For investors looking for an adequate return on their money with the least possible volatility, it would be worthwhile to check out the contenders for our top dividend stocks for 2015.
The Chinese economy is slowing down. Commodity prices are at multi-year lows. Bond yields are pitiful. With so much uncertainty surrounding the global economy, we should expect much more volatility in the second half of 2015.
Given that ugly picture, it’s crucial to have a safe haven in a portfolio, especially if you’re investing for retirement. Dividend-paying companies may just be the answer.
If you don’t already own a couple of solid dividend-paying stocks, the time has come to add a few to your portfolio. These stocks have a remarkable dividend history and I won’t be surprised to see more of a dividend hike in the coming years.
Dividend Stocks for Portfolio
Wal-Mart Stores Inc. (NYSE:WMT)
Wal-Mart Stores Inc. (NYSE:WMT) has a current yield of 2.7% or $1.96 per share. The company has increased its annual cash dividend every year since first declaring a $0.05 per share annual dividend in March 1974. (Source: Wal-Mart, last accessed August 18, 2015.)
Wal-Mart’s competitive advantage comes from its remarkable economic scale which resulted in enormous operation efficiency. The company uses its bargain over suppliers to lower its cost and then passes lower prices compared to other competitors to customers.
Wal-Mart’s simple business plan is its strength. The company has a very friendly relationship with its shareholders. Routinely, the company has repurchased about 2.8% of shares outstanding each year. During the second quarter of 2015, the company paid $1.6 billion in dividends and repurchased nearly 14 million shares for $1.0 billion.
Even in the midst of the financial crisis in 2008, the company managed to increase its dividends by nearly eight percent. Currently, the company has adequate financial health. Moreover, the payout ratio lands at 39%. With that said, the company is expected to continue growing its dividends for the foreseeable future.
PepsiCo, Inc. (NYSE:PEP)
PepsiCo, Inc. (NYSE:PEP) has a current yield of 2.80% or $2.81 a share. The company has paid consecutive quarterly cash dividends since 1965 where 2015 marks the company’s 43rd consecutive annual dividend increase. (Source: PepsiCo.com, August 11, 2015.)
On July 9th, the company announced second-quarter results, with earnings up at $1.98 billion or $1.32 per share—up from $1.97 billion, or $1.29 per share, compared to the the second quarter of 2014. PepsiCo revised up its full-year earnings per share (EPS) growth target to eight percent from the previous guidance of seven percent. (Source: PepsiCo.com, August 11, 2015.)
Over the past decade, the giant beverage company has paid $63.0 billion to shareholders in the form of dividends and share repurchases. With a payout ratio of 62%, PepsiCo expects to pay $8.5 to $9.0 billion to shareholders in the form of dividends and share repurchases in 2015.
An increase in the full-year outlook may also indicate that the company increases its dividends. With the current payout ratio, and given the solid financial structure, the company is expected to reward its shareholders both in its stock price and through dividends. PepsiCo is also outperforming the S&P 500; up 5.82% year-to-date.
Dominion Resources, Inc. (NYSE:D)
Dominion Resources, Inc. (NYSE:D) is one of the nation’s largest producers and transporters of energy is based in Richmond, Virginia. Dominion provides electricity at wholesale prices to rural electric cooperatives, municipalities, and for the wholesale electricity marketplace.
The company has a market cap of $45.12 billion and currently has a dividend yield of 3.4% or $2.59 per share.
On August 4th, the board of directors declared a quarterly dividend of 64.75 cents per share of common stock—marking the 350th consecutive dividend that Dominion or its predecessor company has paid to shareholders. (Source: Dominion Resources Dividend History, last accessed August 18, 2015.)
In early August, the company reported its second-quarter earnings of $429 million or $0.73 per share, compared to operating earnings of $361 million $0.62 per share for the same period in 2014.
As for their outlook in the third quarter of 2015, the company expects operating earnings in the range of 95 cents to $1.10 per share, compared to third-quarter 2014 operating earnings of 93 cents per share.
Dominion’s share price is up 5.19% in the last three-month period. Year-to-date, the stock performance stands at -1.16%.
For investors who are seeking a decent return and less volatility, this company is an alternative that has been around for decades. Dominion has paid steady dividends with relatively low moderate risks. I expect to see continuing dividend growth for years to come.