While going the route of dividend-paying large-cap stocks might not lead to gargantuan returns, you’re likely to improve your odds of success. To use a baseball analogy, many times it’s better to be statistically productive at the plate and get several singles than it is to mash an odd homerun in a throwaway game.
So it is with the best dividend stocks to buy. Basically, passive income has to come from somewhere. Therefore, if an enterprise consistently rewards its shareholders, it’s reasonable to assume that it has a relatively stable and predictable business. As such, the company in question may be able to ride out various market cycles and still maintain viability. At this juncture, that’s an attractive quality.
Plus, you can occasionally find some diamonds in the rough among the largest companies, including high-yield dividend stocks (relatively speaking, of course). If you’re ready to face potentially incoming market headwinds, you can tip the scale in your favor with the below industry stalwarts.
Duke Energy (DUK)
Based in Charlotte, North Carolina, Duke Energy (NYSE:DUK) represents one of the largest energy holding companies in the nation. According to its public profile, Duke has an electric generating capacity of 51,000 megawatts (MW) through its regulated utilities and 3,000 MW through its non-regulated Duke Energy Renewables unit. Despite its relevancy, DUK slipped nearly 12% since the beginning of this year.
Though it hasn’t offered the most impressive start, DUK ranks among the top dividend-paying large-cap stocks. Fundamentally, Duke – which carries a market capitalization of almost $71 billion – benefits from a natural monopoly. Basically, the barrier to entry into the utility business is so steep that would-be competitors don’t even try.
On the financials, DUK doesn’t initially seem like one of the best dividend stocks to buy. However, it’s important to note that utilities tend to print unremarkable stats. However, one of the most important metrics is Duke’s consistent profitability.
Invariably, this attribute helps with its passive income, with the company carrying a forward yield of 4.39%. In addition, Duke features 18 years of consecutive dividend increases. Therefore, it’s a strong candidate for high-yield dividend stocks for patient investors.
A chemicals and materials specialist, Dow (NYSE:DOW) offers wide-ranging relevancies, from healthcare to electronics to advanced mobility initiatives. Per its public profile, Dow seeks to become the most innovative, customer centric, inclusive and sustainable materials science company, with a purpose to deliver a sustainable future for the world through its materials science expertise and collaboration with its partners. Presently, Dow features a market cap of $38.1 billion.
I must all this to stress that no matter what happens in the future, any industry that utilizes physical materials will help undergird Dow’s pertinence. Thus, its multivariate applications makes DOW a top candidate for dividend-paying large-cap stocks. Enticingly, the market prices shares at a trailing multiple of 13.47, ranking better than 65% of companies in the chemicals industry.
Further, Dow enjoys a strong three-year EBITDA growth rate (on a per-share basis) of 54.8%, storming above 92.51% of its peers. Also, its book growth rate lands at 17.2%, above 71.52% of sector players.
Lastly, Dow features a forward yield of 5.2%. That’s well above the material sector’s average yield of 2.82%. Also, it’s worth pointing out that its payout ratio sits at a reasonable 59.23%, making DOW one of the top large-cap dividend stocks.
Rio Tinto (RIO)
An Anglo-Australian multinational firm, Rio Tinto (NYSE:RIO) is the second-largest metals and mining corporation per its corporate profile. Though mainly focused on the extraction of minerals, Rio Tinto also has significant operations in refining, particularly the refining of bauxite and iron ore. Commanding a market cap of $107.4 billion, RIO ranks among the biggest dividend-paying large-cap stocks.
However, global economic concerns took some of the shine off Rio’s fundamental narrative. As such, shares plunged more than 10% since the January opener. On the flipside, this red ink could make RIO one of the high return dividend stocks available. Specifically, Wall Street analysts peg RIO a unanimous buy. Their average price target stands at $96.28, implying over 51% upside potential.
Financially, Rio benefits from strong and consistent profitability metrics. As a bonus, the market prices RIO at a forward multiple of 8.47, which is notably undervalued. On a final note, Rio carries a forward yield of 7.07%. Again, that’s well above the material sector’s average yield of 2.82%, making RIO a great candidate for high-yield dividend stocks.
On the date of publication, Josh Enomoto 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.