Choose low-volatility dividend stocks for stability.
Things have gotten a bit choppy on Wall Street in 2021 amid talk of rising prices and inflationary pressures. At the same time, the general notion that the “recovery trade” in anticipation of fewer pandemic-related restrictions this summer has pretty much run its course as investors who were front-running that trend piled in months ago. If you’re concerned about a correction in an environment like this or looking to mitigate the chance of volatility in the long term, take a look at these seven safe dividend stocks. All offer dividend yields of more than 2% at present and are also “low beta” stocks — a statistical measure indicating they typically move less than the market at large. The risk is that if the entire market goes on a tear these low-beta investments will lag behind, of course. But if you’re a low-risk investor looking for fewer bumps in the road more than a rocket to the moon, consider these less volatile dividend payers right now.
Crown Castle International Corp. (ticker: CCI)
Crown Castle is a nearly $80 billion real estate investment trust, or REIT. That means it’s a special class of stock that gets tax breaks on its massive property holdings in exchange for a mandate to deliver 90% of taxable income back to shareholders. That property includes mainly telecommunications infrastructure like cellphone towers, where carriers must pay rent in order to put up an antenna and serve their customers. Needless to say this is a rock-solid business in the digital age, as CCI doesn’t have to worry about upgrading anyone’s phone or dealing with cellphone contracts. All it does is operate some 40,000 cell towers and approximately 80,000 route miles of fiber cable and charge big telecom companies that want to use its infrastructure. That adds up to reliable income and dividends for shareholders.
Current yield: 2.93%
FirstEnergy Corp. (FE)
Utility stocks are often regional monopolies. As the utilities sector is highly regulated with enormous capital costs that create natural barriers to competition, there are fewer publicly traded companies that have less risk associated with their model than power stocks like FE. This $20 billion electric utility has an even lower risk profile than many of its peers, however, with about 270,000 miles of power lines to serve customers in Ohio, Pennsylvania, New Jersey, West Virginia and Maryland. Electricity is a necessity alongside food and water for Americans, and while short-term demand trends can fluctuate, there is little chance FE stock — or its generous and reliable dividends — face any risk of disruption in the long term.
Current yield: 4.17%
Gilead Sciences (GILD)
Gilead Sciences stands apart from other pharmaceutical stocks because of its long-term price stability and robust product pipeline of branded drugs that can give investors confidence for the long haul. Most recently, GILD has made news thanks to its lucrative hepatitis treatments, as well as Veklury, the first drug approved by the U.S. Food and Drug Administration to treat COVID-19. The true potential comes from consistent reinvestment in the future, with $5 billion of its revenue going into research and development in 2020. When you look at GILD over the long term, it’s not as dynamic as smaller development-stage biotechs — but if you’re looking for a low-beta stock with a decent dividend that will hang tough amid volatility, this drugmaker is worth a look.
Current yield: 4.15%
The J.M. Smucker Co. (SJM)
J.M. Smucker is a rare consumer stock that benefits from a rich brand history and little chance of changing tastes upending its business. It certainly faces competition, both to its eponymous jellies and jams as well as other brands like Folgers coffee and Jif peanut butter, but its massive reach has proven durable over the years. After all, peanut butter and jelly sandwiches remain a lunch favorite regardless of demographics. Smucker is a low-beta stock with staying power, as consumer staples aren’t as sensitive to pullbacks in discretionary spending, and income-oriented investors can have faith in the dividend as it remains less than half of the total earnings SJM rakes in each fiscal year.
Current yield: 2.68%
Novo Nordisk (NVO)
Investors looking for a “sure thing” oftentimes gravitate to health care, as one of the only things you can be certain about is the fact that everyone will get old and sick eventually. NVO is particularly interesting in the sector, however, as it’s a focused stock that primarily offers treatments for diabetes. The World Health Organization estimates that the number of people suffering from diabetes rose from 108 million in 1980 to 422 million in 2014 — an increase of nearly fourfold. That means this Denmark-based company has more “customers” than ever. Furthermore, these patients need regular maintenance of their diabetes and not a one-time cure — so NVO shareholders can rely on a built-in revenue stream for many years to come, regardless of broader market volatility.
Current yield: 2.3%
Public Storage (PSA)
Like Crown Castle, PSA is classified as a REIT. And with more than 2,500 self-storage facilities located in around 38 states to total approximately 171 million rentable square feet, it’s easy to see why dividend investors are attracted to this company. It’s universally true that storage units are more in demand during tough times as people downsize or put off buying bigger homes until they have more faith in their finances, so this “countercyclical” nature means PSA stock very often hangs tough even during an economic downturn. This obviously limits growth, but the lower risk profile is appealing to many investors who are more concerned about volatility than anything else.
Current yield: 2.89%
Walgreens Boots Alliance (WBA)
It’s probably not a surprise that drugstore chain Walgreens is one of the most stable stocks on Wall Street. In addition to having more than 9,000 retail locations in the U.S. and around 4,000 more under the Boots brand in the U.K. and Ireland and the Benavides and Ahumada brands in Latin America, this global powerhouse also operates a robust wholesale pharmaceutical segment on top of that. As long as folks need their medication, they will keep shopping at Walgreens stores in good times and bad. You may never see amazing growth in this entrenched player, but 45 years of consecutive dividend increases shows income investors can still take WBA stock to the bank.
Current yield: 3.41%
Seven safe dividend stocks to buy:
— Crown Castle International Corp. (CCI)
— FirstEnergy Corp. (FE)
— Gilead Sciences (GILD)
— The J.M. Smucker Co. (SJM)
— Novo Nordisk (NVO)
— Public Storage (PSA)
— Walgreens Boots Alliance (WBA)
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