Investors love dividend-yielding stocks. First, they provide investors with a quarterly, and in some instances, monthly revenue stream. In addition to capital gains, solid companies can reward investors by raising their annual dividend. When times are tough, dividend-yielding companies can provide solace by maintaining their payout in the face of a declining stock price.
And there are a lot of companies faced with falling stock prices; August was ugly. After the events of Black Monday, it was nice to see the month of August disappear in the rear view mirror. The S&P 500 ended the month down 6.2%; the Dow Jones Industrial Average fell in step, down 6.7%. That represents the seventh-worst August for stocks since 1945.
Now that it’s September, can investors breathe a collective sigh of relief? Nope. Not even in the best case scenario. And we aren’t anywhere near that. For starters, September has historically been one of the worst months when it comes to stock market performance. Going back to 1945, stocks have fallen 55% of the time in September; significantly more than other months.
And it’s even worse when correlated to the performance of the stock market in August. When the stock market falls by more than five percent in August, it either falls or is flat in September 80% of the time. More specifically, six of the last 11 times stocks fell in August by more than five percent, they had a larger or similar fall in September.
This September, the stock market is faced with some challenging economic headwinds. China, the world’s second-largest economy, continues to remain weak and fears are that it will hinder global growth. The U.S., the world’s largest economy, reported disappointing manufacturing data; adding additional strain to ongoing volatility.
Will history repeat itself in September? Who knows? The economic outlook remains underwhelming and investors are scared and irrational. This September, it might be a good idea to consider some high dividend-paying stocks with a long history of increasing their annual dividend, with favorable multi-year growth rates.
Below are three of the top dividend stocks to watch in September.
3 Dividend Stocks to Watch in September
The Home Depot, Inc. (NYSE:HD)
The Home Depot, Inc. (NYSE:HD) is the world’s largest home improvement specialty retailer with close to 2,300 locations across North America. And thanks to an improving housing market and increasing home improvement spending, the company’s share price has been bucking the downtrend affecting much of the markets.
Since the beginning of the year, Home Depot’s share price has climbed 12.6%, a far cry from the 4.8% drop experienced on the S&P 500. And for Home Depot to get back to its mid-August, pre-Black Monday highs, it needs to climb 5.8%.
Home Depot also has a solid track record of increasing its annual dividend. In fact, it has raised its annual dividend for the last six consecutive years. In 2009, it paid investors $0.90 per share annually ($0.225 quarterly). In 2015, its annual dividend yield payout stands at 2.02% or $2.36 per share ($0.59 quarterly). (Source: homedepot.com, September 3, 2015.)
Since the beginning of 2009, the company’s share price has climbed more than 600% while its annual dividend yield has increased 162%.
KLA-Tencor Corporation (NASDAQ:KLAC)
KLA-Tencor Corporation (NASDAQ:KLAC) is a leader when it comes to tracking down chip flaws. The company is one of the world’s largest makers of process control equipment defect review systems, and semiconductor manufacturing products.
Like the broader market, KLA-Tencor’s share price has been under pressure and lost four percent of its value in August. Currently trading near $49.00 per share, KLA-Tencor is down almost 30% since the beginning of the year.
What’s the upside? The company reported solid fourth-quarter and year-end results and pays a fat annual dividend of 4.27% or $2.08 per share. In July, the firm announced that fourth-quarter revenue increased three percent year-over-year to $756 million while net income was up 10% at $142 million or $0.89 per share. (Source: kla-tencor.com, July 30, 2015.)
On top of that, KLA-Tencor has raised its annual dividend for the last six consecutive years. During the recession, while other companies were freezing or lowering their annual dividend payouts, KLA-Tencor was raising theirs, from $0.60 per share in calendar year 2009 to $1.90 in 2014. (Source: dividends.com, September 3, 2015.)
Wal-Mart Stores Inc. (NYSE:WMT)
Everyone knows Wal-Mart Stores Inc. (NYSE:WMT) and what they do. But did you know that Wal-Mart is an excellent dividend stock that has raised its annual dividend for the last 42 consecutive years? That should provide investors with peace of mind when the markets are volatile.
Wal-Mart declared its first annual dividend of $0.05 per share in 1975. In 2015, the company’s annual dividend yield stands at 3.05% or $1.96 per share. (Source: NASDAQ.com, September 3, 2015.)
While Wal-Mart’s share price is down nine percent since the beginning of August, the company is clearly big enough to respond long-term.
Currently trading near a tested support level near $64.00, Wal-Mart’s share price is down nine percent since the beginning of August. While a further drop cannot be ruled out, it is trading in an attractive range. There is also a possibility for short-term gains. Erasing its August losses would represent a gain of 10%.