Arguably, there’s never a bad time to consider trustworthy dividend stocks. By securing passive income, you can complement any returns you generate through speculation. Also, by having dividend-paying companies in your portfolio, you stand a better chance of ending up in positive territory. These factors may become even more critical at this present juncture.
Over the weekend, President Joe Biden announced that he would no longer seek reelection. Instead, he will focus on finishing out his term. This massive – though not entirely unexpected – paradigm shift presents huge uncertainties for the market. Prior to the announcement, the consensus view appeared that former President Donald Trump had an easier road back to the White House.
Now, the situation got murkier. Adding to the pressure, geopolitical tensions and flashpoints are blaring. This means that the American electorate must choose their leadership wisely. Basically, the decision will likely come down to a few key swing states. With uncertainty in the air, it’s time to consider these trustworthy dividend stocks.
Broadcom (AVGO)
Frankly, it doesn’t get much more trustworthy than semiconductor giant Broadcom (NASDAQ:AVGO). With innovation moving at breakneck speed, the company’s relevance has only increased. Therefore, even though AVGO wobbly in recent sessions, it still ranks among the top trustworthy dividend stocks to buy.
In terms of pure generosity, Broadcom doesn’t exactly impress, providing a forward dividend yield of 1.3%. Also, the payout ratio is quite high at 84.88%. Nevertheless, you won’t find too many investors questioning the yield’s sustainability. That’s because the company has been delivering the goods financially. In the past four quarters, it posted an average earnings per share of $1.09, beating the consensus view of $1.06.
Sure, AVGO stock trades at a premium at 16.99X trailing-year sales. That’s well above the 11.44X metric seen between the first quarter of 2023 to Q1 2024. However, context matters. By year’s end, analysts believe that sales may jump to $51.46 billion. That’s up 43.7% from last year’s haul of $35.82 billion. Thus, AVGO is one of the trustworthy dividend stocks to consider.
Procter & Gamble (PG)
When it comes to trustworthy dividend stocks, few resoundingly earn the title quite like Procter & Gamble (NYSE:PG). A household goods giant, people use P&G products every day. Now, it’s not the most exciting and innovative enterprise. But what it lacks in outright growth potential, it makes up for with business predictability. That’s what it’s all about when talking about passive income.
Right now, the company offers a forward dividend yield of 2.39%. The payout ratio is a bit elevated at 61.48% but it arguably falls under the reasonable range. Again, I don’t think investors are worried about yield sustainability as the company features a predictable business. Plus, it consistently beats its bottom-line targets, generating an earnings surprise of 6.55% in the past year.
Between Q1 2023 to Q1 2024, PG’s price-to-sales ratio sat at 4.42X. Most recently, this metric increased to just under 5X. That might seem problematic to some market participants. However, analysts project steady growth in the years ahead, to $84.31 billion in 2024 (up 2.8%) and $86.94 billion in 2025 (up 3.1%).
Home Depot (HD)
In many ways, Home Depot (NYSE:HD) is akin to a government agency. Of course, it’s a private enterprise. However, when things go wrong – such as inclement weather – Home Depot stores stay open, so long as it’s safe to do so. This initiative allows troubled homeowners to buy necessary and critical equipment to (literally) weather the storm.
Just by this corporate ethos alone, HD ranks among the most trustworthy dividend stocks. If you want to talk actual numbers, the home-improvement retailer provides a forward yield of 2.48%. The payout ratio sits at a very reasonable 57.1%. While it’s not the most generous source of passive income, investors can bank on this every quarter.
Stacked against the retail cyclical sector, HD stock is pricey. Right now, shares trade at 2.38X trailing-year sales. That said, in the past year, this metric sat at 2.1X. In other words, Home Depot isn’t trading for much of a premium relative to what the market typically bears.
Further, by year’s end, covering experts anticipate revenue to hit $159 billion. That’s up 4.1% from last year’s print of $152.67 billion. And next year can ring up $166.24 billion on the top line.
