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Yahoo
09-07-2025
- Business
- Yahoo
Looking to Generate Passive Income? Consider These 3 Rock-Solid Dividend King Stocks
Emerson Electric has restructured its business to focus on long-term growth opportunities. Kenvue is a good choice for investors mainly focused on capital preservation and passive income. American States Water is a water utility stock that has paid dividends since its founding in 1931. 10 stocks we like better than Emerson Electric › Investing in the stock market over a long-term time horizon can be an excellent way to compound your savings. However, the path toward unlocking significant gains can be marked by numerous ups and downs. Risk-averse investors or those nearing retirement may prefer dividend stocks over growth stocks, as they offer passive income regardless of the broader market's performance. But dividends aren't guaranteed. In fact, some companies will cut their dividends if profits fall, or irregularly raise their dividends even when the company is expanding. Dividend Kings are in a league of their own when it comes to dividend reliability. These are companies that have raised their dividends every year for at least 50 consecutive years. Given this impressive track record, Dividend Kings are a good starting point for investors seeking to enhance their passive income. Here's why Emerson Electric (NYSE: EMR), Kenvue (NYSE: KVUE), and American States Water (NYSE: AWR) stand out as three particularly compelling Dividend Kings to buy now. Lee Samaha (Emerson Electric): Dividend Kings, such as Emerson Electric, have a proud record of increasing dividends for over 55 years, for many reasons. One of them is a demonstrable ability to sustain and grow the earnings necessary to increase dividends over time. As such, when you buy a Dividend King, you are not just buying a dividend-paying stock; you are buying a stock with a proven track record of growth. The interesting thing about Emerson Electric is that it's a significantly different company from what it was just a few years ago, but its growth prospects are arguably even stronger. The company has been restructured to focus on long-term growth opportunities arising from process and industrial automation, industrial software, and adjacent markets, such as automated test & measurement. Management believes it has a game plan that will result in 4% to 7% revenue growth throughout the economic cycle, with an increase in margins (notably from selling more software-defined automation) driving double-digit earnings growth over time and free cash flow margins in the 15% to 18% range. Those are impressive numbers, and ones that support significant dividend growth in the coming years. Given that Emerson's three-month trailing orders are currently growing in the mid-single-digit range in an economy plagued by uncertainty, its longer-term growth aspirations look achievable, and this Dividend King's dividend looks set to grow for a long time yet. Daniel Foelber (Kenvue): Kenvue spun off from Johnson & Johnson in 2023, taking with it well-known consumer health and hygiene brands ranging from Neutrogena to Aveeno, Tylenol, Listerine, Band-Aid, and more. With such a dominant slate of brands and a smaller, more focused company, Kenvue seemed like a coiled spring for steady growth. However, that has not been the case. As you can see in the following chart, Kenvue's stock price is down since the spinoff despite the S&P 500 rocketing higher during that period. Revenue and margin growth have been nonexistent as Kenvue has struggled to offset inflation pressures with price hikes and higher sales volume. Despite the poor results, Kenvue does have some noteworthy qualities that could be attractive to income investors. The company is technically a Dividend King -- having inherited Johnson & Johnson's 61-year streak and then hiking its payout by 2.5% last July. Kenvue is likely to modestly boost its dividend later this month to keep the streak alive. The stock has a high yield at 3.9%, which is significantly higher than well-known Dividend Kings like Coca-Cola or Procter & Gamble. And finally, Kenvue sports a reasonable valuation -- with a forward price-to-earnings ratio of 18.4. Kenvue isn't the kind of company that will "wow" investors with a breakneck growth rate and innovation. However, it has a strong portfolio of brands that should support modest dividend growth over time. Scott Levine (American States Water): Water utility stocks like American States Water are rarely the source of sizzling headlines, but sometimes boring can be beautiful. For those looking to fortify their portfolios with a solid -- albeit unexciting -- dividend stock, American States Water and its forward-yielding 2.4% dividend is an excellent option. It has paid dividends since its founding in 1931, and for the past seven decades, it has consistently hiked its dividend -- and that streak isn't likely to end anytime soon. Serving over 264,000 regulated water utility customers in California, American States Water also provides water service to 12 military bases under 50-year contracts. Between these two businesses, the company generates steady revenue and highly predictable profits. With the resulting insight into