In May, the stock market seemed to finally hit a snag for the first time in a while.
Specifically, in the middle of the month, investors saw the Nasdaq slide 2.7% in a single session and the S&P 500 drop 2.1% for one of the worst days for stocks since January. The shaky performance was thanks in part to continued fears about inflation, with the consumer price index surging 4.2% in April compared with last year.
Stocks have firmed up since then as we approach the end of the month, but the rocky run in May hints that investors may want to be more selective as we enter the sleepy summer months. If you’re looking to reduce your risk by moving toward reliable dividend stocks, here are five trade ideas to consider:
— Franklin Resources (ticker: BEN)
— International Paper Co. (IP)
— Interpublic Group of Cos. (IPG)
— Nutrien (NTR)
— PetroChina Co. (PTR)
Franklin Resources (BEN)
Current yield: 3.39%
Franklin Resources is a roughly $17 billion asset manager. While perhaps not as high-profile as some other big names on Wall Street, dividend investors should take note of Franklin Resources simply because of its long-term income potential.
The stock has increased its dividend for 40 consecutive years — earning a spot among the 65 divided aristocrats in the S&P 500 — showing a clear commitment to shareholders and a well-run operation that can weather any short-term trouble.
Right now, there’s no trouble to speak of, either, as BEN stock is up about 38% year to date in 2021 to outperform the roughly 13% or so for the broader S&P 500 in the same period.
International Paper Co. (IP)
Current yield: 3.22%
As many investors remain concerned about the risks of inflation and rising materials cost, one family of companies that’s doing just fine lately are the materials producers themselves.
Obviously, paper is not incredibly high-tech and over the years the industry has consolidated into just a few core players. International Paper is one of those dominant names, and as long as paper remains in demand for everything from toilet tissue to the boxes Amazon.com ( AMZN) is sending you, IP has a strong flow of orders from customers. And seeing as it is cranking out the building blocks of many necessities consumers and businesses need, IP is one of the companies raising its prices rather than seeing margins squeezed lately.
That’s part of the reason this stock is up 12% in the last month or so, while the rest of the stock market is flat.
Interpublic Group of Cos. (IPG)
Current yield: 3.26%
The Interpublic Group of Cos. is an advertising powerhouse that has roots going back roughly 100 years through two of the first big names in advertising — McCann and Erickson.
Interpublic has grown through a series of big acquisitions and mergers, and it has since become an increasingly dominant force in consumer advertising, digital marketing, public relations and a host of other specialized communications disciplines. Shares have more than doubled in the last 12 months as many companies are looking to get their brands back on track thanks to the easing of pandemic pressures, but long-term income investors have a lot to like, too.
Consider that the quarterly dividend has surged from 15 cents per quarter at the end of 2016 to 27 cents at present — an 80% increase in distributions in less than five years.
Current yield: 3.02%
Just as paper is one of the building blocks of many industries, so are agricultural products. Nutrien is a key farm supply company that offers potash, nitrogen and other fertilizers along with seed and “crop protection products” to keep away weeds and pests.
Nutrien has about 2,000 locations to serve the agricultural industries in the U.S., Canada, South America and Australia. If you believe prices are going to keep rising, this is one stock that’s very insulated from that trend as it’s literally at the beginning of the food chain.
And given the long-term issue of a rising global population and only so much farmland to go around, you can bank on Nutrien being an important service provider to the agricultural industry going forward.
PetroChina Co. (PTR)
Current yield: 6.39%
If you’ve kept up with the theme so far, you’ll understand why PTR is also a great stock to mitigate fears of rising prices.
Not only is this massive oil company benefiting from rising crude oil prices, it’s also a state-run giant that’s backed by Beijing and directly plugged into the energy-hungry economy of China. This makes PetroChina uniquely positioned to benefit from inflationary trends but also to stand out as a more stable option to Big Oil companies that have to answer to shareholders with no backstop from the government.
Admittedly, the long-term prospects of an oil exploration company may not be grand in the era of global warming. However, with a big dividend and share prices that are up 15% in the last month even as most other stocks have moved sideways, PetroChina is at least looking good in the month of June.
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Update 05/27/21: This story was published at an earlier date and has been updated with new information.