Dividend investment can make you wealthy but you need to pick the right stocks. Whether you are just beginning your investment journey or are a professional at it, there is nothing better than receiving income without having to work for it. The earnings season is a good time to target top dividend stocks to add them to your portfolio. I’ve identified seven dividend stocks to buy as they are ready to soar after having reported strong fundamentals. These are dividend kings with steady cash flow and a commitment to rewarding shareholders.
These companies have survived several market ups and downs and can weather any storm. Some of these stocks are trading at a discount due to the current economic uncertainty and market volatility, but these are gems worth holding on to for a decade. They will offer passive income with capital growth over the years. Let’s take a look at them.
Dividend Stocks to Buy: PepsiCo (PEP)
Beverage and snack food giant PepsiCo (NASDAQ:PEP) hasn’t had a good start to the year. PEP stock is up 3% year-to-date and hasn’t rallied much. Trading at $179, the stock is a buy in the dip.
Its business is doing well and even if the company sees a drop in sales volume in one quarter, it wouldn’t affect the long-term business outlook. If you have been waiting for the stock to dip before you make your move, now is the time.
PepsiCo is so much more than a beverage company and generates more than half of the income from the food segment, this diversification is the reason you should bet your money on the company. It allows the company to enjoy steady growth. In the first quarter, PepsiCo saw a 2.7% rise in organic sales and is projecting a 4% rise in sales throughout 2024.
If you are a passive income investor, a dividend yield of 3.02% and a steady rise in dividends should be reason enough to hold on to the stock. With summer approaching, PepsiCo could have better days ahead.
Johnson & Johnson (JNJ)
Dividend aristocrat Johnson & Johnson (NYSE:JNJ) is a safe stock in times of market uncertainty. Both of its segments, innovative medicine, and MedTech are thriving.
The innovative medicine sector reported a 2.5% jump in sales to hit $13.6 billion while the MedTech division grew 6.3% to hit $7.8. billion. The company enjoys a dominating position in the market, and the success of its drugs and cardiovascular goods has helped achieve tremendous growth.
Trading for $149, the stock has dropped 6% YTD, and this dip is a chance to make the move. It is very close to the 52-week low of $143 and might continue to drop before it soars. This dividend stock will add stability and safety to your investment portfolio. It enjoys a dividend yield of 3.31% and announced a 4.2% rise in dividend in the first-quarter results. JNJ is one of the top dividend stocks to buy.
Johnson & Johnson enjoys steady cash flow growth and ended the quarter with $26 billion in cash. It has a top-tier balance sheet and has been paying dividends for 62 years. Buy the stock before it soars.
American Express (AXP)
There are two reasons to bet on American Express (NYSE:AXP). One is the growing transition from cash to cards. The demand for cards is going to be on the rise as people across the world continue to use their debit and credit cards.
Second, the company has successfully managed to capture the attention of the younger generation. About 60% of its new customer accounts came from Gen Z and millennials. This specific demographic is jumping on the earning ladder and could be using debit and credit cards for all of their purchases, making American Express indispensable.
American Express reported an 11% YOY rise in revenue for the first quarter to hit $15.8 billion and a 34% YOY jump in the net income to reach $2.4 billion. It added 3.4 million cards in the quarter.
Trading at $235 today, the stock is up 25% YTD and has increased 56% in the past 12 months. The company has a steady source of income and as the usage of cards increases, American Express will make more money. It increased the dividend by 17% this year and enjoys a yield of 1.19%.
Caterpillar (CAT)
There are several reasons to bet on Caterpillar (NYSE:CAT) stock. The largest construction equipment manufacturer in the world has reported impressive first-quarter results. The company enjoys a diversified business that caters to multiple industries and its revenue came in at $15.8 billion and the net income soared 47% YOY to hit $2.86 billion.
The management expects the 2024 sales to be similar to 2023 but I do not think it will impact the dividends. Trading at $350 today, CAT stock is up 19% YTD and 67% in the past 12 months.
It has an envious balance sheet and a steady cash flow which allows the company to offer a dividend yield of 1.48%. It is currently focusing on growing its service revenue so that the company does not suffer during extreme market conditions.
Caterpillar holds a global presence and operates in an industry that can never run out of demand. It is a mature company set to benefit from the growing importance given to the construction industry. The company has raised dividends for three consecutive decades, making it one of the top dividend stocks to own.
Dividend Stocks to Buy: Walmart (WMT)
Having impressed with the first-quarter numbers, Walmart (NYSE:WMT) stock went from $59 to $64 in a day. Trading at $64 today, the stock is up 22% YTD and has been quietly moving in the upward direction. As inflation cools, Walmart will be the first one to benefit because we are never going to stop spending on groceries and household essentials.
It reported a revenue of $161 billion with the EPS coming in at $0.60. The company isn’t the one to sit back and watch consumer preferences change, instead, it pounces on every opportunity to grow. It has invested in the e-commerce segment and saw a 22% jump in e-commerce sales in the recent quarter.
Despite the economic challenges, Walmart is ready to take off. Having paid dividends for over 50 years, the company recently announced a 9% dividend hike. With a dividend yield of 1.28%, WMT stock is a long-term buy and hold and it looks inexpensive to me at the current level. It certainly has the potential to raise dividends in the coming quarters and is one of the best dividend stocks to buy.
Morgan Stanley (MS)
Another fintech company I love, Morgan Stanley (NYSE:MS) has bounced back with an improvement in the investment banking sector. The company saw a 16% jump in revenue in this investment banking unit while the wealth management unit was up by 5%.
It reported a revenue of $15.14 billion and saw a whopping 138% jump in the EPS quarter over quarter and 19% YOY, to $2.02.
Morgan Stanley is sitting in a strong position right now and is building momentum for the months ahead. It also saw a 100% YOY jump in the debt underwriting revenue. A rate cut and an improved economic outlook could benefit the company.
Exchanging hands for $98, the stock is just up 5% YTD and I believe it has a long runway. It has a dividend yield of 3.44% and pays an annual dividend of $3.40. Warren Buffett’s favorite stock, Morgan Stanley is here to stay and the investment banking sector will keep driving growth.
Domino’s Pizza (DPZ)
Fast food giant Domino’s Pizza (NYSE:DPZ) is making slow and steady moves. Trading at $502 as of writing, DPZ stock is up 21% YTD and 63% in the last 12 months. The company’s dividend is as tasty as the pizza. With a dividend yield of 1.20%, Domino’s has raised the payout for the past 12 years and I am certain it will continue doing the same.
In the first quarter, revenue increased 7.3% and it reported an EPS of $3.58, better than expectations. Its net income jumped 20% to $126 million, and the same-store sales grew 5.6% in the U.S.
Domino’s expansion strategy is paying off, and it has successfully managed to open multiple stores across the globe. It aims to open 1,100 stores by 2028. The company’s effective marketing and pricing has helped it reach new highs, and I am certain your investment will pay off in the coming years. Domino’s is a global leader, a household name, and has a long way to go.
On the date of publication, Vandita Jadeja did not hold (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.