future cash flows, management is consequently able to responsibly budget for future capital expenditures, such as infrastructure upgrades and dividends. Over the past 10 years, American States Water has consistently generated ample operational cash flow to source its dividend payments. And that's not the only indication that the dividend is secure. The company has averaged a conservative 56.4% payout ratio from 2015 through 2024. With a 70-year streak of returning an increasing amount of capital to shareholders and a resilient business model, American States Water should shine brightly on the radars of investors looking for stalwart dividend stocks. Before you buy stock in Emerson Electric, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Emerson Electric wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $695,481!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $969,935!* Now, it's worth noting Stock Advisor's total average return is 1,053% — a market-crushing outperformance compared to 179% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 7, 2025 Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Emerson Electric and Kenvue. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy. Looking to Generate Passive Income? Consider These 3 Rock-Solid Dividend King Stocks was originally published by The Motley Fool
Yahoo
22-05-2025
- Business
- Yahoo
Prediction: These 3 Monster Dividend Stocks Will Continue Crushing the S&P 500 Beyond 2025
Deere is delivering strong results despite a choppy operating environment. The energy company is a major player in exporting U.S.-produced LNG worldwide. Sunoco recently announced the acquisition of Parkland -- a transaction that will provide immediate benefits. 10 stocks we like better than Deere & Company › There are two basic ways to generate a return from holding stocks: capital gains and dividends. Capital gains are when investors get rewarded for a company's stock compounding in value, whereas dividends are when a company distributes a portion of its corporate profits directly to shareholders. Companies with growing dividends that also have a stock compounding in value over time can help investors achieve their passive income and long-term financial goals. Three Motley Fool contributors were asked to outline why Deere (NYSE: DE), Cheniere Energy Partners L.P. (NYSE: CQP), and Sunoco L.P. (NYSE: SUN) are three dividend stocks that can continue outperforming the S&P 500 (SNPINDEX: ^GSPC) beyond 2025. Daniel Foelber (Deere): Deere leaped to a new all-time high on May 16 after reporting second-quarter fiscal 2025 results. At first glance, the move higher may come as a surprise, given Deere's worldwide net sales fell 16% year over year and net income was down 24%. It also widened the low end of its full-year net income guidance from a prior range of $5 billion to $5.5 billion to a new range of $4.75 billion to $5.5 billion. But investors may have been expecting even worse results, given global tariff tensions and economic uncertainty. Deere notched an 18.8% margin on equipment operations during the quarter -- which was better than expected, given cost pressures. On the earnings call, Deere management said that incremental tariff headwinds during the quarter were $100 million and that it expects a full fiscal year pre-tax tariff impact of just over $500 million if current tariff levels persist. There are a few ways to digest this news. The negative is that tariffs are impacting Deere's bottom line. But the impact would be much worse if Deere didn't manufacture so many of its products in the U.S. (and source the majority of its components from U.S. suppliers). So the company is well-positioned to handle tariffs compared to companies with more globalized supply chains. Additionally, basic math tells us that without the tariff impact, Deere may have actually raised its full-year guidance, which is a testament to its strong results despite weakness in several end markets. Most importantly, nothing has changed about Deere's long-term investment thesis. The company continues to be an industry leader in agriculture and a major player in construction and forestry. It generates plenty of free cash flow to support its growing dividend, repurchase stock, and invest in research and development projects in artificial intelligence (AI) and automation. Despite being at an all-time high, Deere stock isn't terribly overpriced. Based on full-year net income at the midpoint of guidance of $5.13 billion, Deere would have a price-to-earnings (P/E) ratio of around 28.1 -- which isn't bad for a company in a cyclical downturn. Cyclical companies will see their P/E ratios inflate during downturns and compress during expansion periods. But given the operating environment, Deere is reasonably priced. Deere's dividend yields just 1.2%, but the company tends to spend considerably more on share buybacks than dividends. It is focused on generating long-term growth, rather than passing along too much of its profits directly to shareholders through dividends. The strategy has worked out marvelously for Deere investors, who have enjoyed a 285% gain over the last five years and a 25% gain year to date. Given Deere's competitive advantages and strong management team, I expect the stock