7 Dividend Stocks for a Reliable Stream of Income
Stock dividends are important for investors. Over time, regular dividend payments that are reinvested in the stocks that pay them can have a positive impact on portfolios, helping them to grow and generate larger dividends. For retirees, dividend distributions can serve as an important part of their income. It’s no accident that some of the world’s most successful investors seek out stocks that pay consistent dividends that tend to grow over time. Consider that famed investor Warren Buffett will this year earn $736 million of dividend payments from his stake in Coca-Cola (NYSE:KO), and you can understand the benefits of reliable dividend payments. Currently, the average dividend yield among companies listed on the benchmark S&P 500 index is 1.64%. However, there are stocks that pay much larger dividends than the average, and some companies have been raising their payouts in recent months. Here are seven dividend stocks that will provide investors with a reliable stream of income.
Dick’s Sporting Goods
Dick’s Sporting Goods (DKS)
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American retailer Dick’s Sporting Goods (NYSE:DKS) recently announced that it is more than doubling its quarterly dividend payment after hitting a grand slam with its fourth-quarter earnings. The company said that it was hiking its quarterly payment to $1 per share, which is an increase of 105% from the 48.75 cents that it paid previously. Dick’s forward dividend yield now stands at a healthy 2.76%. The dividend increase comes after the company reported blowout Q4 results that were lifted by strong holiday sales last December.
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Dick’s Sporting Goods’ same-store sales rose 5.3% during Q4, more than double analysts’ average forecasts of 2.1% growth, according to Refinitiv. The retailer’s earnings per share (EPS) came in at $2.93 versus the $2.88 that analysts, on average, had anticipated.
The company’s Q4 revenue amounted to $3.60 billion compared to $3.45 billion that was expected, on average, by analysts. The firm’s strong earnings and big dividend increase have helped DKS stock gain about 21.5% so far this year.
Birchcliff Energy (BIREF)
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In Canada, oil and natural gas companies have been reporting record profits and passing the windfall onto shareholders in the form of dividends. One company in that category is Birchcliff Energy (OTC:BIREF). The oil company recently announced that it was raising its quarterly dividend by an amazing 900%. The new dividend payment is 20 Canadian cents per share (15 U.S. cents), up from only two Canadian cents previously. Birchcliff Energy now boasts a dividend yield of 10%.
The dividend increase is part of Birchcliff Energy’s new strategic plan that focuses on delivering returns to shareholders. The company anticipates that it will accumulate Cdn$570 million of free cash flow in 2023. It paid down Cdn$920 million of debt during the last three years and plans to completely eliminate its debt within the next two years. As its cash flow increases, Birchcliff says it plans to ramp up dividend payments to shareholders.
Icahn Enterprises (IEP)
Any stock that has a dividend yield of 16% deserves attention. And that brings us to Icahn Enterprises (NYSE:IEP), the holding company of Wall Street legend Carl Icahn. IEP stock currently pays a quarterly dividend of $2 per share for a yield of 16.02%. A yield that big is nearly impossible to find anywhere else. Investors can buy Icahn Enterprises stock for about $50 per share right now. A $10,000 investment would give you 200 shares, resulting in a quarterly payout of $400. That’s not bad at all.
At age 87, Carl Icahn owns 88% of the company that bears his name and remains involved in its daily operations, along with his son, Brett. The company today mostly owns investments in industries such as energy, automotive, food packaging, and real estate, among others. It’s not a flashy company, but its stock performance has been consistent over the years.
In the last 12 months, IEP stock has declined 7%, outperforming the overall market by a bit. But the stock’s main attraction is its dividend.
British Petroleum (BP)
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British Petroleum (NYSE:BP), a large oil company, increased its quarterly dividend by 10% after reporting record annual profits due to elevated crude and natural gas prices throughout last year. The British energy company posted a profit of $27.7 billion for 2022, which was more than double the $12.8 billion profit that it achieved in 2021.
Consequently, BP raised its quarterly dividend payment by 10% to 40 cents per share, giving it a respectable yield of 4.44%. The company also announced an additional $2.75 billion of stock buybacks following its results.
For the fourth quarter of 2022, BP posted a net profit of $4.80 billion, narrowly beating analysts’ mean expectation of $4.70 billion. The company noted that its fourth-quarter debt was reduced to $21.40 billion from $30.60 billion a year earlier.
BP was one of several global energy companies to report record profits after crude oil prices topped $120 a barrel last year. One of its rivals, Shell (NYSE:SHEL), announced its highest-ever annual profit of close to $40 billion. BP’s stock is up nearly 30% over the last 12 months.
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Among technology stocks, telecommunications giant Verizon’s (NYSE:VZ) dividend stands out. The largest wireless carrier in the U.S. with more than 120 million subscribers, Verizon currently pays a quarterly dividend to shareholders that yields 78%. That’s impressive for any company, but it is almost unheard of among technology firms. Most tech companies, including giants such as Amazon (NASDAQ:AMZN) and Meta Platforms (NASDAQ:META), pay no dividend.
Down 30% over the last 12 months and carrying a price-earnings ratio of 7.30, VZ stock looks undervalued at its current levels, especially given its dominant position in the U.S. market. The company looks likely to maintain its position as America’s leading mobile-phone provider after spending $45.5 billion to acquire the most 5G internet spectrum among U.S. wireless carriers.
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Similar to the other oil companies on this list, Chevron (NYSE:CVX) has also bolstered its quarterly dividend on the back of record earnings. Chevron increased its dividend payment by 6% to $1.51 per share from $1.42 previously, giving its stock a dividend yield of 3.88%. Perhaps even more impressive than the dividend increase is a new $75 billion stock buyback program that was also announced by the company along with its Q4 print.
CVX’s new stock buyback program comes into effect on April 1 and has no expiration date. The new share repurchase program follows a $25 billion plan that was started back in 2019.
The old plan will be terminated at the end of this month, the company reported. The dividend increase and stock buyback program follow a strong year for Chevron and its stock. The company’s annual profit in 2022 doubled from a year earlier to a record $36.5 billion.
CVX stock rose more than 50% in 2022, trouncing the market’s performance.
Source: Jonathan Weiss / Shutterstock.com
Dow Inc. (NYSE:DOW) doesn’t get mentioned a lot in discussions about dividend stocks. But the chemical company pays a hefty dividend of 70 cents per share each quarter, giving it a current yield of 5.63%. That’s a strong payout from one of the world’s three largest producers of plastics, coatings, and silicones. In 2022, Dow paid out a total of $2 billion worth of dividends to shareholders. The company also bought back $2.3 billion worth of its own stock last year.
Dow is able to be generous with shareholders because it maintains a squeaky clean balance sheet and has a large cash pile on hand. Add in the fact that DOW stock is currently trading at its lowest level since before the pandemic began in March 2020 and has a low P/E ratio of 7.92 and there is plenty to like about this chemical producer that appears woefully undervalued.
While its earnings have missed the mark of late, Dow performs best when the economy is steaming ahead and manufacturing is at its peak. It’s a good holding for long-term investors.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
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