3 Dividend Stocks That Will Hold Up No Matter the Market Conditions
By Adria Cimino,2023-02-08
All three major indexes have started the year off on the right foot. After touching bear territory last year, they're now posting gains for 2023 so far. Will the next step be a bull market? It's possible -- but it's too early to say whether the market is truly ready to fully recover and thrive.
And this means now is the perfect time to consider companies that may boost your portfolio no matter the market conditions. The winning choice? Dividend stocks. They'll offer you annual income regardless of market movement. And certain players also offer excellent earnings prospects over time. Let's check out three top players.
1. Johnson & Johnson
Johnson & Johnson (NYSE: JNJ) has climbed about 23% over the past five years. But if you look at the stock's total return, which includes dividend payments, the performance is even stronger. In fact, your gains nearly double.
The healthcare giant not only pays you just for holding the stock -- but it's also known for increasing those payments over time. It's lifted its dividend for more than 50 years, making it part of the elite group known as Dividend Kings . This means rewarding shareholders is a key part of J&J's business -- so there's reason to believe it will continue increasing its dividend.
You'll also like J&J for its solid portfolio of drugs and medical devices that help it generate billions in annual revenue and profit. Moving forward, growth should even get a lift. The company this year will spin off its slowest-growing business -- consumer health. This leaves J&J with its faster-growing businesses, pharmaceuticals and medtech.
So, dividends may boost J&J's total return no matter what the general market is doing. And J&J's status as a healthcare company offers a lift, too. That's because people need its products whether the economy is growing or struggling. All of this makes J&J an evergreen stock to buy.
2. Abbott Laboratories
Abbott Laboratories (NYSE: ABT) has a couple of things in common with J&J. It's a Dividend King and it's a healthcare company. So those two reasons for owning J&J also apply to Abbott.
Let's talk about Abbott more specifically, though. Abbott pays an annual dividend of $2.04, at a yield of 1.84%. The company's free cash flow has generally gained over the past several years -- so Abbott has what it takes to keep increasing payments.
As for earnings, Abbott's business model also helps it succeed no matter what's happening in the general economy. The company has four businesses: medical devices, diagnostics, nutrition, and established pharmaceuticals. When one of these businesses suffers, another may compensate. For example, when the pandemic hurt medical device sales due to canceled surgeries, sales of diagnostic tests lifted revenue.
Abbott has a history of earnings growth, with annual revenue and profit reaching into the billions of dollars. And the company's continued innovation, launching new medical devices and updated versions of its bestsellers, should keep earnings climbing over time. All of this makes Abbott another solid dividend stock to consider right now.
Coca-Cola (NYSE: KO) is another player that's been increasing dividend payments for more than 50 years. Today, the world's biggest non-alcoholic beverage maker pays a dividend of $1.76, at a yield of 2.87%. The yield is higher than the industry average of 1.98%, according to NYU Stern Business School research.
And like J&J, Coca-Cola's total return over the past five years is significantly higher than just its share price performance.
The beverage maker clearly is a top dividend stock . But there's even more good news. Coca-Cola's brand strength and diversified portfolio of drinks have helped the company increase earnings -- even in a difficult economy. For example, in the most recent quarter, global unit case volume, net revenue, and operating income all were on the rise. This is in spite of headwinds such as higher costs and pressure from currency exchanges.
Coca-Cola even raised full-year guidance. The company expects to post non-GAAP (adjusted) organic revenue growth in the range of 14% to 15%, up from the range of 12% to 13% in an earlier forecast.
So, Coca-Cola has what it takes to add to your portfolio's performance over time -- no matter what the market does this year.
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy .
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