Investing for Stability: 3 Promising Dividend Stocks to Consider in April 2024
Most investments are filled with uncertainty. You could put your money into a CD or a high-yields savings account to minimize your risk, but these accounts don’t pay as well as stocks. While stocks can go down, they can deliver tremendous upside for long-term investors.
Index funds and ETFs can simplify the process of investing. These funds take less work, but some people want to construct portfolios that can achieve respectable returns while aligning with the investor’s risk tolerance. Investors who are seeking stability and lower risk may want to consider these promising dividend stocks.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) has become a well-diversified corporation that taps into numerous growth levers. It doesn’t have a high yield, but a good growth rate combined with numerous segments can lead to continued outperformance. Business software, Xbox, LinkedIn, Microsoft Azure Cloud, Bing and artificial intelligence (AI) are some of the company’s opportunities.
Azure is the most significant revenue engine for now and made up more than half of the company’s total revenue in Q2 FY24. Cloud revenue increased by 24% year-over-year (YOY) while the firm’s overall revenue increased by 18% YOY. Further, MSFT generated $62.0 billion in revenue and $21.9 billion in net income during the quarter. That comes to a 35% net profit margin.
Analysts can’t get enough of the stock and believe that it has an implied 17% upside from current levels. With a strong buy rating, the stock’s highest price target of $550 per share suggests a 35% gain. Microsoft has rewarded analysts’ optimism with a 10% year-to-date (YTD) gain. Shares have rocketed 214% higher over the past five years.
Walmart (WMT)
Many people turn to Walmart (NYSE:WMT) when they want to save money. When the cost of living gets higher and the economy becomes unstable, people want to protect their wallets.
Although Walmart has established a reputation as an affordable retailer, the stock can outperform the broader market during economic booms. Shares have gained 75% over the past five years which is better than the S&P 500. Also, Walmart’s 12% YTD gain is higher than the famed index.
Walmart closed Q4 of FY24 with 5.7% YOY revenue growth. Advertising and e-commerce continue to strengthen the company. These two segments can make Walmart more attractive for long-term investors. Recently, Walmart acquired Vizio to bolster its advertising division.
The stock has 1.40% dividend yield and recently committed to a 9% dividend hike. It’s Walmart’s highest dividend hike in more than a decade. Currently, Walmart trades at a 31 P/E ratio.
American Express (AXP)
American Express (NYSE:AXP) offers stability in any economic cycle. While certain products and services may fall out of favor, people will continue to use their credit and debit cards. These cards are more convenient than cash, and consumers can rack up rewards or cash back for every purchase.
Investors can choose from several credit card giants. However, American Express has the lowest P/E ratio and a rapidly rising profit margin. The stock has a 20 P/E ratio and has delivered an exceptional 104% return over the past five years. It’s also off to a great start with a 27% YTD gain.
American Express achieved 11% YOY revenue growth and 34% YOY net income growth in Q1 of 2024. The firm expects full-year revenue growth to range from 9% to 11%. Most of the company’s newest cardholders are Gen Z or Millennials. This trend demonstrates the firm’s ability to attract younger generations.
On this date of publication, Marc Guberti held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
