Dividend stocks to buy as a concept offers universal relevance because of the underlying passive income. While nothing is guaranteed in the market, if you acquire shares of established enterprises that reward their shareholders with consistent payouts, dividend investing can bolster confidence. You have reasonable assurances that every quarter (or sometimes every month), you’re going to get something for your risk.
However, dividend stock picks may be supremely relevant right now and that’s because of the market’s present ambiguous clouds. Sure, the recent June jobs report came in lower than expected. As well, key inflation readings have demonstrated a slowdown in rising consumer prices. Still, the Federal Reserve has plenty of work ahead as certain sector pricing remains too elevated.
Notably, home prices have become grossly unaffordable for the average family and that may lead to catastrophic generational problems. Essentially, an extremely hot housing market disrupts the normal lifecycle of young people starting families. And that will almost invariably force the Fed to act in the best interest of long-term goals.
Given that the market could go in multiple directions, these reliable dividend stocks to buy make plenty of sense.
Exxon Mobil (XOM)
On the surface, Exxon Mobil (NYSE:XOM) hardly seems a great candidate for dividend stocks to buy. While it does offer fairly decent passive income, broader fundamental conditions don’t seem to favor the oil and gas giant. Most notably, the Fed’s long-term target to bring inflation down to truly manageable levels clashes with upward energy prices. Still, it’s worth investigating for those interested in dividend investing.
For one thing, you have the passive income itself. Right now, the company carries a forward yield of 3.58%. While it’s a bit lower than the energy sector’s average yield of 4.24%, the payout ratio sits at 41.25%. Therefore, yield sustainability shouldn’t be that much of an issue. Plus, Exxon enjoys 40 years of consecutive annual dividend increases. That’s the kind of stability you want in dividend stock picks.
On a fundamental note, as all elements of society return gradually to pre-pandemic norms, the workplace might be no different. Subsequently, the return of the morning commute could lead to higher energy prices, bolstering XOM and its ilk.
Chicago Rivet & Machine (CVR)
A boring enterprise among dividend stocks to buy, Chicago Rivet & Machine (NYSEAMERICAN:CVR) produces and sells rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines, automatic assembly equipment and parts and tools for such machines. While it’s not going to be a meme anytime soon, Chicago Rivet represents an important (but overlooked) cog in the infrastructure rebuild.
In terms of passive income, the company presently carries a forward yield of 3.44%. Notably, this stat comes in higher than the industrial sector’s average yield of 2.36%. To be fair, Chicago Rivet lacks consecutive history of annual dividend increases. Still, because of its everyday relevance, it’s worth a look as one of the dividend stock picks.
Also, keep in mind that the company benefits from a stout balance sheet, particularly because it incurs zero debt. As well, it features an equity-to-asset ratio of 0.9 times, ranked better than 96.8% of its peers. Plus, an Altman Z-Score of 7.49 indicates very low risk of imminent bankruptcy.
To be upfront, IBM (NYSE:IBM) appears as an afterthought in the rapidly burgeoning narrative of artificial intelligence. For example, you have a powerhouse enterprise like Nvidia (NASDAQ:NVDA). Sleek and sexy, NVDA appears poised to gain 230% on a year-to-date basis. IBM stock? It’s down more than 4% during the same period. Yet for patient investors, I think it’s one of the dividend stocks to buy.
First, as a technology enterprise, you’re not going to find too many names offering a forward yield of 4.9%. Just look at the sector’s average yield of 1.37%, which is not very inspiring. Granted, IBM’s payout ratio is a bit warm at 66.49% but arguably not worth sounding the alarm. Importantly, “Big Blue” commands 30 years of consecutive dividend increases, warranting respect.
Plus, it seems that AI has just caught mainstream society’s attention. In reality, IBM has been leveraging its AI-based acumen to provide real solutions for real businesses for years. True, Big Blue hasn’t always been a great investment. Nevertheless, it truly deserves another look right now.
