It is not an easy time for money-making investors. The dividend yield is only 1.4%, the lowest in 150 years, excluding the peak of the dotcom bubble two decades ago. That situation is not helpful if you are investing to manage your monthly cash flows.
Many top companies have cut or suspended their dividends in the past year to survive one of the worst economic downturns we have seen in our lives. Boeing (NYSE :), Royal Dutch Shell (NYSE 🙂 and Disney (NYSE 🙂 are among them.
While payouts from S&P 500 companies are slowly returning as the economy reopens, you still need to be careful when choosing your dividend stocks. We have shortlisted three reliable stocks from the income universe. Each is considered a relatively safe choice due to their ample cash reserves, healthy balance sheets and reasonable payout ratios.
1. Verizon
Yield: 4.28%
Quarterly Payout: $ 0.6275
Telecommunications are considered a defensive game in times of uncertainty. In general, these companies regularly increase payouts. And in many cases, they have been increasing dividends regularly for decades. In this space, we like wireless service provider Verizon (NYSE :).
Verizon Weekly Chart.
Verizon has focused on improving its infrastructure in recent years. The company has avoided major acquisitions such as AT&T (NYSE :). Instead, Verizon has placed smaller bets aimed at ways to improve its network quickly. Thanks to the timely acquisition of Straight Path Communications in 2018, Verizon is at the forefront of the race to build a 5G network – part of an industry-wide effort to increase speed and unlock new revenue streams.
In March, Verizon spent more than $ 52 billion on mid-band radio waves as part of its commitment to have 5G signals available for a third of the country by early next year. The carrier expects its revenue growth to double to 4% by 2024, thanks to a wave of new 5G services.
With its strong, growing dividends and leadership position in the 5G rollout, Verizon is a solid – and relatively safe – income choice for long-term investors.
2. Real estate income
Yield: 4%
Quarterly Payout: $ 0.70
When interest rates fall, many investors turn to real estate mutual funds (REITs) because of their higher yields and payout stability. But during the pandemic, the risk profile of many top REITs changed as buildings that once housed restaurants, shopping centers and offices went silent.
Even in this difficult work environment, we cannot put all REITs in the same basket. Realty Income (NYSE :), which leases space to premium clients including Walgreens (NASDAQ :), FedEx (NYSE 🙂 and Dollar Tree (NASDAQ :), is one of those REITs that fixed income investors should consider.
The strength and diversification of its portfolio allowed Realty Income to escape the worst pandemic. The portfolio of 6,662 properties, located in the US, Puerto Rico and the UK, had an occupancy rate of 98% at the end of the first quarter, with rental income of 94%.
Weekly income table.
"Looking ahead, our rental collections have improved and stabilized, the company is well positioned to capitalize on our active global investment pipeline, and we have rounded it off with approximately $ 2.5 billion in liquidity," the company said in a profit statement this week.
3. Cisco Systems
Yield: 3%
Quarterly Payout: $ 0.37
Cisco Systems (NASDAQ 🙂 is not a high-flying technology player that will double in value in a few months, but it is a cash-rich company well positioned to pay uninterrupted dividends. The San Jose-based network giant is the world's largest manufacturer of routers, switches and other equipment that companies use to connect computers.
The company has significantly improved its future growth prospects following an aggressive diversification from hardware to a software-driven model within new, fast-growing areas of the market, such as cybersecurity, applications and services.
These growth initiatives, coupled with the company's dominant position in America, where it generates most of its revenue, has positioned the company to outperform when macroeconomic risks recede.
Goldman Sachs improved inventory in March, saying in a note that a return to offices would lead to better IT spending in general, with Cisco also looking forward to a replacement cycle for older technology.
Cisco Systems Weekly Chart.
Besides Cisco is also a reliable dividend payer. Although Cisco is not yet considered a dividend distress, since it only pays dividends for 11 years, Cisco has nevertheless increased its payout every year, making it an attractive option for those looking for growing income.
