3 Dividend Kings To Consider

June
1, 2021

4 min read

This story originally appeared on MarketBeat

With the major indices ticking back towards all-time highs, there’s no doubt that equities are very much in favor. But despite the 10YR’s interest rate dipping in recent weeks as inflation concerns recede, there are still several macro reasons to justify some caution being exercised when choosing what stocks to add to June’s portfolio.

One way to mitigate this risk is by focusing on quality names, and choosing the best among them. While there are more than a few methods available to both determine and find quality, looking at a company’s dividend history is one of the more popular and reliable. This is particularly the case in light of last year’s volatility in equity markets, which led to many blue-chip stocks slashing and even halting their dividend payouts. Here are three of the stronger dividend stocks out there to consider. 

Nucor Corporation (NYSE: NUE)

Nucor is a $30 billion steel company headquartered in North Carolina that tacked on more than 150% to its shares in the past year. Having set consistently lower lows from 2018 into the first quarter of 2020, this scorching run is a welcome change of past for investors and underlines the attractiveness of the stock itself. As one of the more diversified steel manufacturers out there, Nucor stands to do very well from Biden’s $2 trillion infrastructure package, in particular from the American Jobs Plan.

Though modest compared to the others on this list, their $0.405 quarter dividend (1.6% dividend yield) was uninterrupted by the COVID pandemic, and in fact is higher now than it was before the pandemic hit, making it all the more rock solid. Management has established an enviable track record of hiking the dividend at the end of every year and in light of the stock’s performance in the past twelve months, there’s every reason to think this year will be no different.

Like Nucor, Altria have used the pandemic as a springboard to break a multi-year downtrend that was taking shares lower and lower since hitting all time highs in 2013. But despite this underperformance compared to what the likes of the S&P 500 index was doing over the same time period, management also had a habit of consistently boosting their dividend.

Though the stock is still down 35% from its all time highs even after moving up 20% this year already, its current dividend of $0.86 (dividend yield of 6.9%) is more than 100% higher than the $0.41 it was in 2012. Does management know something Wall Street doesn’t? If so, maybe the latter is starting to catch on, especially as momentum starts swinging from growth to value stocks. With a price-to-earnings ratio of 20, no one could call Altria an expensive stock, and with an $8.5 billion buyback program currently underway, you can’t help but feel you’re adding a sleeping giant to your portfolio by picking up some shares. 

For an oil and gas company that’s very much subject to the whims of the underlying energy market, Chevron sure knows how to keep their boat steady. Though shares are still trading at 2012 levels, this is a pain primarily reserved for shareholders who’ve been involved for many years. For those of us sizing up the opportunity at hand, there’s a lot to like. 

Oil futures are trading at multiple year highs, the stock is considered to be of the value rather than the growth variety, and they have an impressively strong history of paying dividends. Though for all wants and purposes shares might be flat since 2012, management has increased their dividend by 65% in the same time period to give them a current dividend yield of 5.2%. Annual revenue is on the rise and there are plenty of macro factors present to underpin a move up towards the $120 range. Wall Street is also expecting management to announce the resumption of their share buyback program in the near-term, which should add further strength to the bid.

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