As we know, it is best to invest in dividend-yielding stocks when market movements are uncertain. While Pfizer, Inc. (PFE) and Moderna, Inc. (MRNA) have recently announced positive trial results for their coronavirus vaccines, manufacturing and distribution of the vaccines still remain a major concern. In the words of Jerome H. Powell,  Chair of the Federal Reserve, “Even in the best case, widespread vaccination is months in the future.”

In the prevailing near-zero interest rate environment, dividend-yielding stocks are the best bet to generate steady income. Besides dividend yield, one should also consider a company’s financial strength before investing in its stock. In addition to helping the company sustain its dividend payments, the strength of its financial underpinnings can help ensure that its stock will not lose value.

Walmart Inc. (WMT), Coca-Cola Company (KO), and Procter & Gamble Company (PG) are three great dividend stocks that have been paying dividends for more than three decades and have even consistently increased the dividend amounts. These three companies are also sufficiently financially sound to sustain their dividend payments in the future.

Walmart Inc. (WMT)

Operating for more than 50 years, WMT is the largest retailer in the world. The company operates through three segments — Walmart U.S., Walmart International and Sam’s Club. The company has sustained itself during the pandemic based on s one-stop shopping convenience and its e-commerce operations. The stock has gained 25.3% year-to-date and is currently trading 3.1% below its 52-week high of $153.66, which it hit on December 1^st.

The stock has consistently paid dividends each quarter for more than three decades. In the last five years, the dividend payout for WMT grew at a CAGR of 2%. The four-year average dividend yield for WMT is 2.2%, and the current dividend translates into 1.5% yield. The most recent dividend declared by the company was $0.54 payable on January 4^th, 2021, amounting to an annual dividend of $2.16.

For the quarter ended October 2020, WMT’s top line climbed 5.2% year-over-year to $134.7 billion. The company reported strong growth across all segments. Walmart U.S.’s comparable sales increased 6.4% year-over-year due to strong performance across key categories, including general merchandise, health & wellness, and food. Consolidated net sales increased 5.3% year-over-year to $133.8 billion. Operating income increased 22.5% year-over-year to $5.8 billion. EPS increased 15.5% year-over-year to $1.34.

Analysts expect WMT’s revenue to increase 4.3% for the current quarter ending January 2021, and 5.9% in 2021. The company’s EPS is expected to increase 8% for the current quarter, and 13.2% in 2021, and at a rate of 6.8% per annum over the next five years. In fact, WMT has an impressive earnings surprise history with the company missing the consensus estimate of just one of the trailing four quarters.

WMT announced attractive deals for Black Friday and Cyber Monday. The company reinvented the Black Friday savings event, moving the most sought-after items to online-only and creating a socially distanced in-store experience. Also, for the holidays, the company removed the shipping minimum for its members. Last month, the company reopened two Walmart Health centers in Chicago.

How does WMT stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

B for Peer Grade

A for Industry Rank

A for Overall POWR Rating

The stock is also ranked #1 out of 18 stocks in the Grocery/Big Box Retailers industry.

Coca-Cola Company (KO)

Founded in 1886, KO is the world’s largest beverage company. The company offers more than 500 brands in more than 200 countries and territories. Along with its Coca-Cola brands, the company’s portfolio includes some of the world’s most valuable beverage brands such as AdeS plant-based beverages, Ayataka green tea, Costa coffee, Fanta, Georgia coffee, Minute Maid juices and ZICO coconut water, to name a few. During the past six months, KO soared 12.4% to close Friday’s trading session at $53.85.

KO has consistently paid dividends each quarter for more than three decades. In the last five years, the dividend payout for KO grew at a CAGR of 5.6%. The four-year average dividend yield for KO is 3.3% and the current dividend translates into 3.01% yield. The most recent dividend declared by the company was $0.41 payable on December 15^th, amounting to an annual dividend of $1.64.

Even though deeply affected by the pandemic, the company has been able to recover quarter over quarter. The company’s net operating revenues increased 21% sequentially to $8.7 billion for the third quarter ended September 2020. Gross profit increased 25.2% sequentially to $5.2 billion. KO opened all its Costa Stores in China, and 95% of its Costa stores in the United States. EPS increased 31% sequentially to $0.55.

Analysts expect KO’s revenue to increase 10% next year. The company’s EPS is expected to increase 11.6% next year and at a rate of 2.9% per annum over the next five years. KO has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters.

The company is committed to exploring new products in dynamic beverage categories. In line with its commitment, KO launched Topo Chico Hard Seltzer, which blends purified sparkling water, a gluten-free alcohol base and natural flavors, with added minerals. First announced in August, the company is also undergoing a reorganization to adapt to the ‘new normal.’ A couple of months ago, the company announced appointments for several senior roles that will lead the company’s new operating units and beverage category teams.

KO’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade, and a “B” for Buy & Hold Grade and Industry Rank. Among the 29 stocks in the Beverages industry, it’s ranked #12.

Procter & Gamble Company (PG)

Based in Cincinnati, Ohio, PG manufactures and sells branded consumer packaged goods. The Company operates through five segments — Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care. PGhas products in more than 180 countries. It has gained 40.7% since hitting its 52-week low of $94.34 in March. It closed Friday’s trading session at $137.47.

The company has consistently increased its dividend for 64 years. PG declared a quarterly dividend of $0.7907, which was paid on November 16^th. In the last five years, dividend payout for PG grew at a CAGR of 3.1%. While the four-year average dividend yield for PG is 3%, the current dividend translates into a 2.3% yield.

PG’s net sales increased 8.5% year-over-year to $19.3 billion for the fiscal year 2021 first quarter ended September 2020. The beauty segment’s organic sales increased 7% year-over-year to $3.8 billion, driven by innovation-led growth in North America and China. Operating income increased more than 23% year-over-year to $5.9 billion. EPS increased 19.9% year-over-year to $1.63.

Analysts expect PG’s revenue to increase 4.5% in 2021 and 3.2% in 2022. The company’s EPS is expected to increase 8.6% in 2021, 6.3% in 2022, and at a rate of 8.5% per annum over the next five years. PG has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters.

On December 2^nd, Health Canada approved the company’s Microban 24 Multi-Purpose Cleaner as effective at killing SARS-CoV-2, the virus that causes COVID-19. Additionally, it is also approved the product’s claim that it kills 99.9% of bacteria and viruses that cause common colds and the flu. Earlier this month, PG unveiled their first ever recyclable HDPE toothpaste tubes across its leading toothpaste brands, Crest, Oral-B and Blend-a-med. These brands will start the switch in January 2021 and will continue until full conversion, by 2025.

It is no surprise that PG is rated “Buy” in our POWR Ratings system. It also has an “A” for Buy & Hold Grade, and a “B” for Trade Grade, Peer Grade, and Industry Rank. In the 34-stock Consumer Goods industry, it is ranked #7.

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WMT shares were trading at $147.62 per share on Monday afternoon, down $1.29 (-0.87%). Year-to-date, WMT has gained 25.83%, versus a 16.40% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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