting a check every so often for little more than making sure the roofs of its building don’t leak.
To be fair, its dividend growth rate has been a bit hot and cold, although it has been more hot than cold, and the current yield of 5.2% makes it one of the more attractive dividend stocks among names with a comparable risk factor.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.