Although the new year seems incredibly auspicious due to having avoided a recession in 2023, investors may still want to consider reliable dividend stocks. Fundamentally, passive income never goes out of style. It’s always nice to know that every quarter (or whatever the payment cycle is), you can get a payout.
Of course, not all passive income providers are built equally and this is where reliable dividend stocks come in. These enterprises benefit from a combination of strong cash positions relative to debt along with fundamental relevancies. If certain projections for 2024 come true, these passive-income-providing companies should rise to the occasion.
Plus, we don’t know for sure what will happen this year. Given the uncertainties, it’s best to have some exposure to more conservative ideas. On that note, below are reliable dividend stocks to consider.
Weyerhaeuser (WY)
A timberland company, Weyerhaeuser (NYSE:WY) might not be the most exciting enterprise. However, when it comes to reliable dividend stocks, it’s well worth your time. Per its public profile, Weyerhaeuser owns nearly 12.4 million acres of timberlands in the U.S. Further, it manages an additional 14 million acres under long-term licenses in Canada. You can probably see where I’m going with this.
As a major supplier of lumber – obviously a key material for building new homes – Weyerhaeuser may benefit as the home building industry moves to address the housing shortage. Further, broader economic trends might come into play. With the Federal Reserve possibly set to lower interest rates this year, the move may improve affordability. Thus, greater demand would call for increased materials for home building needs.
Right now, the company offers a forward dividend yield of 2.23%. Granted, that’s noticeably lower than other companies structured as real estate investment trusts (REITs). At the same time, the payout ratio comes in at 53.44%, which is much lower than your typical REIT. Combined with the forward relevancy, WY ranks among reliable dividend stocks.
Discover Financial Services (DFS)
A financial services firm that owns and operates Discover Bank, Discover Financial Services (NYSE:DFS) may be best known for its credit card services. According to its corporate profile, Discover represents the third-largest credit card brand in the U.S. Now, to be blunt, I’ve been a bit hesitant about the business considering the record plastic debt load. Still, a monetary policy pivot could change things.
Last month, the Federal Reserve hinted at the possibility of interest rate cuts. Fundamentally, this represented a huge departure from the prior hawkish policy of raising borrowing costs. Suddenly, previously embattled sector – such as the solar energy space – rebounded conspicuously. And this dynamic could also lift the consumer economy. After all, people were spending amid elevated rates. Imagine what they might spend under a dovish environment?
If you’d like to speculate on this prospect, Discover offers a forward yield of 2.49%. That’s a bit underweight compared to the financial services space. However, Discover also enjoys a superior cash-to-debt ratio of 0.47X. As well, the payout ratio sits at a sustainable 18.52%, making DFS one of the reliable dividend stocks.
Cisco Systems (CSCO)
While Cisco Systems (NASDAQ:CSCO) might be another boring entity among reliable dividend stocks, the beauty here is the relevance. As a multinational digital communications technology company, Cisco specializes in networking hardware, software and related equipment. Basically, it’s vital to the development and proper operation of the vast telecom infrastructure. In other words, it’s not going out of style anytime soon.
Further, within the communications space, Cisco offers a broad range of services. For example, the company invests heavily in cybersecurity, an area that should draw attention given the consequences of high-profile breaches. Just as well, Cisco enjoys a robust cash-to-debt ratio of 3.08X, better than the industry median metric of 1.3X. While it prints average revenue growth, it’s consistently profitable.
And that translates to greater confidence in the underlying forward yield of 3.09%. In contrast, the broader tech sector average yield is only 1.37%. Also, it’s worth pointing out that the payout ratio sits at a very sustainable 38.76%. Thus, CSCO makes a great case for reliable dividend stocks to buy.
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.
