If you are looking for stability and dividend income, these stocks are good options to consider.
Dividend stocks are often sought after in bear markets or times of market turbulence, as they are typically stocks of steady, stable companies that are well capitalized with lots of liquidity to navigate choppy markets.
They also provide dividend income at a time when investors could use the extra return.
In recent weeks, three excellent dividend stocks raised their dividends, signaling that their financials are still strong, even in this period of volatility.
1. Illinois Tool Works
Illinois Tool Works Inc (NYSE:ITW) is one of the best and most reliable dividend stocks on the market. The manufacturer of industrial tools and equipment has raised its dividend each year for the past 55 straight years, making it a Dividend King. There are only about 25 stocks that have a longer streak than that.
On August 2, Illinois Tool Works raised its quarterly dividend again, bumping it up 7% to $1.50 per share, from $1.40 in the previous quarter. For the full year, it pays out $6 per share, at a yield of 2.5%, which is higher than the S&P 500 average.
Illinois Tool Works stock is down 9% year-to-date, but it posted solid numbers in the second quarter, with earnings up 2.4% year-over-year and an outlook for 6% earnings growth for 2024.
Further, its operating income increased 4.5 percent to $1.05 billion, a second quarter record, while the operating margin jumped 140 basis points to 26.2 percent, also a second quarter record.
It has been able to maintain its divided for 55 years and it should have no trouble continuing that streak, based on its financials.
2. Broadridge Financial
Broadridge Financial Solutions Inc (NYSE:BR) is a firm that assists public companies with shareholder materials and communications, like annual and quarterly reports, proxy statements, SEC filings, and other documents.
Broadridge is coming off a fiscal fourth quarter and fiscal year when revenue grew 7%, operating income increase 9% and earnings were up 11%. In addition, it increased its free cash flow by 26% to $943 million, and raised its free cash flow conversion rate to 102%.
The excellent results allowed Broadridge to increase its dividend by 10% to 88 cents per share, its 12th double-digit dividend increase in the past 13 years. With the increase, Broadridge has increased its annual dividend for 18 straight years. For the full fiscal year, it paid out a dividend of $3.52 per share, at a yield of 1.67%.
And with guidance for 5% to 7% revenue growth and 8% to 12% earnings growth, it should be in a good position to keep raising its dividend.
3. Dover Corp.
Dover Corporation (NYSE:DOV) is probably not a company that registers with most investors, unless you are a dividend investor. If you are a dividend investor, you know that Dover has boosted its dividend every year for the past 69 straight years, which is the longest streak of any company in the U.S. — tied with a few others.
Dover, a manufacturer of industrial products, made it 69 straight years in August when it raised its divided to 52 cents per share, up from 51 cents per share the previous quarter. It has a yield of 1.18%, which is slightly below the S&P 500 average.
However, Dover is more than a dividend stock, as it has returned about 14% year-to-date and it is rated as a buy by most analysts with a median price target of $200 per share, suggesting 14% upside.
The stock is fairly cheap, with a P/E ratio of 16, and it is coming off a quarter when revenue rose 4%, earnings jumped 19%, and free cash flow increased 5% to $163 million. For the full year, Dover anticipates 3% to 4% revenue growth and 3% to 5% growth in adjusted earnings.
Of the three stocks, Dover looks like the best buy for its incredible consistency and commitment to the dividend, as well as its cheap valuation and robust growth outlook.
But it does have the lowest yield of the three, so those looking for higher yields may want to consider Illinois Tool Works or Broadridge.