Log in

7 Stocks That Prove Dividends Matter in 2020

7 Stocks That Prove Dividends MatterPosted on Thursday, April 9th, 2020 by MarketBeat Staff

Dividends can be an equalizing factor when comparing stocks. For example, you can be looking at one stock that is up 5% and another that is up 7% over a period of time. However, the stock that is up 5% pays a dividend while the one that pays 7% does not. That dividend factors into the stock’s total return. Therefore although the former would appear to offer a better return, the stock that pays a dividend may actually provide a higher total return.

Dividends are a portion of a company’s profit reflected as a percentage. However, this percentage changes with the company’s stock price. For that reason, a common mistake investors make is to chase a yield. But a company that pays a 4% dividend yield may be a far better investment than a company with an 8% yield. Here’s why.

The most important attribute of a dividend is its reliability. Getting a solid dividend one year has very little meaning if the company has to suspend, or cut, its dividend the next year. Investors want to own stocks in companies that have a solid history of paying a regular dividend. Another important consideration is a company’s ability to increase its dividend. This means that the company is increasing the amount of the dividend regardless of stock price. Companies that do this over a specific period of time have achieved a special status. Dividend Aristocrats are companies that have increased their dividend every year for at least the last 25 years. Dividend Kings have increased their dividends every year for at least the last 50 years.

In this presentation, we highlight seven companies that offer a nice dividend and the opportunity for decent growth.

Click on Continue to view the “7 Stocks That Prove Dividends Matter”.

#1 - Sherwin-Williams (NYSE:SHW)

Sherwin-Williams logo

Sherwin-Williams (SHW)

Years of Consecutive Dividend Growth: 41 Years (Dividend Aristocrat)

Sherwin-Williams (NYSE:SHW) has been giving shareholders solid growth to go along with its super reliable dividend for the last five years. However, the company’s stock has really taken off since its $11 billion purchase of Valspar in 2017.

However, every company is likely to feel some pain from the current mitigation efforts spawned by the coronavirus. Sherwin-Williams reported disappointing fourth-quarter earnings and will likely continue to show weaker numbers in subsequent quarters.

Still, the company has a couple of catalysts that make the company an attractive option as the country works through the coronavirus pandemic. First, interest rates that are at lows not seen since the financial crisis are a motivating factor for current homeowners to make home improvements. And one of the easiest and most cost-effective home improvements that can be made is adding a fresh coat of paint.

Plus, prior to the social distancing guidelines have forced Americans indoors, the housing market was beginning to show the strength that investors were counting on since the Fed first lowered interest rates in 2019.

And to go along with that growth, Sherwin-Williams has a highly reliable dividend that they have increased every year since 1979. And, the company pays out just over 19% of its earnings as dividends.

About Sherwin-Williams
The Sherwin-Williams Company develops, manufactures, distributes, and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers. It operates in three segments: The Americas Group, Consumer Brands Group, and Performance Coatings Group. The Americas Group segment offers architectural paints and coatings, and protective and marine products, as well as OEM product finishes and related products for architectural and industrial paint contractors and do-it-yourself homeowners. The Consumer Brands Group segment provides branded and private-label architectural paints, stains, varnishes, industrial products, wood finishes products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks, and adhesives to retailers and distributors. The Performance Coatings Group segment develops and sells industrial coatings for wood finishing and general industrial applications, automotive refinish products, protective and marine coatings, coil coatings, packaging coatings, and performance-based resins and colorants. It serves retailers, dealers, jobbers, licensees, and other third-party distributors through its branches and direct sales staff, as well as through outside sales representatives. The company has operations primarily in North and South America, the Caribbean, Europe, Asia, and Australia. As of February 19, 2019, it operated approximately 4,900 company-operated stores and facilities. The company was founded in 1866 and is headquartered in Cleveland, Ohio.

Current Price: $594.16
Consensus Rating: Buy
Ratings Breakdown: 12 Buy Ratings, 11 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $574.00 (-3.4% Upside)



#2 - McCormick & Co. (NYSE:MKC)

MCCORMICK & CO /SH logo

McCormick & Co. (MKC)

Years of Consecutive Dividend Growth: 34 Years (Dividend Aristocrat)

McCormick (NYSE:MKC) illustrates the larger supply chain issues that our nation will be working through in the wake of the coronavirus. The company has three factories in China, including one in Wuhan the epicenter of the pandemic.

