Stocks to buy

Trouble-Proof Dividend Darlings: 7 Stocks That Keep Paying No Matter What

At first glance, another gangbusters jobs report seems to imply that dividend stocks are irrelevant. It’s all about growth, baby! Well, maybe not.

According to The Wall Street Journal, labor market growth continues – that’s the good news. However, the not-so-great news is that there are signs of a cooling employment arena. One of the yellow flags is that the unemployment rate ticked up to 3.9%. That was higher than expected. Also, wage growth slowed, which isn’t what you want to see for a growth-based thesis.

Look, I’m not suggesting a black swan-style meltdown. But I think it also makes sense just to diversify your holdings amid rising uncertainties. On that note, here are the dividend stocks to consider.

McDonald’s (MCD)

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Like most of the companies below, McDonald’s (NYSE:MCD) is a giant in the broader business ecosystem. It needs no introduction. Fundamentally, the company should benefit from rising normalization trends in the workplace. People need a quick fix – either a bite to eat, coffee to drink or both. Still, the market doesn’t seem so enthusiastic about MCD stock.

To be fair, there are outside reasons for this underperformance. Due to geopolitical tensions, some Muslim-majority countries have boycotted big-name western brands. Obviously, it doesn’t get much bigger than McDonald’s, which has negatively impacted sales.

That puts a bit of question market on the Golden Arches. For this fiscal year, analysts project revenue to reach $26.89 billion on average. That would be a lift of 5.5% from last year’s haul of $25.49 billion. However, the low-side estimate may be the real target, which is still robust at $25.88 billion.

Notably, McDonald’s forward yield is 2.28%. It’s not generous but the company commands 48 years of consecutive payout increases. It’s easily one of the dividend stocks to buy despite the protests.

Target (TGT)

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One of the top big-box retailers, Target (NYSE:TGT) hits a sweet spot in its core market. Basically, the company caters to both higher-income folks as well as the more modest wage-earning segment. Further, everybody can shop at Target, which is a big plus relative to the other big-box retailer. Sure enough, the market is excited about TGT stock, evidenced by its almost 19% return this year.

Recently, the company posted earnings per share of $2.98 during the fourth quarter. That easily surpassed the consensus target of $2.41. In addition, the company generated revenue of $31.9 billion, moving past the estimate of $31.83 billion. Looking ahead, management anticipates EPS in fiscal 2024 to range between $8.60 to $9.60. That’s above the consensus of $8.44.

Further, if consumer pressures start to rise, people will eschew restaurants for cooking at home. That would benefit Target’s grocery sales. For passive income, the company carries a forward yield of 2.59%. It also enjoys 53 years of consecutive payout increases. So, it’s another easy idea for dividend stocks to buy.

PepsiCo (PEP)

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As a stalwart in the soft drink and snacks industry, PepsiCo (NASDAQ:PEP) enjoys everyday relevance. Fundamentally, with more people returning back to the “real” workforce, the need for caffeinated beverages will likely increase steadily. Further, if economic pressures build, people will need their fix at the cheapest rate possible. This dynamic should benefit PEP stock.

In fairness, the market isn’t quite seeing it that way. Since the beginning of the year, PEP lost almost 6% of equity value. In addition, repeated price hikes for its products hurt sales. Nevertheless, this headwind should fade. I mean, let’s face it – it’s the new reality these days. Everyone else will be forced to raise prices too, most likely.

For fiscal 2024, analysts anticipate sales to reach $94.7 billion. That would be a 3.5% rise from last year’s haul of $91.47 billion. And in 2025, revenue should jump to $99.16 billion.

For passive income, PepsiCo offers a forward yield of 3.1%. That’s pretty generous. As well, the company features 52 years of consecutive payout increases. So, it’s one of the dividend stocks you can trust.

