SPECIAL REPORT The Top 7 Stocks for 2024

7 Dividend Stock Picks to Protect Your Portfolio From a Dark Winter

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  • Emerson Electric (EMR): This stock stands resilient to market conditions, beating analyst expectations. 
  • Walmart (WMT): Walmart’s market penetration is unmatched, positioning it as a strong dividend stock for holiday sales and shopping.
  • Caterpillar (CAT): The dividend-producing heavy equipment giant is at the forefront of AI and automation, representing growth opportunity alongside yield.
  • Read more about the top dividend stocks to protect your portfolio!
dividend stocks - 7 Dividend Stock Picks to Protect Your Portfolio From a Dark Winter

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Dividend stocks might be your portfolio’s antidote to protect itself against a dark economic winter. Historically, dividend-paying companies, often established and financially stable, are more resilient to economic downturns. 

What’s more, the power of compounding returns, where dividends are reinvested, offers significant long-term growth potential. As markets dip further and further, you can capitalize on the compounding to build an increasingly large position in anticipation of a broad bounceback.

These seven dividend stocks range across sectors and industries. At the same time, they demonstrate strong yield and growth potential – making them ideal shields for your portfolio.

Emerson Electric (EMR)

An office building with an Emerson Electric sign on it.
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Emerson Electric (NYSE:EMR) is an attractive choice for investors seeking income. The company currently gives investors a 2.3% dividend yield. But its remarkable record of raising dividends for 66 consecutive years truly appeals to those prioritizing sustainable dividends.

In addition, earnings have been solid. In fact, in its recent earnings report, Emerson Electric outperformed analyst expectations, reporting quarterly earnings of $1.29 per share, slightly lower than the previous year’s $1.38 per share. However, revenue figures exceeded projections, standing at $3.95 billion. Given the pivotal role of industrial stocks in supporting essential infrastructure, Emerson Electric plays a critical role in shaping the future of industrial processes and technologies as a prominent player in global industrial automation. Although the company faces near-term challenges related to supply chain disruptions, its strong track record and commitment to innovation make it a compelling dividend stock to protect your portfolio.

Dividend Stocks to Buy: Walmart (WMT)

A photo of the Walmart (WMT) logo on the side of a truck.
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Walmart (NYSE:WMT) is a must-have in your dividend stock portfolio, especially during economic downturns. As the world’s largest supermarket and general merchandise retailer, it boasts a global presence with over 11,500 stores spanning 27 countries.

Remarkably, Walmart stores are situated within a 10-mile radius of 90% of the U.S. population. This not only signifies unmatched convenience for consumers but also establishes Walmart as the go-to destination during challenging times, thanks to its commitment to everyday low prices, aiding individuals in stretching their budgets.

Just as essential as its everyday products is Walmart’s dividend history. This retail giant initiated dividend payouts in March 1974 at a rate of 5 cents per share. Today, it stands at a solid forward yield of 1.47%. This represents an 8% annual growth rate sustained for half a century – remarkable, considering the conditions.

Walmart’s exceptional strength lies in its immense scale, enabling it to secure the best prices from suppliers and deliver value to its customers. While many retailers faltered in competing against Amazon (NASDAQ:AMZN), Walmart successfully rose to the challenge, emerging as a viable e-commerce alternative.

During economic downturns, Walmart remains consistently profitable, making recessions something of a specialty. Over the past five decades, the stock has delivered remarkable total returns, amounting to more than 5,000% – double the performance of the S&P 500.

Caterpillar (CAT)

Close up of industrial bricklayer installing bricks on construction site. materials stocks
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Caterpillar (NYSE:CAT) specializes in construction, mining, and engineering equipment manufacturing. With a dividend yield a bit below 2% and a remarkable record of increasing dividends for 31 consecutive years, this stock has garnered favor among long-term and income investors.

The stock saw a 4.5% increase since the beginning of the year and exceeded earnings and revenue expectations in the second quarter. Caterpillar reported a robust 22% surge in revenues, totaling $17.3 billion. Earnings per share amounted to $5.67, or $5.55 on an adjusted basis.

Caterpillar holds a prominent position as the largest global manufacturer of construction and mining equipment, making it a vital indicator of the world economy’s well-being. Even more promising for its prospects is Caterpillar’s strong commitment to artificial intelligence and automation. Currently, 13% of construction professionals leverage automation tools, with 60% expecting to do so in the future.