Fortunately, the company is back in business in China. And that is corresponding to an increase in sales in North America as consumers have stocked up before taking shelter in their homes. On the other hand, the company’s restaurant business has basically ground to a halt.

Before pulling their 2020 guidance because of the novel coronavirus, the company had predicted sales growth of 2% to 4%. And analysts feel McCormick may be able to do even better. They are forecasting 6% annual growth for the next five years.

Even if McCormick’s growth comes in at the low end of that estimate, McCormick’s dividend is well supported. The company has had over 30 consecutive years of dividend growth with the most recent hike being in November. The company’s quarterly dividend now sits at 62 cents per share.

“We remain committed to our long history of returning cash to shareholders and I am incredibly proud to announce another dividend increase,” said CEO Lawrence Kurzius via a press release.

Stock #4 has had 52 years of consecutive dividend growth...



About MCCORMICK & CO /SH
McCormick & Company, Incorporated manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to the food industry. The company operates in two segments, Consumer and Flavor Solutions. The Consumer segment offers spices, herbs, and seasonings, as well as desserts. This segment markets its products under the McCormick, French, Frank's RedHot, Lawry's, Club House, Gourmet Garden, and OLD BAY brands in the Americas; Ducros, Schwartz, Kamis, and Drogheria & Alimentari, and Vahiné brand names in Europe, the Middle East, and Africa; McCormick and DaQiao brands in China; and McCormick, Aeroplane, and Gourmet Garden brand names in Australia, as well as markets regional and ethnic brands, such as Zatarain's, Stubb's, Thai Kitchen, and Simply Asia. It also supplies its products under the private labels. This segment serves retailers comprising grocery, mass merchandise, warehouse clubs, discount and drug stores, and e-commerce retailers directly and indirectly through distributors or wholesalers. The Flavor Solutions segment offers seasoning blends, spices and herbs, condiments, coating systems, and compound flavors to multinational food manufacturers and foodservice customers. It serves foodservice customers directly and indirectly through distributors. The company was founded in 1889 and is headquartered in Hunt Valley, Maryland.

Current Price: $174.30
Consensus Rating: Hold
Ratings Breakdown: 2 Buy Ratings, 4 Hold Ratings, 4 Sell Ratings.
Consensus Price Target: $143.50 (-17.7% Upside)



#3 - Abbott Laboratories (NYSE:ABT)

Abbott Laboratories logo

Abbott Laboratories (ABT)

Years of Consecutive Dividend Growth: 48 Years (Dividend Aristocrat)

Abbott Laboratories (NYSE:ABT) has been rewarding shareholders for years. In fact, ABT stock has often been a signature part of a dividend investor’s portfolio. Abbott has increased its dividend every year for 48 consecutive years. Most recently, the company raised its quarterly dividend, which now sits at 36 cents per share, in December.

Right now, Abbott stock is on fire based on its role in providing rapid testing for the novel coronavirus. On March 27, the company received emergency use authorization (EUA) from the U.S. Food and Drug Administration (FDA) for its rapid point-of-care COVID-19 test. COVID-19 is the underlying disease that causes the coronavirus.

This was the second such authorization that Abbott received in the month of March. Considering the key role that testing will play in getting the U.S. economy (if not the global economy) back to any semblance of normal, Abbott should be a solid growth stock for the remainder of 2020.

Fortunately, the need for testing should decline. However, the company has much more in its pipeline than its recent contributions to combat the novel coronavirus. The company’s portfolio also includes Similac infant formulas, Glucerna diabetes management products, and i-Stat diagnostic devices.

About Abbott Laboratories
Abbott Laboratories discovers, develops, manufactures, and sells health care products worldwide. The company's Established Pharmaceutical Products segment offers branded generic pharmaceuticals for the treatment of pancreatic exocrine insufficiency; irritable bowel syndrome or biliary spasm; intrahepatic cholestasis or depressive symptom; gynecological disorder; hormone replacement therapy; dyslipidemia; hypertension; hypothyroidism; Ménière's disease and vestibular vertigo; pain, fever, and inflammation; migraine; and anti-infective clarithromycin, as well as provides influenza vaccines and products that regulate physiological rhythm of the colon. Its Diagnostic Products segment offers core laboratory systems in the areas of immunoassay, clinical chemistry, hematology, and transfusion; molecular diagnostics systems that automates the extraction, purification, and preparation of DNA and RNA from patient samples, as well as detects and measures infectious agents; cartridges for blood analysis; rapid diagnostics systems for infectious diseases; molecular point-of-care care testing for HIV, influenza A and B, RSV, and strep A; cardiometabolic test systems; drug and alcohol test systems, as well as remote patient monitoring and consumer self-test systems; and informatics and automation solutions for use in laboratories. The company's Nutritional Products segment provides pediatric and adult nutritional products. Its Cardiovascular and Neuromodulation Products segment offers rhythm management, electrophysiology, heart failure, vascular, and structural heart devices for the treatment of cardiovascular diseases, as well as neuromodulation devices for the management of chronic pain and movement disorders. The company also provides glucose and blood glucose monitoring systems, including test strips, sensors, data management decision software, and accessories for people with diabetes. The company was founded in 1888 and is headquartered in Abbott Park, Illinois.

