4 Dividend-Paying Stocks set to Outperform in 2021

NYSE: PG | Procter & Gamble Co. News, Ratings, and Charts

PG – Given the low-interest-rate environment and expected market volatility with the second wave of coronavirus, investing in dividend stocks could ensure a steady stream of income. In addition to paying solid dividends, Procter & Gamble (PG), Danaher (DHR), Anthem (ANTM), and Colgate-Palmolive (CL) have the potential for growth as well.

The current instability in the market caused by the rising spread of the virus and low-interest-rate environment make the case favorable for dividend stocks. As the pandemic-related uncertainty is expected to continue next year as well, in the absence of any effective treatment or vaccine so far, it could be wise to bet on dividend stocks that have price appreciation potential as well.

Dividend stocks have performed well this year as can be noted from the performance of the Vanguard High Dividend Yield ETF (VYM) which has gained 43.9% since March.

Companies like The Procter & Gamble Company (PG), Danaher Corporation (DHR), Anthem, Inc. (ANTM), and Colgate-Palmolive Company (CL) have been paying steady dividends for years and have also increased their payout over time. These companies have time-proven business models and are expected to continue doing well in 2021.

The Procter & Gamble Company (PG)

PG develops, manufactures, and markets consumer goods in a wide variety of segments. The company engages in healthcare, grooming, home care, fabric care, and beauty. PG’s stock has gained 12.3% so far this year.

The company has distributed a $0.79 dividend per share for the last three quarters, which is an increase of 6.8% from the earlier dividend amount. The company’s dividend payout has a five-year CAGR of 3.13%. The expected annual dividend yield is 2.25% while the four-year average dividend yield is 2.99%.

The company has recently released a new line of dampers with a lining of shea butter to help take care of the skin and prevent rashes. The company’s new Microban 24 sanitizing spray that prevents the spread of the coronavirus has received approval from the EPA. This new product that has been shown to kill the COVID-19 virus in 60 seconds is expected to be highly popular among people wanting to stay safe during the pandemic.

PG is expected to witness revenue growth of 4.6% for the quarter ending December 2020, and 4.5% in 2021. The company’s EPS is estimated to grow by 8.6% in 2021 and at a rate of 8.5% per annum over the next five years.

How does PG stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

A for Peer Grade

A for Industry Rank

A for Overall POWR Rating

The stock is also ranked #1 out of 34 stocks in the Consumer Goods industry.

Danaher Corporation (DHR)

DHR develops, manufactures, and markets medical, industrial, and commercial products in the United States and internationally. The company operates a range of brands such as Videojet, Pall, Beckman Coulter, and more. Many of these brands hold leadership positions in their respective segments. DHR’s stock has gained 47.2% so far this year.

The company has distributed a $0.18 dividend per share for the last three quarters, which is an increase of 5.9% from the earlier dividend amount. The company’s dividend payout has a five-year CAGR of 17.53%. The expected annual dividend yield is 0.32% while the four-year average dividend yield is 0.53%.

The company’s different brands are working at fighting the spread of the coronavirus. Beckman Coulter is creating assays that could help determine whether a patient has developed an immune response to COVID-19. Cepheid’s diagnostic test for COVID-19 has received emergency use permission from the FDA. Further, Cytiva is helping researchers develop a potential vaccine for the coronavirus which is currently in pre-clinical testing.

DHR is expected to witness revenue growth of 31.9% for the quarter ending December 2020, and 15.6% in 2021. The company’s EPS is estimated to grow 18.2% in 2021 and at a rate of 15.2% per annum over the next five years.

It’s no surprise that DHR is rated a “Strong Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. In the 60-stock Industrial – Machinery industry, it is ranked #1.

Anthem, Inc. (ANTM)

ANTM is a health insurance company that operates in the United States. The company primarily operates in the Commercial and Specialty Business, Government Business, and Other segments. ANTM’s stock has gained 8.8% so far this year.

The company has distributed a $0.95 dividend per share for the last four quarters, which is an increase of 18.8% from the earlier dividend amount. The company’s dividend payout has a five-year CAGR of 12.83%. The expected annual dividend yield is 1.16% while the four-year average dividend yield is 1.27%.

The company has recently launched a new digital tool that will help public officials and other community leaders track and predict the impact of the coronavirus. This tool is available for free along with a paid version that is more customizable. The company has also recently acquired pharmacy start-up Zipdrug to improve medicine delivery services. The company’s efforts to diversify its offerings will help drive future growth along with contributing to its resilience.

ANTM is expected to witness a revenue growth of 13.8% for the quarter ending December 2020, and 7.2% in 2021. The company’s EPS is estimated to grow 12.7% in 2021 and at a rate of 13.9% per annum over the next five years.

ANTM’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” in Trade Grade, Peer Grade, and Industry Rank. In the 9-stock Medical – Health Insurance industry, it is ranked #1.

Colgate-Palmolive Company (CL)

CL manufactures and markets consumer products globally. The company primarily engages in two segments: oral, personal, and home care along with pet nutrition. The company’s stock has gained 21% so far this year.

The company has distributed a $0.44 dividend per share for the last three quarters, which is an increase of 2.3% from the earlier dividend amount. The company’s dividend payout has a five-year CAGR of 3.8%. The expected annual dividend yield is 2.11% while the four-year average dividend yield is 2.42%.

CL new line of electric toothbrushes under the brand name of Hum. The company is also focusing its efforts on improving its e-commerce business. The new focus on e-commerce will help the company retain and grow its market share in the oral care and personal care space.

CL is expected to witness a revenue growth of 2.6% for the quarter ending December 2020, and 2.7% in 2021. The company’s EPS is estimated to grow by 5.6% in 2021 and at a rate of 6.7% per annum over the next five years.

It’s no surprise that CL is rated a “Strong Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. In the 34-stock Consumer Goods industry, it is ranked #2.

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PG shares were trading at $142.69 per share on Wednesday afternoon, up $2.43 (+1.73%). Year-to-date, PG has gained 17.06%, versus a 12.50% rise in the benchmark S&P 500 index during the same period.


About the Author: Aaryaman Aashind


Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...


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