This story originally appeared on MarketBeat
At a time of economic uncertainty, there is something to be said about low-risk dividend stocks. Companies whose assets are not directly related to economic health and which pay a steadfast dividend can be a reassuring investment for those who don't want to take great risk.
Here, we introduce three stocks that offer steady dividends and some level of security as the economic recovery unfolds. They probably won't make you rich anytime soon, but they will make for some restful nights
Is Coca-Cola still a buy-and-hold stock?
If Coca-Cola (NYSE: KO) is a refreshing investment for value legend Warren Buffet, it should be good enough for the rest of us. Regardless of the economic environment, there will always be consumer demand for sodas, juices, teas and other beverages.
With this in mind, restrictions on large gatherings during the pandemic have impacted Coke's recent financial performances, adding more volatility than usual to the stock. With the worst likely ending, however, the company appears to be on its way back to normalized sales patterns. With family picnics and outdoor concerts gradually returning along with restaurant traffic, the group size should make Coke notice higher volumes than stocking.
Despite Coke's revenue being 11% lower in 2020, the dividend hike continued to allow loyal shareholders to pay out $ 1.64. The 2.4% increase in dividend resulted in higher dividends for 59 consecutive years.
In the short term, cola is a conservative way of playing the theme of economic reopening. The beverage portfolio is more in line with the health and wellness trends of brands such as Vitaminwater, PowerAde and Minute Maid. As activities such as youth sports and participation in amusement parks normalize, Coke's performance should improve.
The longer-term rising dividend and the defensive nature of Coke make Coke a classic buy-and-hold stock. So investors can simply choose what Warren drinks.
What's a Good Dividend Non-cyclical Stock?
Unilever (NYSE: UL) is as non-cyclical as it gets on defensive stocks. The UK-based consumer goods giant is the company behind many of our favorite personal care and food products. Pigeon Soap, Ax Body Spray, Q-Tips and Vaseline are trademarks of Unilever. Equally popular indulgences like Ben & Jerry's ice cream, Lipton iced teas (and soups), Hellmann's mayonnaise, and even the popular Popsicle brand.
Unilever is definitely a mature, low growth company, but sometimes it slowly and steadily wins the race. After rising 9% and 6% respectively in 2019 and 2020, the low volatility stock is down about 8% this year, which gives investors a good chance to stock up.
Although the increased demand for Unilever groceries has subsided over the past few quarters, it is pretty certain that people will still pick up on their items once shopping patterns normalize. And, as usual, this should translate into solid profits for Unilever and sizeable dividends for shareholders.
Unilever has one of the strongest track records in its peer group, which supports the ability to pursue growth opportunities such as product expansion and a stronger presence in developing markets. The ADR currently has a trailing dividend yield of 3.4%, which is roughly twice the average dividend yield of the consumer staples sector. This is a simple stock to toss in the shopping cart as a long-term core item.
Is It A Good Time To Buy 3M Stock?
3M (NYSE: MMM) has been one of the least volatile US large-cap stocks for the past decade. While it is not a defensive consumer company, its highly diversified end markets produce reliable financial results. With broad exposure to the automotive, aerospace, transportation, electronics, healthcare, and consumer markets, a downturn in one segment can easily be offset by strength in another.
The company has shown some choppy performances over the past few quarters. Some of them have to do with the pandemic, some not. The demand for home improvement, cleaning, food safety, and personal safety products has been strong. On the flip side, COVID-19 restrictions have forced automotive, industrial, office supply, and oral care companies to reevaluate adapting to the post-pandemic economy.
However, after a corporate reorganization, 3M appears to be in a good position to benefit from the improved conditions in its key markets and to meet its profit growth target. Management aims to reduce annual operating costs by at least $ 250 million. Based on the initial progress, this seems feasible and should lead to higher margins and steady single-digit growth in the long term.
3M generates approximately $ 30 billion in annual revenue and rewards shareholders with a higher dividend, even in years of slow or no growth. In fact, 3M has partnered with Coca-Cola to increase its annual dividend for the past 59 years. The mainstay of the Dow Jones index has a dividend yield of 3.1% and 23x earnings is trading at the lower end of its historical valuation range. It deserves to be a mainstay in a long-term investment portfolio.