Iron Mountain (IRM)
Structured as a real estate investment trust or REIT, Iron Mountain (NYSE:IRM) specializes in information management services. Historically, the company was best known for physical document and asset storage. That’s still part of the company’s overall offerings. Further, with the CrowdStrike (NASDAQ:CRWD) system outage fresh in people’s memory, the storage business may have gotten a branding boost.
Attractively, IRM also ranks as one of the most trustworthy dividend stocks. Presently, the company offers a forward dividend yield of 2.6%. Now, the payout ratio is sky high so that’s one thing to monitor. However, it should also be stated that REITs generally run a much hotter payout ratio than non-REIT enterprises.
Interestingly, IRM stock trades at a 5.21X trailing-year sales multiple. That’s actually lower than the sector median 6.45X. Even better, experts believe that by the end of the year, Iron Mountain can generate revenue of $6.11 billion. That’s up 11.5% from 2023’s tally of $5.48 billion. In the following year, sales may hit $6.68 billion, up 9.4%.
Combined with the potential interest in “analog” security, IRM is one of the trustworthy dividend stocks to consider.
AbbVie (ABBV)
Pharmaceutical giant AbbVie (NYSE:ABBV) makes a solid case for trustworthy dividend stocks. Unless you envision a future where society no longer searches for solutions for vexing conditions and diseases, AbbVie should enjoy perpetual relevance. Specifically, the company’s acquisition of Allergan should bolster its long-term appeal. Basically, with Botox under its wing, AbbVie can serve the social media generation’s members as they grow older.
Another attractive component of ABBV stock is the underlying dividend. With a forward yield of 3.57%, it’s quite generous. Further, the payout ratio of 51.12% is very reasonable. Not only that, AbbVie enjoys 52 years of consecutive annual dividend increases. The pharmaceutical firm was spun off from Abbott Laboratories (NYSE:ABT).
To be sure, not everything about AbbVie is attractive. Notably, the stock trades at 5.66X, which is very high for the industry. Also, it’s at a premium over the prior year’s average of 4.95X. That said, analysts see slow but steady growth over the next two years. Sales may rise to $55.23 billion in 2024 (up 1.7%) and to $58.84 billion in 2025 (up 6.5%).
Williams Companies (WMB)
A midstream energy firm, Williams Companies (NYSE:WMB) specializes in the segment of the hydrocarbon value chain involving transportation and storage. Anytime in the news you hear stories about pipelines, that’s part of the midstream segment. Obviously, Williams plays a vital role in national infrastructure. As such, it’s a key component of the economy.
Arguably by default, WMB ranks among the most trustworthy dividend stocks. It basically comes down to the indelible nature of the midstream business. Further, what makes Williams so attractive is the forward yield of 4.24%. Now, the payout ratio is elevated at 74.49%. However, this metric is excusable because of the generation predictability of midstream operations.
To be fair, WMB stock trades at a premium to sales of 5.16X. In the past year, the metric sat at 3.72X. So, the idea has definitely gotten pricier. That said, analysts see revenue rising to $10.47 billion by year’s end. If so, that would imply a growth rate of 5.2%. In the following year, sales may soar to $11.57 billion, up 10.6%.
With midstream operators typically enjoying long-term contracts, WMB is one of the trustworthy dividend stocks to consider.
Realty Income (O)
Saving what may be the best for last, Realty Income (NYSE:O) deserves special attention among trustworthy dividend stocks. Structured as a REIT, Realty generates cash flow from long-term net lease agreements with commercial clients. Many of these clients include retailers of necessary goods and services, such as home-improvement stores and pharmacies.
No matter what’s going on with the broader economy, people will need access to critical goods. That’s why Realty makes fundamental sense. Another reason is the payout profile. First, the REIT is generous with a forward yield of 5.48%. Second, the payout cycle is monthly, not quarterly. Therefore, with enough exposure to O stock, you can conceivably pay off your bills with dividends – nice!
Now, Realty isn’t perfect. One factor to consider is the sky-high valuation, trading at 9.65X trailing-year sales. However, this is a discount relative to the prior year’s metric of 10.05X.
For fiscal 2024, analysts see sales hitting just over $5 billion. If so, that would imply a growth rate of 23.2%.
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.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.