4 Dividend Stocks to Buy as Uncertainty Looms
Stocks that pay dividends can provide investors with a great source of income. Many investors rely on dividend stocks as a passive source of income in retirement.
And when times get tough in the stock market (as they are right now with continued volatility), it helps to have steady quarterly and annual dividend payments to rely on.
While some stocks are famous for their dividend payments, and for increasing the amount of their dividend each and every year, there are many great dividend stocks that fly under the radar with investors. These unrecognized gems would be a welcome addition to any portfolio.
In this article, we take a look at four dividend stocks for investors to buy as uncertainty looms in the markets.
- Target (NYSE:TGT)
- Proctor & Gamble (NYSE:PG)
- PepsiCo (NASDAQ:PEP)
- Discover Financial Services (NYSE:DFS)
Dividend Stocks: Target (TGT)
Minneapolis, Minnesota-based Target just blew the house down with its latest quarterly results. The popular retailer reported that its first-quarter sales rose 23% driven by the popularity of exclusive brands and services such as curbside pick-up during the Covid-19 crisis.
The company’s earnings per share in the first quarter came in at $3.69 versus $2.25 that had been expected by analysts. Revenue rose 23% to $24.2 billion from the same period a year ago, outpacing analysts’ expectations of $21.81 billion.
Emboldened by its strong results, Target raised its second-quarter guidance, saying it now expects comparable sales to grow by the mid-to-high single digits in the second quarter and by the single digits in the last two quarters of 2021. Target also said that it is on track to invest $4 billion to improve the customer experience and increase its store footprint as we emerge from the global pandemic.
With such strong results, it should come as no surprise that Target has raised its dividend to shareholders for 49 consecutive years. Today, Target pays an annual dividend of $2.72 per share. TGT stock has been a reliable winner in recent months, up 28% so far this year.
Proctor & Gamble (PG)
If you’re human, chances are you’ve used some of the consumer products made by Cincinnati-based Procter & Gamble. The maker of brands ranging from Pampers diapers, to Tide detergent, Gillette razors, Head & Shoulders shampoo and Crest toothpaste are hard to avoid.
And the company is a true dividend aristocrat, having raised its dividend for an impressive 64 consecutive years.
On April 13, Procter & Gamble raised its quarterly dividend by 10%, from 79 cents per share to 87 cents. It was the second time during the pandemic that Proctor & Gamble hiked its quarterly dividend payment, having also done so in the second quarter of 2020. It’s no wonder that investors who earn passive income from dividend payments love PG stock.
The company’s share price fell at the start of this year, but since investors began focusing on stocks that will benefit as the economy reopens, Proctor & Gamble’s stock has climbed 10% higher since early March.
Dividend Stocks: PepsiCo (PEP)
Coca-Cola (NYSE:KO) tends to get all the attention for being a blue-chip dividend king. But don’t sleep on PepsiCo. The other major cola company, based in Purchase, New York, is a giant not only in the beverage sector but also when it comes to snacks and packaged foods.
PepsiCo branded products today include Lays potato chips and Tostitos tortilla chips. Its drink segment goes well beyond Pepsi products and includes Tropicana orange juice, Lipton iced tea and Gatorade sports drinks. In many respects, PepsiCo is a much more diversified company than Coca-Cola.
Owing to its diversification, PepsiCo’s earnings per share rose 29% amid the pandemic last year, while Coca-Cola’s earnings per share declined 19%. And PEP stock pays a very healthy dividend yield of 2.9%, equal to a yearly payment of $4.09 per share.
Like the other stocks on this list, PepsiCo increases its dividend each year, most recently raising it from $3.82. The company’s stock price struggled earlier this year but has gained traction in recent weeks, rising 11% since mid-March.
Discover Financial Services (DFS)
Speaking of overlooked stocks, how about Discover Financial Services? Investors tend to focus on the big three credit card providers, Mastercard (NYSE:MA), Visa (NYSE:V) and American Express (NYSE:AXP) while missing completely Discover.
With a $35 billion market capitalization, Discover is the No. 4 credit card company in the U.S. and tends to live in the shadows of its larger rivals. However, among the big credit card companies, Discover pays the highest dividend yield at 1.5%, which equates to an annual payout of $1.76.
Bank of America (NYSE:BAC) recently upgraded DFS stock to a “buy” rating from “neutral” previously, citing the company’s diversification as a core strength. In addition to its credit cards, Discover also offers private student loans, personal loans, home loans, checking and savings accounts and certificates of deposit through its bank business.
Discover’s stock has been a strong outperformer in 2021, up 30% year-to-date. The company’s latest earnings report was exceptionally good.
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.