Packaging Corp of America (PKG)
A manufacturing firm, Packaging Corp of America (NYSE:PKG) is the third largest producer of container board products and the third largest producer of uncoated freesheet paper in North America, according to its corporate profile. Given the rise of e-commerce – particularly its share of the total retail landscape – Packaging Corp may be boring but it’s tied to an extremely relevant sector.
Put another way, it’s not worried about keeping the lights on. And I don’t think I’m sticking my head out by saying that e-commerce will remain a thing decades away. Even better, PKG ranks among the top dividend stocks to buy. Right now, the company carries a forward yield of 3.68%, above the material sector’s average yield of 2.82%. Also, it commands 12 years of consecutive dividend increases.
In terms of financials, nothing truly stands out. That said, Packaging enjoys decent stability in the balance sheet. With a three-year revenue growth rate (per-share basis) of 7.3%, it’s getting the job done. Finally, it’s consistently profitable with a trailing-year net margin of 11.61%.
An Australian multinational mining and metals firm, BHP (NYSE:BHP) offers broad relevancies for multiple industries. For example, while BHP may be bypassing the lithium market, it remains a powerhouse in the copper and nickel arenas. Both metals represent key commodities for the electrification of mobility and mass-scale transportation. Because it provides the tickets to the game (rather than being a wager on an outcome), BHP makes for one of the dividend stocks to buy.
On the passive income front, the company offers a very generous forward yield of 5.94%. Again, that’s well above the material sector’s average yield of 2.82%. To be fair, its payout ratio is somewhat elevated at 70.55% (though not horrible). In addition, it doesn’t have a current track record of annual dividend increases.
Nevertheless, if you’re seeking dividend stock picks that will be around decades into the future, BHP needs further examination. Aside from its industrial and technological relevancies, BHP also trades at a price/earnings-to-growth (PEG) ratio of 0.53x. In contrast, the PEG ratio for the metals and mining industry stands at a loftier 0.85x.
A designer and marketer of quality and innovative footwear for men, women and children, Weyco (NASDAQ:WEYS) presents considerable risk for those interested in dividend investing. With uncertainty about the Fed’s long-term approach to tackling inflation, the consumer economy stands at an awkward juncture. Still, WEYS enjoys decent chart performances. Since the Jan. opener, it’s up nearly 24% and in the trialing year, it gained almost 5%.
For passive income, Weyco carries a forward yield of 3.72%, above the consumer discretionary sector’s average yield of 1.89%. True, it only features one year of dividend increase history. Nevertheless, Weyco might also benefit from broader fundamentals. Should society fully normalize, you gotta figure that consumers must upgrade their footwear. Wearing sneakers into a professional office might not cut it.
Lastly, Weyco delivers very solid financial stats. For example, its equity-to-asset ratio clocks in at 0.74X, better than 79.46% of its rivals. It features a sector-average-beating three-year revenue growth rate of 6.2% and generates consistent profitability. Thus, it’s one of the dividend stocks to consider.
G. Willi-Food (WILC)
Perhaps the riskiest idea on this list of dividend stocks – in large part because of its unfamiliarity to many U.S.-based investors – G. Willi-Food (NASDAQ:WILC) is the leading importer of food products in Israel. Per its public profile, G. Willi-Food supplies Israeli consumers a wide variety of food products from the leading international brands and suppliers from all over the world. Since the beginning of the year, WILC slipped more than 9%.
It’s not for the faint of heart. Still, investors may find the forward yield of 10.55% quite attractive. Again, that’s well above the consumer staple sector’s average yield of 1.89%. Overall, Israel’s economy may be moving a bit too warmly than its monetary policymakers would like. Still, the framework also implies that consumers are doing relatively well. Plus, food represents a necessity.
On the financials, the company’s best strength centers on its stability. For example, its cash-to-debt ratio comes in at 68.63X, better than 90.82% of its competitors. Also, its equity-to-asset ratio is 0.87x, above 94.43% of sector rivals. If you don’t mind speculating, WILC could be one of the top dividend stock picks.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.