to continue outperforming the S&P 500 for years to come. Lee Samaha (Cheniere Energy Partners): Cheniere is a master limited partnership (MLP) and owner of the Sabine Pass LNG Terminal in Louisiana, one of the largest liquefied natural gas (LNG) facilities in the world. Not to be confused with its parent company, Cheniere Energy, it generates a stream of long-term stable and recurring cash flow, primarily via large take-or-pay long-term contracts with major energy corporations. For example, a list of its major partners in 2024 (generating more than 10% of its external revenue) includes Korea Gas, BG Gulf Coast LNG (part of Shell), GAIL India (the country's largest natural gas company), Spain's Naturgy LNG, and TotalEnergies Gas & Power North America (part of TotalEnergies). Together, these five customers contributed 77% of Cheniere's external revenue in 2024. The cast list of major, financially stable customers secures Cheniere's cash flows and enables it to support its debt and make hefty distributions to its unit holders -- the current yield is 5.3%. The stock is up 15.3% this year compared to a slight gain on the S&P 500. It offers long-term upside potential from the continuing growth of the U.S. as a major exporter of LNG worldwide, which the current administration supports. For example, President Donald Trump lifted the pause in permitting new LNG projects put in place by the last administration. With a supportive administration in place and Russia's LNG exports negatively impacted by geopolitical affairs, the environment is conducive to investment in LNG projects, and that's good news for Cheniere Energy Partners. Scott Levine (Sunoco): While the S&P 500 has vacillated wildly so far in 2025, Sunoco stock has performed consistently better. As of this writing, the midstream company's stock is up 9.6% year to date, compared to a 1.3% gain in the S&P 500. And that's without factoring in dividends. Amid the bearish market sentiment and drop in oil prices, many energy stocks have hardly fared this well, and it's probably that the company's newly announced acquisition will support the stock's further market outperformance. Consequently, it -- and its 6.3% forward-yielding dividend -- has become a compelling consideration for income investors. Characterizing itself as "North America's Largest independent fuel distributor," Sunoco will diversify its operations well beyond the approximately 14,000 miles of pipeline and 124 terminals (in addition to other infrastructure) in which it currently operates distribution with the closing of its $9.1 billion acquisition of Parkland, which is expected to occur in the second half of 2025. Since the two companies operate in similar geographies -- throughout North America and South America (as well as in Europe) -- management expects to recognize synergies, totaling a $250 million run rate in the third year after the acquisition is completed. The transaction, moreover, is expected to immediately produce additional distributable cash flow, leading to a 10% increase in distributable cash flow in the third year after the acquisition closes -- an encouraging sign for income investors who want reassurance that the company's distributions are sustainable. Management projects that once the acquisition closes, the pro forma company will contribute to a more than 50% increase in free cash flow compared to Sunoco prior to the acquisition of Parkland. And with this more robust free cash flow, management foresees the ability to pursue even more growth opportunities. For income investors, today seems like a great time to fuel up on Sunoco stock. Before you buy stock in Deere & Company, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Deere & Company wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!* Now, it's worth noting Stock Advisor's total average return is 975% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cheniere Energy and Deere & Company. The Motley Fool has a disclosure policy. Prediction: These 3 Monster Dividend Stocks Will Continue Crushing the S&P 500 Beyond 2025 was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14-05-2025
- Business
- Yahoo
3 Beaten-Down Dividend Stocks With Yields Over 5% to Buy in May for Passive Income
Despite recent challenges, United Parcel Service remains a good value for patient investors. Plunging energy prices have pulled down APA's share price, but that's lifted its yield. Robert Half's yield provides excellent income while you wait for an upturn in its business. 