Dividend payments are an important source of stock-based compensation. Individual retail investors count on dividend payments for income, often when they are retired and no longer earning a salary. Others reinvest their quarterly dividend payments, helping to compound and grow their stock holdings in the process.
For these reasons, many investors carefully scrutinize the dividend payouts of the companies in which they invest. The average dividend yield among companies listed on the S&P 500 index is currently 1.5%, which is much lower than the historical average of 4.3%. Many companies suspended their dividends during the global pandemic.
This has forced investors to hunt for stocks that pay above-average dividends while also offering stability amidst the current market volatility. Here is a list of three super-safe dividend stocks for investors to buy right now.
|JNJ||Johnson & Johnson||$168.19|
|LOW||Lowe’s Companies, Inc.||$177.94|
FDX stock jumped 13% on news of the dividend increase, which comes despite the Memphis, Tennessee-based company’s current struggles with high gas prices and wage inflation, as well as a labor shortage.
FedEx also announced that it is adding “total shareholder return” as a performance metric to its executive compensation program, news that was also cheered by investors.
The massive dividend increase and jump in FDX stock is welcome news for shareholders of the delivery company. Even after the 13% gain, FedEx’s share price currently sits at $226.18, which is 23% lower than where it was trading at a year ago.
After performing strongly during the pandemic when consumers relied on online shopping and home deliveries, FedEx stock has struggled as the pandemic fades and people emerge from Covid-19 hibernation.
The stock’s recent performance aside, FedEx remains a reliable blue-chip company that now has a dividend that yields more than 2%. That increased dividend will next be paid on July 11 to shareholders of record as of June 27.
Johnson & Johnson (JNJ)
Speaking of sturdy blue-chip companies that offer strong dividend payments to shareholders, how about Johnson & Johnson (NYSE:JNJ)? The consumer healthcare and pharmaceutical giant currently pays a dividend that yields 2.67% for a quarterly payout of $1.13 per share.
The New Jersey-based company has consistently paid its dividend to shareholders since 1989, making the company a “Dividend Aristocrat” defined as a company that raises its dividend for 25 consecutive years or more. Johnson & Johnson’s consistency when it comes to paying its dividend has won the company the loyalty of many shareholders.
While the dividend payout is strong, Johnson & Johnson also has developed a loyal shareholder base due to the consistency of its share price. With the benchmark S&P 500 and Nasdaq indexes each in bear market territory this year, defined as a drop of 20% or more from recent highs, JNJ stock is down only 1% in 2022. At $169.08 per share, Johnson & Johnson’s stock is 2% higher then where it was trading at in June of last year.
The stability reflects the fact that Johnson & Johnson’s products, which include everything from Tylenol to Band-Aids, are viewed as essential items by consumers and able to withstand both inflation and an economic recession.
Investors have a bit of time before the next dividend payout, as JNJ stockholders received their most recent checks on June 7.
Last but certainly not least, we come to home improvement retailer Lowe’s Companies, Inc. (NYSE:LOW). The Mooresville, North Carolina-based company’s stock has been hammered this year, down more than 30% to $177.94 per share.
However, shareholders can comfort themselves with knowledge that LOW stock pays a dividend that yields 2.35% or $1.05 per share each quarter, after the home improvement retailer’s board gave the payout a 31% boost last month. The next dividend is payable Aug. 3 to shareholders of record as of July 20.
That should be enough to keep many shareholders from selling their holdings of Lowe’s, which currently has more than 2,000 retail locations in the U.S. and Canada. And while Lowe’s stock has fallen, it is no reflection on the company’s earnings, which continue to grow.
For this year, Lowe’s is forecasting sales of $98 billion, which would still be higher than the the $96 billion in sales the company posted for fiscal 2021. Plus, Lowe’s stock is inexpensive right now compared to many other retailers, trading at a price-to-earnings ratio of 14.5 and a price-to-free cash flow of 18x. That’s right in line with the average among companies listed on the S&P 500 index.
Most of the decline in LOW stock can be attributed to investor concerns about inflation that is running at a 40-year high and rising interest rates that could lead consumers to put off home improvement projects in the near-term. But over the long-term, Lowe’s should be just fine.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.