So far, 2022 has been a tough year for the US stock market. All major equity indices suffered losses, and a plethora of stocks lost significant ground as well. Finding a stable income in the midst of high volatility is no easy task. However, it may become easier if you focus on dividend-paying stocks that can generate that stable income for you.
No, these are not high growth stocks or meme stocks. The names to focus on are called dividend aristocrats – high-quality stocks dedicated to growing their payouts to shareholders.
Dividend aristocrats are those who have a remarkable dividend history. “There are 65 members of the S&P 500 who haven’t just paid dividends for at least 25 consecutive years — they’ve increased their dividends for at least 25 consecutive years.”
You can pick all of these stocks for steady income, although today we’re focusing on seven. These are top brands, although it’s best to buy stocks when they’re falling or falling ‘they have reached a price level that you consider attractive for your risk tolerance than chasing them higher.
So let’s move on to the dividend-paying stocks on today’s list:
|KO||The Coca-Cola Company||$61.01|
|CLX||The Clorox Company||$131.31|
|CL||Colgate Palmolive Company||$76.18|
|TRF||Federal Real Estate Investment Trust||$103.20|
The Coca-Cola Company (KO)
Dividend yield: 2.9%
The Coca-Cola Company (NYSE:KO) is one of the best-known beverage companies in the world. Some of its products include Coca-Cola, Diet Coke, Coca-Cola Zero Sugar, Fanta, Fresca, Schweppes, Sprite, Thums Up and Aquarius. the Atlanta company was founded in 1886.
The forward dividend and yield are $1.76 and 2.9%. The one-year target is $69.84, about 15% upside potential.
Coca-Cola stocks actually have gains of around 3% in 2022.
The frequency of dividends is quarterly and the forward payout rate of 66.39% looks safe. He is 61 consecutive years increase in the dividend.
Sales for Coca-Cola increased by 17.25% in 2021, gaining momentum after growth of -11.39% in 2020. Profitability is strong and Coca-Cola delivers very steady and positive free cash flow. With a return to normality in the post-Covid era, outdoor socializing should be a favorable factor for strong new sales.
The Clorox Company (CLX)
Dividend yield: 3.5%
The Clorox Company (NYSE:CLX) manufactures and markets consumer and professional products worldwide in four segments: Health and Wellness, Household, Lifestyle and International. Some of its brands include Clorox, Scentiva, Pine-Sol, Tilex, and Formula 409. The California-based company was founded in 1913.
CLX stock has a forward dividend and yield of $4.64 and 3.5% respectively. Interestingly, the one-year target of $137.20 is about 4% above the June 13 opening price of $131.31.
Stocks are down about 25% in 2022 and now look attractive. The company has 53 years of dividend increase. Admittedly, the forward payout rate of 85.24% seems high. Nevertheless, there is still room for future dividend increases. The frequency of dividends is quarterly.
The Clorox Company generates strong free cash flow necessary to continue paying a dividend. Sales growth is showing strength over the past two consecutive years, standing at 8.16% for 2020 and 9.22% for 2021.
As a company with a diverse brand portfolio and sales in over 100 countries, things look promising for Clorox to continue to be among the top dividend-paying stocks.
Colgate-Palmolive Company (CL)
Dividend yield: 2.5%
Colgate Palmolive Company (NYSE:CL) manufactures and sells consumer products worldwide, operating in two main segments: one encompassing oral, personal and household care items and the other focused on pet nutrition. It manufactures toothpaste, toothbrushes, mouthwashes, deodorants and antiperspirants, and health care products for the skin. The New York company was founded in 1806.
CL stock has a forward dividend and yield of $1.88 and 2.5% respectively. Shares are down about 11% in 2022. Colgate-Palmolive has 59 years of dividend increasepaying a quarterly dividend.
The forward payout ratio of 56.07% is considered very safe – and conservative too. There is plenty of room for the company to increase its future dividends.
Colgate-Palmolive has posted stable net income for the past five consecutive years and the the free cash flow trend is also relatively stable despite negative growth of 16.65% in 2021. Investors should continue to expect stable revenue from Colgate-Palmolive over the long term.
Consolidated Edison (ED)
Dividend yield: 3.3%
Consolidated Edison (NYSE:OF) provides electricity, gas and steam to the US market. The company was founded in 1823 and is based in New York. In 2022, Consolidated Edison shares performed exceptionally well with gains of 11%. The ED stock offers a forward dividend yield of 3.3%.
Should you be concerned that the one-year estimate target of $88.33 is now below Monday’s opening price of $93.57? No, for two reasons. First, the company has a five-year monthly beta of 0.22, making it a defensive stock. And second, like all dividend-paying stocks in this article, it offers safe and stable income.
Consolidated Edison has 48 years of dividend increases and a healthy payout ratio (FWD) of 65.55%.
This dividend-paying stock is paid quarterly and its financial performance is both relatively stable and solid. I’m concerned that the company has generated negative rather than positive free cash flow for the past five consecutive years. However, sales increased by 11.72% in 2021 and the net result is very stable.
Emerson Electric (EMR)
Dividend yield: 2.4%
Emerson Electric (NYSE:EMR) is a technology and engineering company with customers in industrial, commercial and residential markets around the world. The Missouri Company was founded in 1890.
EMR stock now has a forward dividend yield of 2.4%. The one-year target estimate of $107.65 signals more than 26% upside potential. Not bad at all.
The company has an impressive history of 65 years of dividend increase. The payout ratio (FWD) of 38.05% is low, showing that Emerson is a very conservative company. Investors should expect more dividend hikes in the future. The company has a very strong and stable free cash flow trend.
In 2021, free cash flow grew 17.64% to $2.99 billion.
Exxon Mobil Corporation (XOM)
Dividend yield: 3.4%
ExxonMobil Corporation (NYSE:XOM) explores for and produces crude oil and natural gas in the United States and around the world. The Texas company was founded in 1870.
The 2022 oil price surge made the energy sector one of the top performers, and XOM stock has followed that rally with gains of 57% year-to-date. The forward dividend yield is 3.4%.
Sales growth is volatile and the net profit trend is also not stable, but this oil company has generated tons of positive free cash flow over the past five years, with the exception of 2020. In 2021, Exxon Mobil reported a free cash flow growth of approximately 1,500% to $36.05 billion.
Exxon Mobil has 38 years of dividend increase and the 40.96% payout ratio (FWD) suggests further dividend hikes will follow. In fact, if oil prices remain high throughout 2022, the company could even declare a special cash dividend.
Federal Real Estate Investment Trust (FRT)
Dividend yield: 4.2%
Federal Real Estate Investment Trustt (NYSE:TRF) is a REIT, or real estate investment trust, with properties in markets like Washington, DC; Boston; San Francisco; and LA. The company was founded in 1962.
REITs are well known as a source of consistently high dividend yields. They must pay out at least 90% of their taxable income in the form of dividends to their shareholders.
Federal Realty Investment Trust has a very high dividend yield. It has 54 years of dividend increaseswhich is ideal for sustainable long-term revenue growth.
It is feared that the payout ratio (FWD) is well over 100%, which is very high. The company also has a volatile net income trend, and the free cash flow trend is also volatile. The forward yield of 4.2% is not too high compared to other REITs.
The main thing is consistency. If the business continues to be profitable, dividends should be taken for granted. In this area, the Federal Realty Investment Trust performs very well. It is very profitable. In 2021, net income increased by 99.13% to $260.29 million and Funds from operations (FFO) have been both stable and growing. It’s very healthy for this REIT.
As of the date of publication, Stavros Georgiadis, CFA does not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.