Current Price: $91.40
Consensus Rating: Buy
Ratings Breakdown: 14 Buy Ratings, 4 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $98.81 (8.1% Upside)



#4 - Stanley Black & Decker (NYSE:SWK)

Stanley Black & Decker logo

Stanley Black & Decker (SWK)

Years of Consecutive Dividend Growth: 52 Years (Dividend King)

For one of the most venerable of dividend stocks, Stanley Black & Decker (NYSE:SWK) has been behaving like a growing start-up. In the last five years the company purchased Newell Tools, a division of Newell Brands (NWL) giving them the Lenox and Irwin brands. Stanley Black & Decker followed that up by negotiating the purchase of the Craftsman tool brand from Sears Holdings (SHLDQ).

And as if that wasn’t enough, the company announced its acquisition of IES Attachments and Nelson Fastener Systems. But Stanley isn’t finished yet. In January, the company announced its intention to buy Consolidated Aerospace Manufacturing, a supplier of Boeing.

So far, all these acquisitions have not helped the bottom line. However, the fact that Stanley is consolidating industries in a downturn will lead to cost cuts. And that creates an opportunity for the company to turn future revenue into bigger profits.

Unfortunately, the coronavirus did not allow investors to see what the company could do with a better trade environment. But the company has paid a dividend for 143 consecutive years and has increased its dividend for 52 years. If you’re willing to wait the stock out, you should be set up for a nice reward.

About Stanley Black & Decker
Stanley Black & Decker, Inc. engages in tools and storage, industrial, and security businesses worldwide. Its Tools & Storage segment offers power tools and equipment, including professional products, such as professional grade corded and cordless electric power tools and equipment, and pneumatic tools and fasteners; and consumer products comprising corded and cordless electric power tools primarily under the BLACK+DECKER brand, as well as lawn and garden products and related accessories, and home products. This segment sells its products through retailers, distributors, and a direct sales force to professional end users, distributors, retail consumers, and industrial customers in various industries. The company's Industrial segment provides engineered fastening products and systems to customers in the automotive, manufacturing, electronics, construction, aerospace industries, and others; sells and rents custom pipe handling, joint welding, and coating equipment for use in the construction of large and small diameter pipelines, as well as provides pipeline inspection services; and sells hydraulic tools and accessories. This segment also serves oil and natural gas pipeline industry and other industrial customers. Its Security segment designs, supplies, and installs commercial electronic security systems and provides electronic security services; offers healthcare solutions, which include asset tracking, infant protection, pediatric protection, patient protection, wander management, fall management, and emergency call products; and sells automatic doors to commercial customers. This segment serves consumers, retailers, educational, financial, and healthcare institutions, as well as commercial, governmental, and industrial customers. The company was formerly known as The Stanley Works and changed its name to Stanley Black & Decker, Inc. in March 2010. Stanley Black & Decker, Inc. was founded in 1843 and is headquartered in New Britain, Connecticut.

Current Price: $137.95
Consensus Rating: Buy
Ratings Breakdown: 12 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $149.25 (8.2% Upside)



#5 - Walmart (NYSE:WMT)

Walmart logo

Walmart (WMT)

Years of Consecutive Dividend Growth: 45 Years (Dividend Aristocrat)

It’s a lot of work to keep pace with Amazon (AMZN). But Walmart (NYSE:WMT) has not only managed to hang with Amazon, they are thriving. Walmart has not only built out their e-commerce business and is embracing the omnichannel model that allows consumers to get what they want when they want it.