10 stocks we like better than United Parcel Service › Money doesn't grow on trees, but there are ways to collect passive income from doing nothing. Some companies pass along a portion of profits to shareholders through dividends, which can be an excellent way to book a return without selling stock. While the S&P 500 dividend yield is just 1.3%, some stocks have far higher yields either because they have steadily raised their payouts or their stock prices are down big, pushing up the yield. United Parcel Service (NYSE: UPS), APA Corporation (NASDAQ: APA), and Robert Half (NYSE: RHI) are three dividend stocks whose yields have ballooned above 5% due to falling stock prices. Here's why all three companies are worth a closer look in May. Daniel Foelber (United Parcel Service): UPS is hovering around a five-year low. A big dividend raise in early 2022, paired with small raises since then and a falling stock price, has pushed the package delivery giant's yield to 6.8%. This yield is at an all-time high, but for all the wrong reasons. When UPS raised its dividend by 49% in early 2022, it seemed reasonable given the surge in earnings per share (EPS) and free cash flow (FCF). But as you can see in the following chart, EPS and FCF have been declining for years, making the once reasonable dividend payment borderline unaffordable. On recent earnings calls, management has reassured investors that the dividend is safe. However, UPS wants earnings to be double the dividend. There are only two ways to achieve that goal: grow earnings faster than the dividend or cut the payout. First-quarter 2025 results didn't give investors a lot to smile about. Consolidated operating profit and diluted EPS were barely higher than Q1 2024, which is disappointing, considering the weak comps. UPS decided not to provide a full-year guidance update but did provide second-quarter guidance. In the upcoming quarter, UPS expects U.S. domestic average delivery volume to be down 9% and revenue to be down by low single digits from Q2 2024. Again, this is particularly bad given the weak comps from last year. Despite all the challenges, UPS could still be worth buying for patient investors. Unlike some turnaround companies that are desperately losing market share and are unprofitable, UPS is still incredibly profitable. Its poor results stem from the overexpansion of its network to prepare for a sustained boom in delivery volumes. Instead, delivery volumes flatlined post-pandemic, leaving UPS overextended. In other words, these issues are solvable. UPS still has plenty of long-term advantages and operating leverage. Profits are still slightly above pre-pandemic levels; they just look low because of how much they grew in 2020 and 2021. UPS wouldn't be in dire straits if its dividend weren't such a high expense. But given where the dividend is, UPS is left with little wiggle room to navigate challenges. As my colleague Lee Samaha points out, UPS may be better off cutting its dividend so it can focus on its long-term growth plans, like high-margin deliveries, technology investments, and so forth. Given the stock's slumping price, investors clearly aren't sticking around to hold the stock just for its high yield. A 50% cut would do wonders for the company's balance sheet and relieve some pressure so management can focus on turning the business around. And UPS would still yield a hefty 3.4% even if the dividend were cut in half, which is still more than many well-known dividend stocks with high yields, such as Coca-Cola. All told, UPS stands out as a good choice for investors looking for a beaten-down value stock to buy in May. Scott Levine (APA Corporation): While some niches of the market have shown resilience during this market downturn, the oil patch isn't one of them. With energy prices plummeting, investors have largely dismissed oil and gas stocks. But smart investors know that this shortsightedness can provide great buying opportunities. Such is the case with APA Corporation -- an upstream energy company with assets in the United States, Egypt, and the United Kingdom -- whose stock currently offers an enticing 6.2% forward yield. Consistent with the strong correlation between movements in the price of oil and gas stocks, investors should find the fall in APA's stock unsurprising as it mirrors the decline in the price of oil benchmarks West Texas Intermediate and Brent. Because energy stocks are cyclical, those with longer investing horizons can take advantage of downturns such as these. APA, in particular, is a worthy consideration, considering its judicious approach to the dividend. In 2024, for example, the company returned 71% of free cash flow to shareholders, while management projects allocating at least 60% of free cash for shareholders -- in the form of dividends and stock buybacks -- in 2025. Adding to the stock's allure right now is that it's trading at a discount to its historic valuation. While APA stock's five-year average operating cash flow multiple is 2.7, shares are currently trading at only 1.4 times operating cash flow. Lee Samaha (Robert Half): Buying into a human resource and recruitment company when the economy is weakening might seem like a recipe for disaster, but hear me out. There are two good reasons for buying the stock to earn passive income. The first is that Robert Half is a company with excellent cash-generating properties, and its dividend has long been very well covered, even in recessionary periods. The second reason is that the economy's slowdown is caused by "heightened economic uncertainty over U.S. trade and other policy developments," according to CEO Keith Waddell on the recent earnings call. As such, "client and job seeker caution continues to elongate decision cycles and subdue hiring activity and new project starts." But here's the thing: That uncertainty will reduce when there's greater clarity over the tariffs or trade deals, leading to a de-escalation in the conflict. Consequently, Robert Half will be ideally positioned to be one of the early beneficiaries of a release of delayed hiring plans. All told, the stock's downside is protected by its dividend and cash flow, while there's upside potential from a de-escalation of trade disagreements. Meanwhile, investors will earn a 5.3% dividend yield. Before you buy stock in United Parcel Service, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and United Parcel Service wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $598,613!