Dividend stocks can be a great way to build wealth. If you are a long-term investor and believe in dividend reinvesting, you could generate above-average returns over a few years. However, the trick is to choose companies that have a steady cash flow and those that believe in rewarding shareholders, no matter how the market moves. If a stock market crash is predicted for the near future, invest in these seven dividend stocks for steady returns, you will continue to generate income while you wait for the market to improve.
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These companies have steady earnings growth and enough liquidity to keep paying dividends. Whether you are investing for your retirement, to leave a legacy, or to cover your monthly expenses, these dividend stocks will ensure you enjoy a considerable amount of cash each year. With that in mind, let’s take a look at the dividend stocks for steady returns. All of these companies enjoy a yield higher than 2%.
Dividend Stocks For Steady Returns: 3M (MMM)
3M (NYSE:MMM) is ready for a comeback after the healthcare spinoff. The management has made several decisions to ensure that the finances are in place and has managed to see an improvement in the free cash flow. The company reported a revenue of $8 billion for the fourth quarter and an operating cash flow of $2 billion. It is set to report first-quarter results on April 30.
3M is making significant investments in the hydrogen industry to enhance the manufacturing of its electrolyzers and this move could help with future growth. MMM stock is trading for $91 today and it enjoys a dividend yield of 6.61%. It is hard to find a company with a dividend yield as high as 6% in the current market environment.
The company has paid uninterrupted dividends for over 100 years and there is little doubt that it will stop or reduce them. 3M has seen many market ups and downs and has the potential to thrive through them all.
Procter & Gamble (PG)
Dividend yield-2.48%Another dividend stock with over 100 years of dividend payments, Procter & Gamble (NYSE:PG) is a highly steady and reliable stock to own in market uncertainty. The company holds a strong market share in the industry and is known for a range of products that will never go out of demand.
Since it offers products suitable for everyday use, the demand is not impacted by market ups and downs. The company started paying dividends in 1890 and has raised the payout to $1.0065 per share this year. It has hiked dividends for 68 years and enjoys a yield of 2.48%. Trading at $162, the stock is nearing the 52-week high but it is worth your money.
The company recently announced the quarterly results with net sales of $20.2 billion and a 3% rise in organic sales. It returned $3.3 billion in cash to shareholders in the form of dividends and repurchases. Procter & Gamble has a dividend payout ratio of 56% which is higher than the sector average.
PepsiCo (PEP)
Dividend yield- 2.86%
Global giant PepsiCo (NASDAQ:PEP) has become a household name today and the company owns a wide range of brands which helps ensure diversification. In the first-quarter results, the company beat earnings, driven by higher prices and growing international sales.
It saw a higher volume and sales growth in the international markets which led to a 2.3% rise in sales to hit $18.25 billion. The management reiterated the guidance for the year and is expecting the organic revenue to increase by 4%.
Trading at $176, PEP stock is up 2% year-to-date and enjoys a dividend yield of 2.86%. The company has increased dividends for over 50 years and announced that it will increase the annual dividend by 7% starting June. With Pepsi, there is low risk and high return potential.
Barclays analyst has a price target of $185 for the stock with an overweight rating while Jefferies analyst has a buy rating with a price target of $209.
Pfizer (PFE)
Dividend yield- 6.65%
Pfizer (NYSE:PFE) has been struggling over the past year due to the massive drop in the sales of coronavirus vaccine. However, investors need to keep in mind that Pfizer is not limited to the vaccine and it was a successful business even before the pandemic hit us. The pharma company might be down today but there is a lot to look forward to.
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Currently, Pfizer has 34 programs in phase 2 trials and 31 programs in phase 3 trials. It is also spending a huge amount of money on the research and development of cancer drugs which could be a game-changer for the business. The management thinks that in the next six years, they will have eight blockbuster drugs.
You wouldn’t be impressed with the company if you looked at its finances now. Do not expect an immediate improvement in the top or bottom line but if you want to make passive income, PFE stock has a dividend yield of 6.65%. Trading at $25 today, the stock is a solid buy and the eventual progress on the clinical trials will take it higher but you will have to remain patient. Take home a steady income while you wait for big rewards.
Dividend Stocks For Steady Returns: Chevron (CVX)
Dividend yield-3.94%
With soaring oil prices, Chevron (NYSE:CVX) looks like a no-brainer buy now. The oil and gas giant is a cash flow machine with a strong upstream and downstream business. Due to its exposure to oil in the upstream production segment, Chevron is directly impacted by the soaring prices which leads to a higher revenue and margin.
Even if the market crashes, Chevron can survive. However, oil prices will continue to remain strong due to the Middle East turmoil. In the fourth-quarter results, the company saw a revenue of $47.18 billion and the EPS stood at $3.45. The company returned $26.3 billion to shareholders through buybacks and dividends in 2023.
Chevron expects the production to increase 4% to 7% this year which will boost the revenue. Trading at $165 today, the stock is on an upward rally. The upcoming results could boost the stock higher. With a dividend yield of 3.94% and a dividend payout ratio of 57%, there is room for growth. Analysts are bullish on the stock before the earnings.
NextEra Energy (NEE)
Dividend yield-3.08%
One of the largest energy companies in the world, NextEra Energy (NYSE:NEE) is a blend of two businesses-a utility business and a renewable energy business. The company is steadily expanding its market share and is an industry leader. A dividend aristocrat, NextEra Energy recently reported results and maintained a dividend hike of 10% for 2024.
It has a strong reputation for rewarding shareholders and its future looks bright. NEE managed to add 2,765 megawatts of new renewables and storage capacity to the portfolio in the quarter. Its net income stood at $1.10 per share and the management maintained the annual guidance.
NextEra Energy also expects to grow the dividends at 10% annually through at least 2026. As the demand for renewable energy soars, NextEra could be in a stronger position and we may be able to see higher dividend payouts. Trading at $66 today, NEE stock has a dividend yield of 3.08%. It is one of the best dividend stocks for steady returns to buy this year. Several analysts raised the price target of the stock after the quarterly results.
McDonald’s (MCD)
Dividend yield-2.42%
Fast food giant McDonald’s (NYSE:MCD) is a strong blue-chip stock to add to your portfolio. No matter the market situation, MCD continues to report impressive numbers due to its franchise business model. It aims to take the number of McDonald’s franchises from 41,000 to 50,000 by 2027. Fundamentally, the company is in a strong position with a 37% rise in net income in 2023 and a 10% increase in sales.
Since it does not own all the restaurants across the globe, it manages to keep the operating costs down while ensuring steady returns through fees and royalties. However, the stock has been under pressure lately due to the high prices. The company is working on making changes to bring back the customers.
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Any dip in MCD stock is a chance to buy. The dividend aristocrat has a yield of 2.42%. Trading at $275 today, the stock is down 7% YTD but I think this slump will not last long and the upcoming results could lead the stock to rally.
MCD is a highly defensive stock to buy and hold for the long term. As consumer spending improves, we could see the restaurant stock soar to new highs.
