Editor’s note: This story was previously published in May 2019. It has been edited and republished.
No matter where we are in the investing cycle, dividend stocks never go out of style. However, it’s during times of unpredictability that investors seek out dividend aristocrats . But despite, there are other dividend stocks out there that are still worth checking out despite not being in this exclusive club.
Regardless of the dividend stock’s status, investors must consider the following when looking at good dividend stocks to buy: Investors should select a company that has a history of steady increases in dividend distributions, has growing cash flow every year and is still trading a discount or up to fair value.
With that in mind, here are the seven dividend stocks that are worth your money:
Starting with one of the most cyclical but most dependable in dividend income on this list, Ford (NYSE: F ) offers a dividend yielding 5.8%.
The selling pressure Ford stock saw near the tail-end of 2018 has been replaced by a bit more optimism in 2019still, a U.S.-led trade war is hurting the stock.
But the company’s quarterly earnings report offered no evidence that business was so bad the stock deserved to fall. Instead, Ford reported a solid earnings-per-share and revenue beat of 29 cents (non-GAAP) and $40.3 billion, respectively.
The economic cycle may hurt auto sales, but Ford is ready to take on the challenging environment. It benefited from a strong product mix in North America. It may even issue a special dividend if truck and SUV sales exceed estimates in 2019.
Philip Morris International (PM)
Philip Morris International (NYSE: PM ) has a dividend yielding 5.84%.
Rumors that the U.S. Food and Drug Administration plans to impose restrictions on e-cigarette sales hurt PM’s stock price slightly. Still, it is holding up better than other cigarette suppliers, which is why it’s one of the solid dividend stocks to buy.
Philip Morris is adapting to the change in smoking habits. It continues to invest in its IQOS device, which has helped the company significantly in the longer term. IQOS 2 launched at the end of 2018 in Japan with notable success . By offering an alternative to cigarette smoking as consumers embrace the heated tobacco system, this company will bring in revenue growth quarter-after-quarter.
And with that trend playing out, management may reward its loyal investors by increasing its dividends in the years ahead.
Dominion Energy (D)
Dominion Energy (NYSE: D ) has a dividend yield of 4.97%. The stock rallied from $61.53 and closed recently around $74.
The company’s stock has started to rise out of its 2019 range, but it still has some legroom to run. Dominion Energy earned $1.15 a share and $3.16 so far for the nine months of the year. Power generation, power delivery and gas infrastructure revenue all came within the guidance range midpoint.
Income investors may look forward to the completion of the SCANA merger later this year, as Dominion’s business plan includes a diverse growth capital investment program that will spread its business risks.
Ultimately, this is one of the dividend stocks to buy because, when you consider that it is starting a variety of businesses, it has an improved risk profile, strong earnings results.
Chevron (NYSE: CVX ) is a major integrated oil and gas firm. At a yield just shy of 4%, consistency is what makes this one of the best dividend stocks to buy.
Source: swong95765 via Flickr (Modified)
Chevron’s upstream operations found a boost at the end of 2018 going into 2019, earning 828 million — a vast improvement from a loss of $26 million last year. The unit benefited from crude oil prices moving higher, while the company increased production.
Chevron stock is really closely tied to the price of oil, which has been volatile for the last five years, but the dividend is so reliable as to make that a non-issue.
Iron Mountain (IRM)
At 7.1%, Iron Mountain Incorporated (NYSE: IRM ) offers one of the highest dividend yields on this list of dividend stocks to buy.
In its Q1 report, revenue rose 5%, year over year while adjusted EBITDA slid 6%. Iron Mountain benefited from rental revenue growing 2.6% so far this year. Internal service revenue growth of 1.8% is due to grow in the shred business, digitization and special projects.
Markets often question the sustainability of Iron Mountain’s dividend, but the NOI CAGR of 3.1% for Physical Storage, plus its expansion in emerging markets and data center, suggests the company will grow EBITDA through the end of 2020. If business keeps up at this strong pace, the share price will go up, lowering the dividend yield. But management may just hike the dividend in the future to keep its yield attractive while rewarding its shareholders.
The takeaway here is that Iron Mountain is in the process of shifting its business into new segments. It has time to make the conversion because its borrowing was at a fixed-rate, averaging 4.8%.
BCE Inc (BCE)
Telecom giant BCE Inc (NYSE: BCE ) is a Canadian firm whose dividend yields 5.04%.
Source: BCE, Inc.
Bell allayed fears of any business weakness when it reported a good first-quarter report. It added a little more than 3% to its customer base when compared with Q1 2018. This added more than 2% in revenue growth and 6.9% higher adjusted EBITDA.
In 2019, BCE will cut 4% of its management staff (700 positions). The capital intensity ratio will fall along with total cash pension funding. In effect, the cost controls will keep profit margins strong while the firm continues to pay out a dividend to shareholders.
Sure, investors could consider AT&T (NYSE: T ) as an alternative, especially given that the dividend is north of 6%. But since BCE is a pure play in wireless and internet markets, with little exposure to content other than its CTV unit, it has a distinct advantage depending on your investment approach. And for that reason, I chose BCE instead.
BP (NYSE: BP ) already has added about 10% to its stock price this year and its dividend yields 5.81%.
While BP had a rocky 2018, 2019 has seen a little less volatility, given that this is an oil stock. This is because the company is well-prepared for an even bigger drop in oil prices. Over the years, it shed non-core assets, strengthened its balance sheet and continued paying a dividend despite the fluctuations in oil prices. Its underlying cash flow inflow is balanced with the outflow of organic capital expenditure and dividends. Should cash flow fall due to lower oil prices, BP may sustain its dividend but lower spending.
To keep growing in the future, BP has five major projects currently in operation: Thunder Horse Northwest Expansion, Western Flank B, Atoll, Taas Expansion and Shah Deniz 2.
BP’s outlook is bright. It is shedding over $3 billion in assets and spending ~ $15 billion in capital expenditure in 2018. In the upcoming fourth quarter, it forecasts higher production from upstream. Downstream will benefit from higher levels of a turnaround thanks to its Whiting refinery in the U.S.
Will oil prices keep falling? No one knows, but BP is prepared.
As of this writing, Chris Lau owned shares of F and BP.
More From InvestorPlace
- 7 A-Rated Stocks That Are Under $10
- 7 Stocks That Are Soaring This Earnings Season
- 5 Biotech Stocks for a Long-Lived Portfolio
- 10 Times Apple's Hardware Failed Consumers -- And Hurt Its Business