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $753,878!* Now, it's worth noting Stock Advisor's total average return is 922% — a market-crushing outperformance compared to 169% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apa. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy. 3 Beaten-Down Dividend Stocks With Yields Over 5% to Buy in May for Passive Income was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
12-05-2025
- Business
- Yahoo
3 Red-Hot Dividend Stocks to Buy in May That Are Up Between 9% and 27% in 1 Month
Deere is worth buying if you can endure its cyclicality. Energy Transfer is a cash-gushing pipeline and infrastructure MLP with growth prospects under the Trump administration. Huntington Ingalls is a defense contractor that reported a great start to 2025 and expects a strong performance for the rest of the year. 10 stocks we like better than Deere & Company › The broader stock market indexes have been on a tear in recent weeks, fueled by a rally in megacap growth stocks. But plenty of dividend stocks have also joined the party, like Deere (NYSE: DE), Energy Transfer (NYSE: ET), and Huntington Ingalls Industries (NYSE: HII). All three stocks are up big in the last month. Here's why they are still worth buying in May. Daniel Foelber (Deere): Heavy machinery giant Deere has stood out in the beaten-down industrial sector. The shares are up more than 16% year to date at the time of this writing. The recent surge is likely due to investor optimism about easing trade tensions. But Deere isn't out of the woods just yet. A prolonged period of tariffs could hurt demand for Deere's products, raise Deere's costs, and throw a wrench in global trade. An economic slowdown would leave Deere's customers with less cash. When the economy is expanding and interest rates are low, Deere's customers are more likely to boost their capital expenditures on long-term investments -- like expensive machinery. So Deere is a great buy for investors hoping the U.S. avoids a recession. Still, Deere has a lot to prove when it reports earnings on May 15. When Deere reported first-quarter fiscal 2025 results in February (ended Jan. 26), trade tensions had yet to heat up. The company booked just $869 million in first-quarter net income but forecast full-year net income of $5 billion to $5.5 billion. Compared to first quarter 2024, revenue fell 30% and net income was down 50%. If that trend continues, Deere will miss its full fiscal year projection. On its February earnings call, Deere said it expects pricing pressures in the second quarter, but that those pressures could ease in the second half of 2025 for certain segments. Deere also faces easier comps against the second half of fiscal 2024 -- which was weak. So the year-over-year comparisons likely won't be as drastic in the second half of this year, even if the results are poor. It's also worth understanding that Deere has been experiencing a multiyear slowdown after sales and earnings soared after the pandemic. Its stock price has continued to climb even while sales and earnings have tumbled, which has pushed up Deere's valuation. Deere has numerous advantages over other heavy machinery companies. On its February earnings call, it outlined why its supply chain is fairly protected against tariffs thanks to its domestic manufacturing and lack of exposure to China. On the next earnings call, investors should listen to see if Deere is adjusting its supply chain to be even more tariff-resistant, if it is seeing weakness in its end markets or more cautious buyer behavior amid economic uncertainty, and if it reaffirms its full-year outlook. Deere could be worth a closer look for investors interested in an industry-leading company that is less global than some of its peers and who care more about growth than passive income. Deere has a modest 1.3% yield, but historically focuses more of its capital return program on stock buybacks and preserving capital to make long-term investments -- like expanding its artificial intelligence and autonomous tractor offerings. Lee Samaha (Energy Transfer): It's no secret that the current administration is business-friendly and wants to encourage the U.S. to develop energy assets to support domestic use and also for export to reduce the U.S. trade deficit. While reshoring toy factories from China or garment manufacturing from Bangladesh to the U.S. might prove a tall order, developing natural gas and exporting liquified natural gas (LNG) is not. That's where the pipeline and energy infrastructure company Energy Transfer comes in. The master limited partnership (MLP) has a distribution yield of 7.5%, but investors shouldn't assume it's a low-growth cash cow type of stock. In fact, Energy Transfer has plans to make $5 billion in growth capital expenditures in 