There’s no such thing as guaranteed gains the stock market, but investing in a strong dividend-paying company offers relative safety and nice income regardless of market volatility. That’s why many investors are focused on finding the best dividend stocks in the market, particularly in the era of the global pandemic. Although growth stocks have been red hot since the market bottomed out back in March, that doesn’t mean you should ignore the opportunity that dividend-paying stocks have to offer.
With interest rates at historic lows and bond-yields heading down quickly, the payouts from dividend stocks are becoming more and more appealing with every passing day. However, in this market, it’s important to dive deep into a company’s financials and business model prior to investing since many businesses will have cash flow issues in the near-term that could put their dividends at risk. That’s why we’ve compiled a list of 3 smart dividend stocks to buy now to save you some of the hard work.
Johnson & Johnson (NYSE:JNJ)
If you are looking for a company in the healthcare industry that is a dividend king, meaning that they have increased their dividend payout for at least 50 consecutive years, you need to take a look at Johnson & Johnson. This is a company that researches and develops products in the healthcare field, which is an area that will always see extensive demand worldwide. You are likely familiar with Johnson & Johnson’s famous brands like Listerine, Aveeno, Neutrogena, Band-Aid, and Tylenol. The opportunity to own a company with so many established products should not be overlooked, and you have to like the solid dividend yield of 2.80%.
With this stock, you are getting shares of a company that is financially healthy with room for significant growth. Perhaps the most exciting thing to note about Johnson & Johnson is that they are working hard on a COVID-19 vaccine that will be in human trials as soon as July. If the vaccine works, the company is well-positioned to manufacture millions of doses and help end the global pandemic for good. Even if the vaccine narrative doesn’t pan out for this stock, you will still have ownership of one of the best dividend-paying stocks of all time.
Sometimes, boring is a good quality to look for when it comes to dividend stocks. If you can find a company like AT&T that has steady cash flows and an established customer base, it’s absolutely worth a look. Although you shouldn’t expect a ton of accelerated growth with this stock, the fact that this company is a leader in telecommunications, media, and technology services worldwide and currently offers a 6.89% dividend yield absolutely makes it worth buying now.
In today’s uncertain economy, buying a dividend stock with a history of increasing its payout for decades makes a lot of sense. That’s exactly what you are getting with AT&T, one of the dividend aristocrats in the S&P 500. There are also some intriguing aspects of owning AT&T to keep in mind as well such as the rise of 5G networks and the new rollout of its streaming platform HBO Max. Consider AT&T a buy at this point that will help you lock in a very strong dividend yield.
Coca-Cola Company (NYSE:KO)
Buying dividend stocks during a recession means that you want defensive plays so that their products will have a relatively stable demand regardless of what the economy is doing. That’s exactly what you get with the Coca-Cola Company, one of the most iconic brands in the world. The multinational beverage corporation offers a solid 3.51% dividend yield and is another member of the esteemed dividend aristocrat club.
Believe it or not, this is the stock on our list with the most near-term risk, since a large portion of their revenue comes from restaurants. We don’t really know when the restaurant industry will get back to normal as the global pandemic continues making an impact, so keep in mind that Coca Cola’s sales figures will be affected. With that said, the strong history of dividend growth and increasing net income that Coca-Cola offers makes it a fairly safe bet in an uncertain market. Although the stock is down on the year, Coca-Cola has a strong balance sheet and enough free cash flow to withstand whatever comes its way.
Each one of these stocks should be considered a smart buy for dividend investors at this point, especially since they all have such a reliable history of increasing their payouts. If the market takes another downturn, remember that the dividend yields for these stocks will go up and offer an even more enticing entry point for savvy investors.
Companies Mentioned in This Article