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PYPL   71.47 (-0.49%)
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3 Dividend Aristocrats to Buy in a Volatile Market

Tuesday, March 15, 2022 | Sean Sechler
3 Dividend Aristocrats to Buy in a Volatile Market

Reliable Dividend Stocks Are Great Options in Any Market Environment

It’s hard to imagine a worse way to start the year for markets in 2022, as U.S. equities have been bludgeoned and are off to one of the poorest Q1 performances of all time. Volatility is wreaking havoc on certain sectors like technology stocks, and with so many complex factors to consider like soaring inflation, geopolitical conflicts, and interest rate hikes, many investors are wondering if they should just wait for more clarity before putting new money to work. While it's safe to say that the volatility might not be going away anytime soon, that shouldn’t scare you away from taking advantage of great stocks that will help you generate income for your portfolio over the years.

Dividend aristocrats are a particularly intriguing area of the market to consider, as investors can rely on these companies for consistent increases in payouts over the years. Each one of the members of the esteemed dividend aristocrats club has increased its dividend for 25 consecutive years or longer, which is certainly the type of reliable growth that investors should be targeting amidst immense uncertainty in the market.

Here are 3 dividend aristocrats to buy in a volatile market:

Consolidated Edison (NYSE: ED)

If you’re interested in illuminating your portfolio with a strong utility stock, Consolidated Edison should be in the spotlight. This electric and gas utility holding company serve areas like New York City, southeastern New York state, and northern New Jersey, which means investors can count on this company to generate consistent cash flows that will cover the dividend over the years. It’s also worth noting that New York regulators adjust rates for things like weather and sales volume, which has been a big positive for Consolidated Edison during the pandemic and keeps earnings and cash flows for the company fairly steady.

With 47 consecutive years of dividend growth and a 3.54% dividend yield, investors that are feeling weary from the volatility might want to consider adding a few shares of this reliable stock. It’s also worth mentioning that Consolidated Edison delivered a solid Q1 earnings report, which saw the iconic utility company deliver year-over-year revenue growth of 15.3% at $3.42 billion for the quarter. In a tough market that continues to face significant selling pressure, the fact that Consolidated Edison stock is up over 4% year-to-date is a testament to the company’s quality.

General Dynamics (NYSE: GD)

Our next dividend aristocrat is a company that could be poised to do a lot more business thanks to the conflict in Ukraine. General Dynamics is a leading defense contractor with segments including aerospace, combat systems, marine, and technologies. These types of businesses tend to make for great long-term holdings since the U.S. Department of Defense is their primary customer. Defense budgets aren’t very correlated to economic growth, which means this company should be able to deliver strong earnings even in a recession. Also, with the increasing geopolitical tensions that we have witnessed this year, it wouldn’t be surprising to see Congress approve a bigger defense budget.

General Dynamics has developed everything from Gulfstream jets to nuclear submarines, which has helped the company become a market-leading force. For example, with limited competition and high barriers to entry in the company’s Marine Systems segment, General Dynamics has reported 17 straight quarters of revenue growth in that area. Additionally, the company’s management recently boosted the dividend by 8%, which is certainly a sign of confidence for the short term. With a 2.17% dividend yield and catalysts working in this General Dynamics' favor, it’s certainly a good option to consider in a volatile market.

Cardinal Health (NYSE: CAH)

Although Cardinal Health recently lowered its 2022 guidance and is dealing with some issues related to inflation, investors should still be interested in adding shares of this leading pharmaceutical wholesaler for the long term. While factors like increased freight costs and rising prices for raw components will likely continue to weigh on earnings for a few quarters, this is still a very strong business that has an appealing dividend yield of 3.73%. Cardinal Health should have no problem maintaining its dividend aristocrat status, and the fact that shares are trading at a 9.91 forward P/E ratio suggests that a lot of the bad news is already priced in here.

Additional reasons to consider adding Cardinal Health include the company's strong negotiating position with drug manufacturers, given that it's one of the “Big Three” wholesalers. The company did recently report Q2 revenue growth of 9% year-over-year, and the inflated costs that are causing issues for the company are likely a temporary problem. It takes a very strong business model to deliver 35 consecutive years of dividend growth, which means that Cardinal Health could end up being a great place to park some capital at this time.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Cardinal Health (CAH)
3.0948 of 5 stars
$53.69-0.2%3.65%8.18Hold$60.56
General Dynamics (GD)
3.222 of 5 stars
$219.28-0.5%2.30%18.77Moderate Buy$243.00
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Should you invest $1,000 in Cardinal Health right now?

Before you consider Cardinal Health, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Cardinal Health wasn't on the list.

While Cardinal Health currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

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