Dividend Stocks

Hot Summer Dividends: 3 Sizzling Stocks to Buy for Reliable Income

With the stock market near all-time highs, I’m looking forward to the next market crash. Yes, I want the stock market to fall and fall hard. Why? Because that is when you can go on a shopping spree. All the great companies that are trading at exceptionally high premiums will be suddenly offering discounts. That is when you want to buy.

The last market crash was brought on by the pandemic. The S&P 500 lost one-third of its value in just one month. Ouch! Since then, though, the benchmark index has been nothing short of phenomenal. It has grown by 144%. 

If you were a buyer when everyone else was a seller, you are sitting pretty today. A $1,000 investment in the index on March 23, 2020 is worth $2,442 today. Not bad for keeping your head when others are losing theirs. But you can do even better.

Buying dividend stocks for income helps juice those returns. That’s because even when the market goes down, you continue receiving income from your investments. You get paid to wait for the market to recover. 

When we add in dividends to the S&P’s returns we see the broad-based index actually grew 161% and that $1,000 initial position would instead be worth $2,613. That’s a 7% boost to your bottom line!

But you don’t have to wait for a market crash (though we can still hope). We can buy a number of quality dividend stocks for income today. Below are three income stocks to add to your portfolio right now.

MSCI (MSCI)

Source: Pavel Kapysh / Shutterstock.com

MSCI (NYSE:MSCI) is a data and analytics firm for institutional investors that also operates the MSCI family of stock market indexes. Shares are down 14% year-to-date (YTD) and only 2.5% higher over the past year. The stock had been doing well until it reported first-quarter results that sent its stock sharply lower.

Although MSCI revenues rose 14% from last year to $680 million, it missed analyst expectations by $6 million. Moreover, the higher total included revenue from several acquisitions it made so organic revenue growth was only 10% year-over-year (YOY). It also suffered a decline in operating margins from 53.1% to 49.9% or 320 basis points.

While that may seem problematic, MSCI is positioning itself for future growth. In addition, it was impacted by a merger from one of its banking clients, which affected its client retention rate. MSCI began paying a dividend 10 years ago and has grown the payout by a whopping 43% compounded annual growth rate (CAGR) over that time. It paid 18 cents per share in dividends in 2014 but today pays $6.40 per share. With over $1.1 billion in free cash flow (FCF) to support the payout, it’s dividend is secure making MSCI a dividend stock for income to buy today.

S&P Global (SPGI)

Screenshot through a magnifying glass of the official website of the company S&P Global (SPGI)

Source: AntonSAN / Shutterstock.com

In the same business as MSCI is S&P Global (NYSE:SPGI), and its performance was far better than its rival. Quarterly revenue grew 10% to a record $3.9 billion but excluding the sale of its engineering solutions business, revenue was up 14% from last year. The gains helped boost GAAP net profits by 25% YOY. Its operating margins grew by 350 basis points to 49.8% on an adjusted basis.

While S&P Global’s dividend growth hasn’t been nearly as remarkable as MSCI, at an 11.7% CAGR for the last decade it remains a strong dividend growth stock nonetheless. It also sports substantial FCF that has grown at a nearly 18% CAGR for the past 10 years. Its FCF payout ratio, or the amount of its cash profits it uses to pay a dividend, is a low 32%, making the payout secure and available for future increases.

Speaking of, S&P Global has raised its payout for 51 consecutive years making it a Dividend King. 

AbbVie (ABBV)

Closeup of AbbVie (ABBV) building corporate office, an American biopharmaceutical company with its headquarters in Lake Bluff, Illinois, USA

Source: Valeriya Zankovych / Shutterstock.com

The third dividend stock for income to buy to beat the summer doldrums is pharmaceutical giant AbbVie (NYSE:ABBV), another Dividend King. Its stock is up 10% in 2024 and 25% higher for the past year. It’s a stock to own in good times and bad as it handily outperformed the S&P 500 during the pandemic. ABBV shares returned over 27% in 2020 compared to 18% by the index.

Of course, calling AbbVie dividend royalty is a bit of a misnomer. It was spunoff from Abbott Labs (NYSE:ABT) in 2013. But under the rules for inclusion in the list, it gets to inherit its parent’s dividend history. Either way, AbbVie is a strong dividend growth stock.

For the past decade the pharma stock increased its payout by a 14% CAGR with the dividend growing from $1.60 per share in 2013 to $6.20 per share today.

It owns a strong portfolio of billion-dollar drugs and has a sizable pipeline of potential blockbusters in the works. Even though its primary drug Humira now faces competition from biosimilars, the treatment still produces $4 billion to $5 billion in annual sales. It makes AbbVie an excellent dividend stock for income today and during the next market crash.

On the date of publication, Rich Duprey held a LONG position in ABBV stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.

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