When deciding what stocks to buy for dividends, there are many factors to consider. The most important factor is to look for a company with consistent revenue and earnings growth. If these numbers are erratic, it could be a sign of trouble. Another key feature is to look for companies with sustainable competitive advantages, such as proprietary technology, high barriers to entry, low customer switching costs, or a strong brand name.
It is easy to see why investors and online brokeri flock to companies that pay dividends. Dividends, after all, are a large portion of a company’s overall returns. While some companies have managed to rein in dividends, others have seen their shares fall more than their dividend earnings. This makes dividend stocks like Exxon Mobil all the more attractive. And with a remarkably consistent yield of 7.3% over the past decade, Exxon has a lot to offer.
The company was first founded in 1870 by John D. Rockefeller, and its success spawned many other companies. The company quickly became the dominant player in the oil and gas industry in the U.S., with an aggressive focus on production and drilling innovation. It was able to limit costs to compete with competitors, which allowed it to expand at an unprecedented rate. The company eventually went public and was eventually broken up by the U.S. Supreme Court in 1911.
Johnson & Johnson
You should look for an investment that gives you a consistent dividend yield. Johnson & Johnson pays a dividend rate of 2.5%, which is a lot better than the interest rates on your savings accounts. Even if the dividend yield isn’t as high as what you could expect from other, safer investments, like bonds, it will still provide you with a steady return. And because JNJ is an old company, it is likely to appreciate over time. Growth stocks and small caps usually don’t achieve such high growth.
Many people view big, well-established firms as the best dividend stocks to buy. However, high-growth companies and tech start-ups are rare exceptions. And high-yielding stocks typically do poorly when interest rates rise. For these reasons, Johnson & Johnson is one of the stocks to buy for dividends. Despite its high yield, JNJ is a compelling investment opportunity. It has a Zacks Rank of 3.
Walgreens Boots Alliance
There are a lot of things to like about Walgreens. For one thing, the company is a great brand name. In addition, it has been consistently increasing its dividend for decades. Today, its stock yields 4.2%, and it is one of the 10 highest dividend paying Dow 30 stocks. Walgreens was founded in 1901, and it merged with Alliance Boots in 2014 to create the largest retail pharmacy in the U.S. and Europe.
While it pays a high dividend, Walgreens has a history of paying out high amounts of cash. Last year, it distributed nearly two-thirds of its free cash flow as dividends. This demonstrates that the company can generate enough cash to cover its dividend and stay profitable. Moreover, Walgreens has maintained its dividend growth for several years. For these reasons, investors should buy shares of the company if they are looking for dividend growth.
If you are looking for a cheap stock to buy for dividends, you should consider Target. This retail giant offers high-quality merchandise at discount prices, and you can buy its products both online and at physical stores. While rivals such as Walmart and Amazon have scale advantages in the retail industry, Target believes it can take advantage of its storefronts as an advantage and create an omnichannel retail approach that can drive sales and profitability.
One of the most important things to keep in mind when buying a dividend stock is that dividend payments are not guaranteed. Target’s earnings per share have consistently risen at a compound annual rate of 12.7% over the past decade, so you can expect your dividend payments to increase over time. If Target were to cut its dividend now, you would have lost a great opportunity to profit. In addition to dividend growth, Target is a great stock to buy for dividends because it reinvests most of its profits within the business.