7 Dividend Stocks to Buy When Safety is Your Top Priority

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[link]Capital preservation is an important objective for every investor.[/link] It's famously summed up by Warren Buffett who says his first rule of investing is to not lose money. And his second rule is to remember the first. When a bull market is racing higher, investors tend to get more aggressive. This means buying growth stocks. And in some cases these companies may not yet be generating a profit at all much less paying out a dividend.

Speculative investors would argue that the risk is worth it since, according to S&P Global, approximately two-thirds of the total return for the S&P 500 index in the last 100 years was due to capital appreciation. The other one-third comes from dividends. And when markets make a move downward, investors are seeking to hedge losses wherever they can. That's where dividend stocks come in.

In this special presentation, we're analyzing seven dividend stocks that investors can look for when they're looking for safety from market volatility. These dividends are safe and likely to continue to rise on a yearly basis.

#1 - AbbVie (NYSE:ABBV)

AbbVie (NYSE:ABBV) is the first of the dividend stocks to look at. The company recently gained entry into the exclusive Dividend Kings club. This means that the company has increased its dividend in each of the last 50 consecutive years. A dividend is a key part of an investor’s total return so a growing dividend helps to offset the years when shareholders have not enjoyed significant capital growth.

The company is beginning to show investors that it can manage any disruption that may occur when it loses patent protection for its flagship Humira drug. A key reason for that is it already has two potential replacements (Skyrizi and Rinvoq) in-market. And those two drugs delivered 64% and 54% year-over-year revenue increases respectively.

And despite the current turbulence in the market, ABBV stock is still up 11% for the year as of May 19, 2022.

About AbbVie

AbbVie Inc discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company offers Humira, an injection for autoimmune and intestinal Behçet's diseases, and pyoderma gangrenosum; Skyrizi to treat moderate to severe plaque psoriasis, psoriatic disease, and Crohn's disease; Rinvoq to treat rheumatoid and psoriatic arthritis, ankylosing spondylitis, atopic dermatitis, axial spondyloarthropathy, ulcerative colitis, and Crohn's disease; Imbruvica for the treatment of adult patients with blood cancers; Epkinly to treat lymphoma; Elahere to treat cancer; and Venclexta/Venclyxto to treat blood cancers. Read More

Current Price: $169.14
Consensus Rating: Moderate Buy
Ratings Breakdown: 10 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $177.43 (4.9% Upside)

#2 - Chevron (NYSE:CVX)

Energy stocks remain one of the best areas to look for value in this volatile market. That’s a good reason to look at Chevron (NYSE:CVX). Even with the market volatility, CVX stock is up 43% in 2022. Chevron has been a favorite of many MarketBeat analysts. And on the company’s last earnings call it reported a 10% year-over-year increase in domestic oil and gas production.

However, Chevron is more than just a play on high oil and gasoline prices. The company is taking steps to increase its production of liquefied natural gas (LNG). And the company is also looking to invest in other alternative energy projects where it believes it can add value.

The company has increased its dividend for 35 consecutive years. It currently pays out $5.68 on an annual basis which works out to a dividend yield of 3.37%.

About Chevron

Chevron Corporation, through its subsidiaries, engages in the integrated energy and chemicals operations in the United States and internationally. The company operates in two segments, Upstream and Downstream. The Upstream segment is involved in the exploration, development, production, and transportation of crude oil and natural gas; processing, liquefaction, transportation, and regasification of liquefied natural gas; transportation of crude oil through pipelines; transportation, storage, and marketing of natural gas; and carbon capture and storage, as well as a gas-to-liquids plant. Read More

Current Price: $160.91
Consensus Rating: Moderate Buy
Ratings Breakdown: 14 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $184.75 (14.8% Upside)

#3 - EPR Properties (NYSE:EPR)

Any list of dividend stocks is likely to include at least one real estate investment trust (REIT). That’s because this is a special class of companies that are legally obligated to pay out a significant portion of their earnings as a dividend. For this list, I’ve chosen EPR Properties (NYSE:EPR). This is a mid-cap company with a market cap as of this writing of just under $4 billion.

With REITs “what” and “where” matter a lot. In the case of EPR Properties the “what” is properties like theaters, amusement parks and stadiums. These are venues that have already benefited from the Covid-19 “travel revenge” movement. And, even with rising inflation, they may continue to hold up. That’s particularly true because many of these properties host destination events.

And despite the market volatility, EPR stock is up 7% for the year and has an annual dividend of $3.30 which currently works out to a dividend yield of 6.49%.

About EPR Properties

EPR Properties (NYSE:EPR) is the leading diversified experiential net lease real estate investment trust (REIT), specializing in select enduring experiential properties in the real estate industry. We focus on real estate venues that create value by facilitating out of home leisure and recreation experiences where consumers choose to spend their discretionary time and money. Read More

Current Price: $40.88
Consensus Rating: Hold
Ratings Breakdown: 3 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $48.05 (17.5% Upside)

#4 - Newell Brands (NASDAQ:NWL)

Another strategy for choosing dividend stocks is to get defensive. That’s an argument for buying Newell (NASDAQ:NWL) stock. The company operates in the consumer goods sector and is home to some of the country’s most recognizable and beloved brands. More importantly, it sells products that show consistent demand regardless of prevailing market conditions.

In the company’s most recent earnings report, the company posted 4% year-over-year (YOY) revenue growth and an even more impressive 20% YOY growth in earnings. And while many stocks are dealing with double-digit declines in their stock prices, NWL stock is essentially flat for the year. A total of 17 analysts give the stock an upside of over 44% from its current level. And even though Raymond James lowered its price target in April, it maintained a Strong Buy rating for Newell.

