3 Dividend Stocks to Help You Sleep Well at Night

Thursday, February 25, 2021 | Sean Sechler
3 Dividend Stocks to Help You Sleep Well at Night

Now that we’ve seen some volatility in February, it might be time to take a long hard look at your portfolio holdings. If you were feeling very uncomfortable during the recent market weakness, you might be overexposed to things like growth stocks or simply haven’t accurately defined your risk tolerance. While growth stocks and momentum names can be very exciting when they are roaring higher, they can be equally stressful during bouts of volatility. That’s why adding a few conservative low-beta dividend stocks to your portfolio is usually a good way to find balance.

Even though these types of investments don’t have the same allure as growth stocks, there’s something to be said about the stability, passive income, and “get rich carefully” qualities that dividend stocks can offer. The truth is that building out a great long-term investment account is all about finding the right tradeoff between riskier companies with big upside potential and stable businesses with consistent earnings. That way, you can rest easy knowing you aren’t overexposed in any one area.

Let’s take a look at 3 dividend stocks to help you sleep well at night.

Medtronic (NYSE:MDT)

Owning one of the biggest medical technology companies in the world is a great way to gain peace of mind for your portfolio. We know how important the healthcare industry is to the world’s economy, and a market-leading company like Medtronic plays a key role. Medtronic’s diversified business offers a nice balance between market leading-products and a pipeline of new growth opportunities. The company sells therapeutic medical devices for chronic diseases, with a portfolio including things like pacemakers, defibrillators, heart valves, insulin pumps, neurovascular products, and surgical tools.

This company has saved countless lives with its innovative products and delivered steady dividend growth for long-term shareholders over the years. Medtronic is a Dividend Aristocrat with over 43 years of consecutive dividend increases and the stock currently offers a 1.97% dividend yield. It should receive a boost to its earnings as elective procedure volumes pick up again and there’s also plenty of upside for the company in emerging markets like China. It’s a great pick for any dividend investor that wants exposure to the healthcare industry.

Colgate-Palmolive (NYSE:CL)

The consumer staples sector can be a good area to look if you are interested in stocks that offer steady revenue, a lack of cyclicality, and dividend growth. For example, Colgate-Palmolive is a nice option since it manufactures and distributes oral care, personal care, household surface care, fabric care, and pet food products that people will always need to buy. The company’s brands like Colgate, Palmolive, Irish Spring, Softsoap, and Irish Spring are household names that are sold in over 200 different countries. That means investors can rest easy knowing that they own a company with a wide economic moat and a dominant worldwide market share.

In Q4, Colgate-Palmolive reported a 5% year-over-year increase in adjusted EPS to $0.77 along with year-over-year organic sales growth of 8.5%. It’s nice to see a steady-dividend payer report earnings growth, albeit a small one. Looking for consistency? Colgate-Palmolive has paid out dividends for 125 consecutive years and raised its dividend for 58 consecutive years. The stock offers a dividend yield of 2.25% and the company has a rock-solid credit rating, which are more reasons why it’s an attractive dividend stock for your portfolio.

Costco Wholesale Corp (NASDAQ:COST)

Costco is a great example of a company with a lot of strengths and a tried-and-true business model that investors can count on. The company currently operates 803 membership warehouses in the U.S., Canada, and several other countries and has created a brand with loyal devotees. People love Costco for several reasons. One of the main draws is that customers can purchase great products in bulk at low prices. The food court in each store is also a customer-favorite, along with the opportunity to try out free samples. There’s also the company’s Kirkland Signature brand which reached over $52 billion in sales during 2020. These are all reasons that Costco has become one of the biggest retailers in the United States.

Costco is a great option for dividend investors because they can always rely on the company to deliver strong sales numbers thanks to its competitive strengths. For example, January sales were up 17.9% to $11.57 billion along with a year-over-year increase in e-commerce sales of 105.4%. While the dividend yield of 0.82% is a bit low, Costco has been known to issue special dividends thanks to its financial strength. The stock has been sinking over the last few months and recently hit its 200-day moving average, offering a sensible entry point for long-term investors at this time.

Featured Article: Relative Strength Index

7 Stocks That Cathie Wood is Buying And You Should Too

If you’re an investor that likes to go with the “hot hand,” then they don’t get much hotter than Cathie Wood. The founder and CEO of ARK Investment Management delivered returns of over 100% in all five of her firm’s exchange-traded funds (ETFs) in 2020.

The names of her funds showcase some of the hottest emerging growth trends in the market: financial technology (fintech), genomic revolution, innovation, autonomous technology/robotics, and next generation internet.

As you would expect, these funds contain some of the hottest growth stocks from the past year. And in the aftermath of the tech selloff, Wood is not backing away. In fact, she’s doubling down on her strategy. It might not be exactly a matter of being greedy while others are fearful; perhaps more like being prepared while others are distracted.

But the other thing about Wood’s selections is that many of them are not obscure names. These are companies that were among the hottest names in 2020. Wood simply believes that they still have room to run. And that’s one reason you should consider making them a part of your portfolio.

In this special presentation, we’re giving you just seven of the stocks that Cathie Wood is buying or has bought recently. We’ve attempted to pick out at least one stock from each of the ARK ETFs. As with any investment decision, it’s important that you perform your own research before making a decision.

View the "7 Stocks That Cathie Wood is Buying And You Should Too".

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Medtronic (MDT)2.7$125.91+0.0%1.84%48.06Buy$125.33
Colgate-Palmolive (CL)2.2$80.70+0.3%2.18%25.78Hold$82.17
Costco Wholesale (COST)2.3$370.72+0.5%0.76%38.06Buy$387.43
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