Dividend Stocks

Nearly the entire stock market is under pressure at the moment. Technology, healthcare, retail — it doesn’t matter. Even the safety we find in dividend stocks is under assault. In fact, almost everything is under pressure right now, with the exception of energy stocks.

Overall, dividend stocks aren’t inherently safe or dependable. You have to do the actual work of finding those hidden gems across Wall Street.

However, when you do locate those holdings, they can help you sleep a little better at night. And it’s not just due to the dividend yield, but also because the stocks tend to be very stable and consistent businesses. Thus, it’s important to remember that when you’re buying stocks, you’re buying a stake in a company — no matter how small your holding is.

So, with that in mind, here are a handful of quality dividend stocks that investors should consider buying on the current dip.

  • Ford (NYSE:F)
  • Starbucks (NASDAQ:SBUX)
  • Exxon Mobil (NYSE:XOM)
  • Realty Income (NYSE:O)
  • Federal Realty (NYSE:FRT)
  • Target (NYSE:TGT)
  • Lowe’s (NYSE:LOW)

Now, let’s dive in and take a closer look at each one.

Dividend Stocks to Buy: Ford (F)

Source: Proxima Studio / Shutterstock.com

Okay, okay. So Ford has only one consecutively paid quarter under its belt with the current dividend, but hear me out.

The automaker axed its dividend and built up its coffers when the novel coronavirus pandemic hit the U.S. Supply chains came grinding to a halt — and still remain very disrupted — and foot traffic to dealerships disappeared.

Nonetheless, the demand came roaring back for anything with four wheels and an engine. New cars, used cars — it didn’t matter, people wanted it.

Now, Ford finds itself in a much better position, with strong demand and solid enough footing to have a dividend. The company currently pays out a 2% dividend, although that yield would have been much higher if not for the stock’s powerful rally.

In the past two weeks, though, Ford stock has fallen more than 23% from the highs. However, year-to-date (YTD), it’s flat on the year and still outperforming the S&P 500 and Nasdaq Composite in 2022. Plus, it has its F-150 Lightning coming into production soon, a vehicle that has enormous demand.

Collectively, Ford has a lot working for it in the next few years. And with its newly-reinstated dividend, it’s one that more aggressive buyers of dividend stocks may want to consider.

Dividend Stocks to Buy: Starbucks (SBUX)

Source: Grand Warszawski / Shutterstock.com

Starbucks is not really known for its dividend yield. Like Ford, however, shares pay out a 2% yield. That’s not exactly groundbreaking, but management has remained committed to sizable increases in its payout.

Moreover, I like Starbucks because it’s a beautiful balance for investors.

There’s a little bit of a yield and a dividend that’s been increased for 11-straight years. The company is sitting between growth and value, straddling the line between generating acceptable growth and a well-established, long-lasting brand. We can call it a “mature growth” company.

In any regard, just take a drive around and you’ll see how busy this company is. Pandemic or not, Starbucks remains in demand and that has kept it as a cash flow machine.

Thus, with shares down 18% from recent highs, interested investors may consider nibbling.

Dividend Stocks to Buy: Exxon Mobil (XOM)

Source: Harry Green / Shutterstock.com

Exxon Mobil is the best-performing stock on this list right now. YTD, shares of XOM stock are higher by nearly 22%.

That said, while Exxon hit its highest price since 2019, it remains well below its all-time high north of $100.

Given the economic recovery — and thus, the recovery in demand for energy products — Exxon could very well remain an attractive stock this year. The company generated strong growth in 2021, with estimates for the final tally sitting at 62.6% revenue growth and over 1,600% earnings growth; Remember, 2020 was a tough year.

For 2022 though, estimates are also rosy. Analysts expect about 12% revenue growth and nearly 20% earnings growth. Despite this, shares trade at more than 12 times forward earnings, while the dividend yield sits up at 4.8%.

And man, if oil prices continue to climb, what do you think will happen to Exxon stock then?

Dividend Stocks to Buy: Realty Income (O)

Source: Shutterstock

Pre-pandemic, Realty Income was one of the top real estate investment trusts (REITs) to own. Not much has changed in that regard, although love for REITs in general really took a hit.

Suddenly, no one wanted to own them. It’s one of the few groups that weren’t able to move to new highs after March 2020. I don’t know if that’s because the love was all about growth stocks, cryptos and everything else or if it’s because investors were worried about rents and a permanent work-from-home situation.

Either way, Realty Income isn’t one to forget about if you’re looking around for dividend stocks to buy on the dip.

Right now, the company kicks out a 4.4% dividend and remains 15.4% below its pre-pandemic high. Did you know that O stock hit a new all-time high in February 2020 just before the pandemic hit the U.S.?

Call me crazy, but at some point, that high has to be taken out. Not to mention it’s one of the most consistent dividend-payers in the market.

Federal Realty (FRT)

Source: Shutterstock

Along the same lines as the argument for Realty Income, Federal Realty is a blue-chip, go-to name in the REIT space. It boasts an impressive dividend track record and most recently increased its payout in August. From the company:

“This increase represents the 54th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.”

Federal Realty currently boasts a 4.4% dividend yield. That said, for those who are lucky enough to snag it in the 4% to 5% range, that’s relatively unfamiliar territory for the stock.

Additionally, shares have suffered a quick 13% pullback from their recent highs, just as the stock was starting to get hot. However, given the yield and the consistency from FRT stock, that may be a solid buying opportunity for the bulls.

Target (TGT)

Source: jejim / Shutterstock.com

Target has had better days than it’s seen now, recently falling almost 20% from its highs back in November. I remember the days pounding the table and making the bull case when Target had a 3%-plus dividend yield and was building out a powerful e-commerce platform.

Well, that has come to fruition and the company has been very successful in its efforts to not only hold off Amazon (NASDAQ:AMZN), but actually compete with them.

So, where does that love the stock now?

Shares are down notably over the past few months, but its dividend yield sits at just 1.7%. Perhaps Target needs a bit more of a washout in the stock price, but it’s one of those names that you can dependably accumulate over the years and feel confident you will come out on top.

In June, the company announced a 32.4% quarterly dividend increase, the company’s 50th consecutive annual increase. How impressive that is for the company to join the five-decade club.

Lowe’s (LOW)

Source: Helen89 / Shutterstock.com

Lowe’s wants some credit too. While the company has “only” raised its dividend for 25-consecutive years, that’s no small feat. It most recently did so last year, and like Target, did so with a 30%-plus boost to its payout.

Analysts expect a deceleration in growth this year (both for earnings and revenue), but given they still expect growth. For earnings, the consensus call is for 8.4% growth.

Given the backdrop of the work-from-home theme and a strong housing market, it’s hard to imagine Lowe’s having too much regression in its business, either short or long term.

In turn, that makes its 13% dip from the recent high look somewhat attractive. Like Target, perhaps it needs a bit deeper of a dip before being a buy, but it’s one to have on the radar.

Plus, don’t forget Lowe’s has a “hidden” catalyst: Most retailers bank on the fourth quarter being their largest. For Lowe’s, Q2 and Q3 are its biggest quarters — and those are soon approaching.

On the date of publication, Bret Kenwell held a long position in O. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

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