Caterpillar is at the forefront of the industry with a comprehensive range of automated construction equipment, including self-digging solar ditch machines. Its adaptability to emerging trends showcases its ability to seize opportunities in new technologies and expand its market share, solidifying its status as one of the top choices for dividend stocks.

Dividend Stocks to Buy: Sherwin-Williams (SHW)

A Sherwin-Williams (SHW) sign in Richfield, Minnesota.
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Sherwin-Williams (NYSE:SHW) just announced its newest dividend of $0.605 per share. That represents a small yield, totaling just 1%, but solid considering the painting company’s prospects amid housing market shocks. Management reinforced those prospects in the same report, projecting 24% earnings growth over the next year and marking a 24% payout ratio. That growth and sustainable ratio mean that SHW’s dividend is here to stay. 

Despite wide market supply concerns, new residential construction has ticked up in recent months. Paint, of course, is a lynchpin for new construction projects. Where the housing market goes, so too does SHW. But it doesn’t stop there. As more Americans realize the housing market might not be kind to sellers, they focus inward, redecorating and revitalizing their existing homes. That, too, bodes well for SHW as more consumers undergo small-scale renovations during winter months. 

McDonald’s (MCD)

McDonald's restaurant in Thailand.
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McDonald’s (NYSE:MCD) is a household name for consumers worldwide, but its dividend stock potential makes it a key part of income-focused investing.

From a value-oriented standpoint, McDonald’s is a well-established powerhouse with an unrivaled market presence. With a footprint of 38,000 locations spanning over 100 countries, it provides investors with geographic diversity, economies of scale, and a dependable cash flow. In addition, the company’s robust financial position and iconic brand afford it an undeniable competitive edge that deters potential competitors. McDonald’s stresses a commitment to embracing technological advancements and fostering digital and delivery capabilities. That committment indicates its readiness to adapt to evolving consumer behaviors, paving the way for future growth.

But MCD’s real benefit today is in its dividend potential. As a longstanding dividend aristocrat, McDonald’s proudly carries a record of nearly 50 consecutive years of dividend growth. This remarkable history exemplifies its unwavering dedication to delivering returns to shareholders. It also makes MCD an ideal choice for those seeking consistent and expanding income streams within their dividend-focused investment portfolios. Its forward-dividend yield is just above 2%, and investors can count on that yield continuing. 

Dividend Stocks to Buy: Medtronic (MDT)

Medtronic (MDT) sign outside office building representing healthcare stocks
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Medtronic (NYSE:MDT) is an enduring presence in the global healthcare industry, continuously advancing and exploring innovative approaches, including integrating artificial intelligence in healthcare.

While Medtronic, like many healthcare companies, faced challenges in the wake of the pandemic, its dividend policy remains steadfast and commendable. The company has consistently increased its annual dividend for nearly half a century. Moreover, Medtronic’s CFO has affirmed its commitment to distributing at least 50% of its free cash flow to shareholders through 2023. That’s a 3.2% forward-dividend yield, a solid dividend stock pick to protect your portfolio.

Beyond its dividend-centric strategy, Medtronic’s standing as a trailblazer in medical device innovation enhances its appeal. By cultivating partnerships with healthcare networks through risk-based agreements, the company is charting a course toward improved patient outcomes and cost savings. In an era when healthcare costs continue to rise, Medtronic’s proposition positions it as an attractive collaborator for many institutions. These strategic initiatives, combined with a generous payout ratio and a strong focus on delivering value to shareholders, make Medtronic a dream investment for those seeking high-dividend stocks.

Stanley Black & Decker (SWK)

Stanley Black and Decker (SWK) is a manufacturer of industrial tools and household hardware and provider of security products
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Stanley Black & Decker (NYSE:SWK) is a dividend king. That status places SWK among a rare group of publicly traded companies that have consistently raised dividend payments for over half a century.

Established in 1843, Stanley Black & Decker has an impressive record of increasing its dividend for 56 consecutive years. The dividend king’s current yield stands at a solid 4.19%. 

With annual revenues reaching $15 billion, Stanley Black & Decker is now one of the world’s largest manufacturers of industrial products. While the company’s sales can fluctuate with economic cycles, its robust brand and strong rapport with contractors provide resilience during economic downturns. Likewise, the uptick in new housing starts mentioned before bodes well for this stock.

On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.


Article printed from InvestorPlace Media, https://investorplace.com/2023/10/7-dividend-stock-picks-to-protect-your-portfolio-from-a-dark-winter/.

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