Before the coronavirus outbreak, the “new retail” model was becoming essential. Now it will be absolutely critical. Consumers are going to return, but it won’t be the same. Whenever our nation goes through a crisis like this, the world we go back to is changed in a fundamental way. As many consumers realize that they really can get much of what they need without visiting the stores, retailers who don’t allow them to do that will certainly get left behind.

Walmart is already ahead of that curve. And with 45 years of consecutive dividend growth they can provide shareholders with one thing Amazon can’t, a regular dividend payment no matter which way the market goes.

About Walmart
Walmart Inc. engages in the retail and wholesale operations in various formats worldwide. The company operates through three segments: Walmart U.S., Walmart International, and Sam's Club. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, drugstores, and convenience stores; membership-only warehouse clubs; e-commerce Websites, such as walmart.com, jet.com, shoes.com, and samsclub.com; and mobile commerce applications. The company offers grocery products, including meat, produce, natural and organics, deli and bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables, such as health and beauty aids, baby products, household chemicals, paper goods, and pet supplies; and health and wellness products. It also provides electronics, cameras and supplies, photo processing services, wireless, movies, music, video games, and books; stationery, automotive, hardware and paint, sporting goods, and outdoor living and horticulture; apparel for women, girls, men, boys, and infants, as well as shoes, jewelry, and accessories; and home furnishings, housewares and small appliances, bedding, home decor, toys, fabrics, crafts, and seasonal merchandise, as well as brand name merchandise. In addition, the company offers fuel and financial services and related products, including money orders, prepaid cards, wire and money transfers, check cashing, and bill payment. It operates approximately 11,300 stores and various e-commerce Websites under the 58 banners in 27 countries. The company was formerly known as Wal-Mart Stores, Inc. and changed its name to Walmart Inc. in February 2018. Walmart Inc. was founded in 1945 and is based in Bentonville, Arkansas.

Current Price: $123.47
Consensus Rating: Buy
Ratings Breakdown: 23 Buy Ratings, 9 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $132.09 (7.0% Upside)



#6 - 3M (NYSE:MMM)

3M logo

3M (MMM)

Years of Consecutive Dividend Growth: 61 Years (Dividend King)

3M (NYSE:MMM) shows why it’s important to understand why dividends matter to a stock’s total return. As the market was on its record bull run, some dividend stocks started to deliver eye-popping returns. Unfortunately, the recent market crash has some investors disillusioned as these stocks look to be returning to the mean.

But the mean for 3M has been pretty good. Investors who have been invested in the stock for the last 10 years have been rewarded with a total return of over 120%. If you exclude dividends, the return is still pretty nifty at over 10%, but it looks more pedestrian.

3M is a dividend king having delivered over 60 consecutive years of dividend increases. The company has been in a very public dispute with the Trump administration over the production of masks during the coronavirus pandemic. And, while analysts are glad to see that the company is still keeping their factories running, there is concern about earnings and revenue for 2020.

But that’s a concern for virtually any manufacturer right now. In time, the economy will get on solid footing. And when it does, it will be stocks like 3M that will be well-positioned to win the day.

About 3M
3M Company operates as a technology company worldwide. The company's Industrial segment offers tapes, abrasives, adhesives, ceramics, sealants, specialty materials, purification products, closure systems, acoustic systems products, automotive components, abrasion-resistant films, and paint finishing and detailing products. Its Safety and Graphics segment provides personal protection and transportation safety products, commercial graphics systems, commercial cleaning and protection products, floor matting, roofing granules, fall protection products, self-contained breathing apparatus systems, and gas and flame detection instruments. The company's Health Care segment offers medical and surgical supplies, skin health and infection prevention products, drug delivery and health information systems, dental and orthodontic products, and food safety products. Its Electronics and Energy segment provides optical films, packaging and interconnection devices, insulating and splicing solutions, touch screens and monitors, renewable energy component solutions, and infrastructure protection products. The company's Consumer segment offers consumer and office tapes and adhesives, repositionable notes, indexing systems, home improvement products, furnace filters, painter tapes, mounting and home care products, sponges, scouring pads, high-performance clothes, protective material products, and adhesive bandages and braces. It also provides cloud-based, conversational artificial intelligence-powered systems. It serves automotive, electronics and automotive electrification, appliance, paper and printing, packaging, food and beverage, construction, medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, health information systems, food manufacturing and testing, consumer and office retail, office business to business, home improvement, drug and pharmacy retail, and other markets. The company was founded in 1902 and is headquartered in St. Paul, Minnesota.