2025. It is a large figure, especially when considering its maintenance capital expenditures, which are budgeted at only $1.1 billion for 2025. In addition, management recently signed a heads of agreement deal with a subsidiary of an institutional investor, EIG Global Energy Partners, to potentially develop a large LNG export facility project in Lake Charles, Louisiana. Both parties are set to make a final investment decision on the project in due course. If you are confident that the Trump administration will usher in a change in U.S. energy production and LNG exports, then Energy Transfer is set to be a winner. Scott Levine (Huntington Ingalls): It's been rough for the market so far in 2025, but defense stalwart Huntington Ingalls has mostly enjoyed smooth sailing. While the S&P 500 (SNPINDEX: ^GSPC) has dipped nearly 4%, shares of America's largest military shipbuilder have risen more than 20%. Hopping aboard with an investment in Huntington Ingalls and collecting its 2.3% forward-yielding dividend certainly seems worth strong consideration right now. Although first-quarter 2025 revenue of $2.7 billion fell short of analysts' expectations of $2.9 billion, unexpectedly strong earnings overshadowed potential investor disappointment in the company's sales. Whereas analysts estimated Huntington Ingalls would report $2.81 in diluted earnings per share, the company reported EPS of $3.79. But it's not only the look back that inspired investors. Management reaffirmed a 2025 forecast that included shipbuilding revenue of $8.9 billion to $9.1 billion and free cash flow of $300 million to $500 million. For context, Huntington Ingalls reported shipbuilding revenue and free cash flow of $8.7 billion and $40 million, respectively, in 2024. During the past decade, Huntington Ingalls has shown a steady commitment to rewarding shareholders, hiking its payout higher in each consecutive year -- and the raises haven't been nominal. From 2015 through 2024, Huntington Ingalls raised its dividend at a 13.3% compound annual growth rate. Lest investors surmise that the company has risked its financial health to please dividend-hungry investors, it's important to recognize that it consistently generates ample free cash flow to cover its dividend payments. Becoming a premier supplier of submarines, amphibious ships, and aircraft carriers is no simple task. As such, Huntington Ingalls retains a significant competitive advantage as the barrier to entry is high for would-be competitors. For conservative investors looking to ramp up their passive income, Huntington Ingalls is a leading defense stock that warrants serious attention. Before you buy stock in Deere & Company, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Deere & Company wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $714,958!* Now, it's worth noting Stock Advisor's total average return is 907% — a market-crushing outperformance compared to 163% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 5, 2025 Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Deere & Company. The Motley Fool has a disclosure policy. 3 Red-Hot Dividend Stocks to Buy in May That Are Up Between 9% and 27% in 1 Month was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
05-05-2025
- Business
- Yahoo
3 Dividend Stocks You Can Be Comfortable Buying and Holding, Even in a Recession
Visa delivers moderate growth that supports a massive capital return program. Kenvue presents a classic value situation in a company with many well-known brands. Essential Utilities is a leading water utility stock with a multidecade history of hiking its dividend. The broader stock market indexes have recovered nicely in recent weeks. However, some investors may still fear that the impact of tariffs could lead the economy into a recession, which could have longer-lasting effects on earnings and stock prices. Visa (NYSE: V), Kenvue (NYSE: KVUE), and Essential Utilities (NYSE: WTRG) are three dividend stocks that can perform well even if economic conditions worsen. Here's why all three stocks are worth buying now. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Daniel Foelber (Visa): Another Visa quarterly earnings print, another clinic in resiliency amid economic uncertainty. In its fiscal second quarter of 2025, ended March 31, Visa delivered a 9% increase in revenue and a 10% increase in non-GAAP (adjusted) earnings per share (EPS). Payment volumes were up 8%, and processed transactions rose 9%. At the time of this writing, Visa is up over 8% year to date compared to a less than 1% gain in the financial sector, and a more than 5% decline in the S&P 500 (SNPINDEX: ^GSPC). But Visa continues to back up gains in its stock price with phenomenal results. Visa's consistent results are a testament to its business model. Visa collects fees based on transaction volume and frequency. So even if consumer spending falls during an economic slowdown, Visa is still well positioned to generate sizable free cash flow. Over the years, Visa has expanded its cross-border volume, growing its international business and reducing its dependence on U.S. payment volumes. In the first half of fiscal 2025, the company generated a staggering $9.42 billion in free cash flow, which supported stock repurchases