The US stock market has been subject to heightened volatility so far this year. Rising spread of the coronavirus, staggered restrictions, higher jobless claims, and shrinking economic activity are offsetting the positive vaccine news. Amid this low-interest-rate environment, many investors are shifting some of their investments to dividend-paying stocks to hedge their portfolio against a market crash.

Investing in dividend stocks might be the best option for investors trying to ensure a steady stream of income. However, given these uncertainties, it’s important to ensure the sustainability of a company’s dividend payment before betting on it. The Robinhood stock trading platform runs a list of the 100 Most Popular stocks on its website that tends to be popular with millennials and younger investors. So, stocks on this list that have grown their dividend payouts over time based on their cash flow and strong fundamentals could be ideal choices.

Here are 4 popular stocks on the Robinhood 100 list that stand out for their financial strength and impressive dividend history: Apple Inc. (AAPL), Walmart Inc. (WMT), Johnson & Johnson (JNJ) and Pfizer, Inc. (PFE).

Apple Inc. (AAPL)

AAPL designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company also deals in software, services, accessories, networking solutions, and digital content and applications. It primarily operates via two segments – Products and Services. AAPL has a 58% buy rating as per the Robinhood analyst ratings.

The stock has been uniformly paying a dividend every quarter for the past couple of decades and has raised its payout in each of the last 9 years. During the past three years, the average dividends per share growth rate for AAPL was 10.9% per year. The annual dividend cumulates to $0.82, which translates into a dividend yield of 0.69%. In its fourth quarter that ended September 2020, AAPL generated $18.7 billion in free cash flow, growing 9.7% year-over-year, and declared a dividend of $0.205 per share.

The company posted record revenue of $64.7 billion in the last reported quarter, led by all-time records for Mac sales and Services. International sales accounted for 59% of the top-line. EPS for the quarter came in at $0.73, compared to the year-ago value of $0.76. However, the early response to all its new products, led by the first 5G-enabled iPhone lineup, has been tremendously positive. The company is constantly innovating by introducing next generation products. Hence, analysts expect current quarter EPS to rise 11.2% year-over-year.

AAPL has recently announced an App Store Small Business Program to help small businesses and independent developers propel their businesses forward with a reduced commission on paid apps and in-app purchases. The company has also introduced a new MacBook Air, 13-inch MacBook Pro, and Mac mini powered by the M1, the first chip designed by AAPL.

How does AAPL stack up for the POWR Ratings?

A for Trade Grade

B for Buy & Hold Grade

B for Peer Grade

B for Industry Rank

B for Overall POWR Rating.

It is ranked #4 out of 30 stocks in the Technology – Hardware industry.

Walmart Inc. (WMT)

WMT is a discount store and supermarket major that operates more than 11,500 retail and wholesale units in 27 countries worldwide, selling grocery and a variety of general merchandise items to over 256 million customers per week. It also serves its customers through its ecommerce website. The company operates in three segments – Walmart US, Walmart International, and Sam’s Club.

WMT has been consistently growing its dividend for the last 47 years. During the past ten years, its payout has grown at a CAGR of 6.9%. The current annual dividend of $2.16 translates into a 1.45% yield. Operating cash flow for the company increased $8.3 billion year-over-year in the third quarter to $23 billion. Consequently, the company paid a dividend of $0.54, implying a 1.9% year-over-year increase in its payout.

Total revenue climbed 5.2% year-over-year in the last reported quarter to $134.7 billion. US eCommerce sales surged 79%, while international sales increased 1.3% year-over-year. EPS for the quarter came in at $1.80, rising 56.5% compared to the year-ago value. WMT is well-positioned to meet holiday pickup and delivery orders. The consensus EPS estimate for the ongoing quarter indicates a 7.2% rise from the year-ago value.

WMT recently announced its continued expansion of a full suite of Pet offerings with the launch of Walmart Pet Care, an omnichannel pet care offering. The company also rolled out its Walmart+ membership program in the last quarter, through which members will receive free delivery services, fuel discounts, and a host of other benefits. It also partnered with Quest Diagnostics and Drone Up, a nationwide drone services provider, to deliver select grocery and household essentials, and to test delivery of certain health and wellness products.

WMT has a 76% Buy rating as per the Robinhood analyst ratings. It’s no surprise that WMT is rated a “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. It is ranked #1 out of 18 stocks in the Grocery/Big Box Retailers industry.