IBM (IBM)

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By now, you may be tired of hearing me talk about legacy technology firm IBM (NYSE:IBM). However, I need an enterprise from the broader innovation space and Big Blue will do just fine. Even with a 21% jump from the beginning of this year, IBM isn’t getting much respect. That seems not quite rational given the underlying prowess.

Yes, the market has gravitated toward artificial intelligence. But seriously, hello? IBM has long been an innovator in this space, with projects such as Deep Blue and more recently Watson. It has a track record of bringing practical digital intelligence to enterprise-level clients.

While Wall Street is trying to figure out what the deal is, analysts project 2024 sales to reach $63.76 billion. That would be a 3.1% jump from last year’s tally of $61.86 billion. However, I suspect that the high-side estimate of $64.16 billion is more accurate.

Looking at passive income, Big Blue offers a big yield of 3.39% on a forward basis. Also, it sports 28 years of consecutive payout increases. It’s a dandy example of tech dividend stocks to buy.

AbbVie (ABBV)

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At first glance, AbbVie (NYSE:ABBV) might seem a risky proposition for dividend stocks to buy. Yes, the company represents a well-known pharmaceutical giant with an enviable track record. However, the company lost exclusivity on its blockbuster drug Humira. That would seem to put a crimp on ABBV stock. However, the opposite situation has materialized.

Since the beginning of this year, ABBV gained almost 12% of equity value. Over the trailing 52 weeks, it’s up more than 21%. No, it’s not the most impressive performance on the Street. Still, it’s an encouraging one. Further, I’ve long contended that AbbVie’s ownership of Botox – via its Allergan buyout – is a huge plus due to the focus on youthful looks in today’s society.

For this fiscal year, analysts anticipate sales to largely come in flat. However, for 2025, they believe revenue could land at $57.9 billion. That would be up 6.2% from 2024’s projected top line of $54.54 billion.

For passive income, AbbVie commands a forward yield of 3.47%. That’s well above the healthcare sector’s average yield of 1.58%.

Exxon Mobil (XOM)

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You’ve all heard the saying, electric vehicles are the future. That possibly being the case, dividend stocks like Exxon Mobil (NYSE:XOM) – while attractive now – may not be so relevant in the near future. However, the disruption to EVs due to extreme winter weather in some regions have left many buyers with a bad taste in their mouths.

Also, on a pound-for-pound basis, EVs continue to be pricier than their combustion-powered counterparts. With economic pressures weighing heavily on American households, many may choose to avoid making the transition to electric. If so, that may give XOM stock an extended lease on life.

To be fair, analysts anticipate a down year in 2024, with sales coming in at $330.98 billion. If so, that would imply a 3.9% decline from last year’s haul of $344.58 billion. However, gasoline prices can be tricky, especially in this geopolitical environment. Plus, if social normalization trends accelerate, demand can accelerate.

Notably, Exxon Mobil features a forward yield of 3.51%. Also, it’s been increasing its payout for the past 41 years. Therefore, it’s one of the trustworthy dividend stocks.

Realty Income (O)

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A real estate investment trust (REIT), Realty Income (NYSE:O) invests in free-standing, single-tenant properties. For many folks, Realty might not be a household name. However, the business that operate on its properties are, which adds to the REIT’s credibility. Unfortunately, the market doesn’t see it that way, with O stock slipping nearly 10%.

Nevertheless, the red ink could represent an opportunity for contrarian investors. No matter what happens in the economy, people need the essentials: groceries, medicine, home improvement equipment and materials. So, Realty should keep on trucking because life keeps on moving.

Even better, analysts expect great things from the REIT. Specifically, 2024 revenue should come in at $4.94 billion, up 21.1% from last year’s sales of $4.08 billion. In 2025, revenue may reach $5.34 billion, up 8% from 2024’s projected top line.

Finally, Realty – which pays out monthly – offers a forward yield of 5.82%. Combined with the experts’ moderate buy consensus and a $61.63 average price target (implying more than 16% upside potential), O is easily one of the dividend stocks to consider.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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