Dividend Stocks

The Dividend Darlings: 3 Stocks That Will Shower Your Portfolio with Cash

Dividend stocks have outperformed the S&P 500 during recessions, making them a reliable investment

From 1930 to 2023, 70% of dividend stocks in the top two quintiles outperformed the S&P 500 during recessions. Dividends have contributed 40% of the stock market gain since 1930, increasing with rising inflation.

In 1981, 2001, and 2007, dividend-paying companies beat the market owing to steady profit flow; given the November election and three rate cuts, these facts are crucial. Experts disagree on the year’s outcome. Goldman Sachs predicts the S&P 500 will reach 5,100 by 2024, whereas BCA Research predicts a drop to 3,300–3,700. In this mixed market, dividend stocks are a safe method of creating a stable income.

For example, One healthcare giant’s distributions increased for 52 years, with sales reaching 10 billion in Q1’24 thanks to excellent growth across all business lines, including new diabetic therapies. Another example of dividend safety is an electrical equipment vendor with a 67-year dividend growth record and a 35% dividend payout ratio. Finally, despite legal issues, a well-known pharmaceutical firm declared a large increase in quarterly dividends for the 62nd year in a row.

Abbott Laboratories (ABT)

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Abbott Laboratories (NYSE:ABT), is one of 53 Dividend Kings and has raised dividends for 52 years. Its $2.20 forward dividend yield is significantly better at 2.13%, compared to the 1.5% industry average.

ABT’s 43% payout ratio is due to its strong profitability. The healthcare firm’s full-year estimate was unexpectedly raised after Q1 2024 success; this is ABT’s most positive first-quarter forecast since 2016, reflecting its confidence in its future.

Abbott’s Q1 2024 revenue rose 2.2% to $10 billion while net profits fell 7% to $1.22 billion. This, paired with excellent growth across its product lines resulted in earnings-per-share (EPS) coming to to 98 cents, down from $1.03 last year but exceeding market projections of 95 cents.

Additionally, Abbott is currently testing novel diabetes treatments via its FreeStyle Libre platform while building on sales of diabetic and structural cardiac devices. One such device is Omnipod 5, which predicts glucose levels to adjust insulin automatically.

Furthermore, ABT is especially well positioned in the diabetes treatment sector, as many other companies rely on FreeStyle Libre’s technology for patient treatments. For example, Novo Nordisk’s (OTCMKTS:NONOF) Connected Pen improves insulin and glucose therapy via ABT’s device data while Sanofi’s (OTCMKTS:SNY) Smart Pen lets physicians customize treatments using FreeStyle Libre and insulin dosage data.

This interconnectedness in the diabetes treatment industry lends itself to ABT’s stability and long-term dividend prospects.

Emerson Electric (EMR)

An office building with an Emerson Electric sign on it.

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Emerson Electric (NYSE:EMR) shares are selling at around $106.87, implying an upside of over 20% to complement its strong buy rating, unsurprising considering its solid earnings beat in Q2 2024 and raising of outlook at a time when competitor Rockwell Automation (NYSE:ROK) lowered its guidance. This adds the finishing touch to a quality pick among dividend stocks that boasts 67 years of straight income growth already.

Even better for investors, Emerson has a strong dividend payout ratio of 35%, which shows that the company is doing a good job of paying shareholders while growing and expanding. Its new manufacturing facility in Saudi Arabia to increase the number of products it can make in the area is an example of this strategy.

Moreover, Emerson reported outstanding second-quarter 2024 EPS of $1.36, above analysts’ expectations of $1.25, and earnings of $4.38 billion, above expectations of $4.29 billion.

EMR also recently raised its full-year earnings forecast due to strong demand for its measurement and analytical products; it now projects adjusted EPS between $5.40 and $5.50 for the full year, up from $5.30 to $5.45.

Johnson & Johnson (JNJ)

A red Johnson & Johnson (JNJ) sign hangs inside in Moscow, Russia.

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Johnson & Johnson’s (NYSE:JNJ) medical goods segment drove EPS of $2.71 in yet another earnings beat, better than the projected $2.64, with overall revenues of $21.38 billion, slightly below the expected $21.4 billion.

Due to Abiomed and electrical products sales, the medical equipment segment made $7.82 billion, up 4% from last year, contributing heavily to net income of $5.35 billion, or $2.20 per share, up from a $491 million loss last year due to talc baby powder liabilities and the sale of Kenvue.

JNJ also raised its quarterly dividend to $1.24 per share for the 62nd year; with a 45% payout, the dividend is safe and is one of the prime reasons analysts are forecasting an almost 19% upside for the stock.

On top of this, JNJ is also buying Ambrx Biopharma, a biotech company testing next-generation antibody-drug conjugates.

The FDA also authorized OPSYNVI, a once-a-day combination therapy for pulmonary artery hypertension, and JNJ also received clearance for CARVYKTI and TECVAYLI for multiple myeloma.

To prepare for Stelara’s patent expiration in 2025, J&J is launching additional therapies, including CAR-T treatment Carvykti, the novel antipsychotic Spravato, and the cancer medication Tecvayli.

These treatments, along with new facilities such as an operations center in South Africa and the J&J Centers for Global Health Discovery, make it a quality pick among dividend stocks.

On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

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