The company pays a consistent dividend with a dividend yield that is currently over 4% and nearly double the sector average.

About Newell Brands

Newell Brands Inc engages in the design, manufacture, sourcing, and distribution of consumer and commercial products worldwide. The company operates in three segments: Home and Commercial Solutions, Learning and Development, and Outdoor and Recreation. The Commercial Solutions segment provides commercial cleaning and maintenance solution products under the Rubbermaid, Rubbermaid Commercial Products, Mapa, and Spontex brands; closet and garage organization products; hygiene systems and material handling solutions; household products, such as kitchen appliances under the Crockpot, Mr. Read More

Current Price: $7.18
Consensus Rating: Hold
Ratings Breakdown: 1 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $9.13 (27.1% Upside)

#5 - Duke Energy (NYSE:DUK)

Another common sector to look for dividend stocks is the utilities sector. And one utility that looks inviting right now is Duke Energy (NYSE:DUK). Location matters when it comes to utilities. And in 2021, the U.S. Census data revealed that population was shifting into the areas such as Florida where Duke Energy operates.

In its first quarter earnings report, the company had a slight miss on earnings. However, it still expects to grow earnings per share at a compound annual growth rate (CAGR) in a range of 5% to 7%.

On the ESG (environmental, social, and governance) front, Duke Energy is planning to triple its renewable energy portfolio by 2030. The company believes it can accomplish this goal while actively reducing its active coal units by 2030.

As of this writing, Duke has an annual dividend of $3.94 which calculates to a 3.60% dividend yield. And the company has increased its dividend in each of the last 18 years.

About Duke Energy

Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States. It operates through two segments: Electric Utilities and Infrastructure (EU&I), and Gas Utilities and Infrastructure (GU&I). The EU&I segment generates, transmits, distributes, and sells electricity in the Carolinas, Florida, and the Midwest. Read More

Current Price: $98.78
Consensus Rating: Moderate Buy
Ratings Breakdown: 6 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $100.62 (1.9% Upside)

#6 - Brookfield Infrastructure Partners (NYSE:BIP)

Another utility company that makes this list is Brookfield Infrastructure Partners (NYSE:BIP). The company operates a collection of traditional infrastructure assets on five continents. However, the company does not have exposure to either Russia or Ukraine. The company’s largest segment is transport, but it also has utility, midstream, and data assets.

The company has a business model in which it actively seeks out high quality assets to purchase. Then it improves and enhances those assets before selling its more mature assets to continue the cycle.

The company has averaged dividend growth of approximately 5.5% for the last two years. And it will pay out about 52% of this year’s earnings which makes the dividend very sustainable. The recent pullback in BIP stock allows investors to take advantage of an approximate 13% upside from the stock’s level as of this writing.

About Brookfield Infrastructure Partners

Brookfield Infrastructure Partners L.P. owns and operates utilities, transport, midstream, and data businesses in North and South America, Europe, and the Asia Pacific. The company's Utilities segment operates approximately 2,900 km of electricity transmission lines; 4,200 km of natural gas pipelines; 8.1 million electricity and natural gas connections; and 0.6 million long-term contracted sub-metering services. Read More

Current Price: $28.15
Consensus Rating: Moderate Buy
Ratings Breakdown: 8 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $38.60 (37.1% Upside)

#7 - CNH Industrial (NYSE:CNHI)

MarketBeat recently gave investors a list of seven agriculture technology stocks to consider. CNH Industrial (NYSE:CNHI) didn’t make that list. One reason is that the company recently completed the sale of its Raven Engineered Films Division (EFD). So this was the first quarter in which the company reported as a pure-play agriculture and construction business.

But the equipment company makes this list of dividend stocks for several reasons. For starters, the company looks to be appropriately valued with a forward price-to-earnings (P/E) ratio of 10.85.

Second, the demand for commodities remains high. For example, a significant amount of wheat will not be exported from Ukraine. That should keep demand for farming equipment at elevated levels. And that will allow the company to grow revenue even if the economy tips into a recession.

Finally, CNH Industrial pays a one-time annual dividend. Last year that paid out at 30 cents a share. Investors should look for that to move higher as earnings grow.

About CNH Industrial

CNH Industrial N.V., an equipment and services company, engages in the design, production, marketing, sale, and financing of agricultural and construction equipment in North America, Europe, the Middle East, Africa, South America, and the Asia Pacific. The company operates through three segments: Agriculture, Construction, and Financial Services. Read More

Current Price: $11.64
Consensus Rating: Hold
Ratings Breakdown: 6 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $15.20 (30.6% Upside)

Dividend stocks are not going to generate the growth that investors can get in young tech stocks. These are mature companies that pay out a percentage of their earnings as a dividend. However, on a risk-adjusted basis many of these stocks have outperformed the stocks of companies that don't pay dividends.

However, like all stocks, dividend stocks are not without risk. A company can suspend or cut a dividend for many reasons. That scenario played out during the Covid-19 pandemic when companies pre-emptively suspended dividends in anticipation of lower earnings.

To help offset that risk, investors may want to choose the relative safety of an exchange-traded fund (ETF) that focuses on dividend-paying companies. By diversifying across many sectors, investors will be less impacted if some companies have to reduce their dividend. One option is the ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL). This fund invests in companies that have increased their dividend for at least 25 years.