of $8.41 billion and $2.33 billion in dividends. Visa stock may yield just 0.7%, but that's only because the stock has been such a strong performer over the years and the company spends multiples more on buybacks than dividends. If Visa were to allocate its entire capital return program to dividends and not repurchase any shares, the stock would yield over 3%. For the full fiscal year, Visa is guiding for low-double-digit net revenue growth and a low teens increase in diluted EPS. This growth rate is what investors have come to expect from Visa in recent years -- showcasing that it is business as usual for the payment processor despite tariff challenges and economic uncertainty. Visa sports a 34.4 price-to-earnings (P/E) ratio, which is above its 10-year median P/E of 33.1. But considering how well the business is doing, the premium valuation is arguably justified. Lee Samaha (Kenvue): The Johnson & Johnson spinoff's stock currently yields 3.5% and offers investors a value opportunity in a relatively safe industry. While many companies' prospects are guided by the direction of their end markets in 2025, Kenvue's stock direction is arguably dictated by management's ability to turn around its underperforming skin health and beauty segment, which includes well-known brands such as Aveeno and Neutrogena. In a sense, it's a classic value stock situation, whereby you buy the stock in the anticipation that the company can release value in the segment by generating performance on par with its skin health peers like Beiersdorf and L'Oreal. Unfortunately, and by management's admission, the segment's recovery is taking longer than anticipated. Kenvue continues to invest in brand marketing and in-store promotions to revive the segment's growth rate -- organic sales declined by 1.9% in 2024. On a positive note, Neutrogena recovered its No. 1 spot in the U.S. in the face care group, and the segment continues to do well in Europe and Latin America. Elsewhere, Kenvue is doing OK. The other two segments, self-care (including Tylenol, Benadryl, and Nicorette), and essential health (including Listerine and Band-Aid) grew organic sales by 1.9% and 4.1% respectively in 2024. In addition, Kenvue is engaging with activist investor Starboard Value. Kenvue has cooperated with Starboard to appoint three new members to its board of directors. That should reassure investors that Kenvue is serious about turning performance around. All told, while there's no guarantee operational performance will improve, the stock looks like a decent value, and the dividend is useful. Hence, the downside seems relatively limited, and the stock has upside potential if management delivers. Scott Levine (Essential Utilities): With many outlets in the media emphasizing doom and gloom during this market volatility, it can be hard for investors to keep their resolve -- let alone stay optimistic that the downturn will come to an end. But that's not to say that there aren't stocks that can help investors sleep more soundly during this tumultuous time. Essential Utilities, for example, is a water utility that can provide cautious investors a way to fortify their portfolios, plus provide some passive income with the stock's attractive 3.2% forward yielding dividend. While some consumers may cut back on their trips to restaurants, delay large purchases, or push off a vacation to reduce household spending, one thing they're unlikely to do is limit water usage. Herein lies the allure of Essential Utilities, which provides water and wastewater services to 1.1 million customers and attributes 99% of its earnings to water and wastewater businesses. It's important to recognize that both of these segments operate in the regulated markets, so the company is guaranteed certain rates of return. This, moreover, provides management with foresight into future cash flows, helping it to balance the $344 million in water and wastewater acquisitions with the $1.6 billion in infrastructure investments it has planned from 2025 through 2029. Essential Utilities has increased its payout for 30 consecutive years, demonstrating a steadfast commitment to rewarding investors. Over the past 10 years, the company has boosted the payout at an impressive 7% compound annual growth rate. While this previous performance doesn't ensure the same will occur in the years to come, it's certainly an auspicious sign that's worth acknowledging. For recession-wary investors looking to buttress their holdings with a reliable dividend stock, putting Essential Utilities to work in their portfolios is a great idea right now. Before you buy stock in Visa, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Visa wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $623,685!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $701,781!* Now, it's worth noting Stock Advisor's total average return is 906% — a market-crushing outperformance compared to 164% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 28, 2025 Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kenvue and Visa. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy. 3 Dividend Stocks You Can Be Comfortable Buying and Holding, Even in a Recession was originally published by The Motley Fool Sign in to access your portfolio