Current Price: $161.21
Consensus Rating: Hold
Ratings Breakdown: 2 Buy Ratings, 7 Hold Ratings, 3 Sell Ratings.
Consensus Price Target: $164.25 (1.9% Upside)



#7 - AT&T (NYSE:T)

AT&T logo

AT&T (T)

Years of Consecutive Dividend Growth: 35 Years (Dividend Aristocrat)

AT&T (NYSE:T) is a stock that can be overlooked if you stay focused on the headwinds. The company is launching a streaming service at a time when that sector is beginning to look saturated. The long-awaited arrival of 5G appears that it will take a little while longer. The company’s investment in DirecTV now looks like more of an anchor than a catalyst.

But AT&T is first and foremost a wireless carrier. And that’s where it makes the majority of its money. The payments it receives from its customers subscriptions is reliable. And many customers will find other ways to save on their budget before allowing their wireless bill to go unpaid.

It’s also why the company has been able to pay out 35 years of increasing dividends. And because it enjoys a virtual duopoly with Verizon (VZ) in the wireless sector, the company’s dividend is among the most secure in the industry.

About AT&T
AT&T Inc. provides telecommunication, media, and technology services worldwide. The company operates through four segments: Communications, WarnerMedia, Latin America, and Xandr. The Communications segment provides wireless and wireline telecom, video, and broadband and Internet services; video entertainment services using satellite, IP-based, and streaming options; and audio programming services under the AT&T, Cricket, AT&T PREPAID, and DIRECTV brands to residential and business customers. This segment also sells handsets, wirelessly enabled computers, and wireless data cards manufactured by various suppliers for use with company's voice and data services, as well as various accessories, such as carrying cases and hands-free devices through the company-owned stores, agents, and third-party retail stores. The WarnerMedia segment primarily produces, distributes, and licenses television programming and feature films; distributes home entertainment products in physical and digital formats; and produces and distributes mobile and console games, and consumer products, as well as offers brand licensing services. It also operates cable networks, multichannel premium pay television, and over-the-top services; and digital media properties. The Latin America segment offers video entertainment and audio programming services under the DIRECTV and SKY brands primarily to residential customers; pay-TV services, including HD sports video content; and postpaid and prepaid wireless services under the AT&T and Unefon brands, as well as sells various handsets through company-owned stores, agents, and third-party retail stores. The Xandr segment provides digital advertising services. The company was formerly known as SBC Communications Inc. and changed its name to AT&T Inc. in November 2005. AT&T Inc. was founded in 1983 and is based in Dallas, Texas.

Current Price: $31.51
Consensus Rating: Hold
Ratings Breakdown: 11 Buy Ratings, 14 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $36.15 (14.7% Upside)

 

Dividends matter. Companies with a solid history of paying, and potentially increasing, its dividend show financial strength. And once a company commits to paying a dividend, it will usually prioritize that dividend even in difficult financial times.

In this difficult economy, many solid companies have to suspend dividends based on circumstances that could not have been foreseen. That makes the financial strength of the companies that are not only continuing to offer dividends, but increase them even more important.

As you can see from this presentation, dividend investing does not mean investing with some of the big tech companies. You won’t be chasing the hot penny stock, or looking to discover the next unicorn stock. In fact many of these businesses are stable, and could be considered boring.

But when the market gets crazy, boring doesn’t look so bad. And the ability of these stocks to put cash in your pocket should not be overlooked.

10 Rock-Solid Dividend Paying Stocks to Own

Historically low interest rates have made it difficult over the last decade for income-oriented investors that want to generate safe cash flow for their retirements.

Dividend-paying stocks have become more appealing to income investors because of their competitive yields, the favorite tax treatment that dividends receive and their ability to grow their payouts over time. While fixed interest rates from bond investments will lose purchasing power to inflation over time, the purchasing power of income from dividend growth stocks is more protected because companies tend raise their dividend payments every year.

In this slideshow, we look at ten of the best high-dividend stocks that offer strong yields (above 3.5%), have consistent cashflow and a strong track record of dividend growth. The companies in this slideshow have all raised their dividend every year for the last ten years.

These companies also have low payout ratios (below 75%), meaning that they will have the ability to continue to pay their dividend if their earnings have a temporary dip.

Stock prices will always fluctuate, but the dividends paid by these rock-solid dividend payers should remain secure with moderate earnings growth.

View the "10 Rock-Solid Dividend Paying Stocks to Own" Here.






Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.