Johnson & Johnson (JNJ)

JNJ researches, develops, manufactures, and sells various products in the healthcare field worldwide and is popularly known for its consumer products such as baby care, women’s health, and wound-care. The company has operations in the pharmaceutical, consumer, and healthcare devices segments. JNJ is working on a potential COVID-19 vaccine and has recently initiated the second global phase 3 clinical trial of its Janssen vaccine candidate.

Over the last three years, dividend payouts for JNJ grew at a CAGR of 6%. The current annual dividend of $4.04 translates into a 2.74% yield. The company has already declared a cash dividend of $1.01 per share for the fourth quarter. JNJ generated $7.65 billion in free cash flow in the third quarter and returned $2.66 billion back to its shareholders in the form of dividends.

In the third quarter, JNJ reported a top-line of $21.1 billion, increasing 1.7% year-over-year to $980 million. The consumer products and pharmaceutical segments saw a recovery in revenue, but the medical devices segment declined 3.6%. Moreover, worldwide sales improved 1.7% year-over-year. EPS for the quarter came in at $1.33, surging 101.5% compared to the year-ago quarter. Driven by robust momentum of its drugs, analysts expect EPS to grow 12.4% next year.

The company has a robust drug pipeline with more than 14 new drugs expected to launch by the end of 2023. It recently submitted applications to the FDA and European Medicines Agency (EMA) seeking approval for Darzalex Faspro, for patients with relapsed or refractory multiple myeloma. JNJ also submitted Paliperidone Palmitate 6-month supplemental new drug application to the FDA earlier this month for treatment of schizophrenia in adults.

JNJ has a 76% buy rating as per the Robinhood analyst ratings. Moreover, JNJ’s POWR Ratings reflect a promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade and a “B” for Industry Rank. Among the 240 stocks in the Medical – Pharmaceuticals industry, it’s ranked #15.

Pfizer, Inc. (PFE)

PFE develops, manufactures, and sells healthcare products worldwide. It offers medicines and vaccines in various therapeutic areas. PFE in partnership with BioNTech (BNTX), has recently concluded the phase 3 study of COVID-19 vaccine candidate BNT162b2, indicating a primary efficacy rate of 95%. Moreover, the safety data milestone required by the FDA for Emergency Use Authorization has been achieved.

PFE pays an annual dividend of $1.52, which translates into a yield of 4.19%. The company has been reliably increasing its quarterly dividend payout for the past ten years. During the past five years, the average dividends per share growth rate for PFE was 6.7% per year. The most recent dividend declared by the company was $0.38 in September 2020 for the fourth quarter. Despite generating $1.56 billion in free cash flow in the third quarter, PFE returned $2.11 billion back to its shareholders in the form of dividends.

PFE delivered a top-line of $12.1 billion, primarily driven by 4% year-over-year operational growth from the Biopharma segment. Vyndaqel/Vyndamax global revenues of $351 million was up 125% operationally. However, EPS for the quarter came in $0.72, declining 3% year-over-year. By 2025, PFE is expected to get approval for 6 diabetic medicines, 6 vaccines, 12 autoimmune drugs, 3 gene therapies, and 14 cancer treatments, which would contribute more than $15 billion to its annual revenue.

PFE presently has a total of 92 projects in its pipeline, of which 57 are in Phase 2 or 3 trials. The company recently announced a strategic collaboration with LianBio to expand development of novel therapeutics in Greater China. Moreover, PFE recently announced positive top-line results from the Phase 3 Jade Regimen study to treat severe atopic dermatitis.

PFE has a 47% buy rating as per the Robinhood analyst ratings. PFE is also rated a “Buy” in our POWR Ratings system, consistent with its strong momentum. It also has an “A” for Trade Grade and Peer Grade and a “B” for Buy & Hold Grade and Industry Rank. It is ranked #16 out of 240 stocks in the Medical – Pharmaceuticals industry.

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AAPL shares were trading at $117.71 per share on Thursday afternoon, down $0.32 (-0.27%). Year-to-date, AAPL has gained 61.51%, versus a 12.00% rise in the benchmark S&P 500 index during the same period.

About the Author: Sidharath Gupta

Sidharath’s passion for the markets and his love of words guided him to becoming a financial journalist. He began his career as an Equity Analyst, researching stocks and preparing in-depth research reports. Sidharath is currently pursuing the CFA program to deepen his knowledge of financial anlaysis and investment strategies. More...

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