With many pundits continuing to see rocky times for the stock market, it may be time to look to dividend stocks for the remainder of 2022.
Dividend stocks are a way to diversify a portfolio that may be a little too obsessive about growth. They generate income in good times, bad times and, especially important today, times of high inflation. (U.S. consumer prices rose 8.5% in July from a year ago.)
They also tend to outperform the S&P 500 in the long run.
A prominent portfolio with many dividend stocks belongs to The Bill & Melinda Gates Foundation Trust. With the trust used to pay for so many initiatives, revenue must continue to flow.
Dividend stocks help with that.
Here are three dividend stocks that take up significant space in the foundation’s holdings.
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Waste management (WM)
It’s not the most glamorous industry, but waste management is essential.
Whatever happens to the economy, municipalities have little choice but to pay companies to get rid of our mountains of waste, even as the costs rise.
As one of the largest players in the space, Waste Management remains in an entrenched position.
Shares have more than doubled in the past five years. And management is forecasting 10% revenue growth for the year.
Waste Management’s dividend currently offers a return of 1.5% and has risen 19 years in a row.
The company paid nearly $1 billion in dividends last year, and the roughly $2.5 billion in free cash flow for 2021 means investors don’t have to worry about getting their checks received.
As a company whose fortunes typically follow that of the larger economy — which will happen when your equipment is a fixture on construction sites around the world — Caterpillar is in an intriguing post-pandemic position.
The company’s revenues are feeling the effects of a crippled global supply chain, but historically still low interest rates and President Joe Biden’s recently approved $1.2 trillion infrastructure bill mean there’s an awful lot to build in the near future. US
Caterpillar’s mining and energy businesses also provide exposure to commodities, which typically do well in times of high inflation.
The company’s stock has pushed higher commodity and petroleum prices to more than 55% over the past five years.
After announcing an 8% increase in June, Caterpillar’s quarterly dividend is currently $1.20 per share and offers a yield of 2.5%. The company has increased its annual dividend for 28 years in a row.
Because supermarkets were considered essential businesses, Walmart was able to keep its more than 4,700 US stores open during the pandemic.
Not only has the company increased both profits and market share since COVID made its way across the planet, but its reputation as a cheap haven makes Walmart the retailer of choice for many consumers when prices soar.
Walmart has steadily increased its dividends for the past 49 years. The annual payout is currently $2.24 per share, which translates to a 1.6% dividend yield.
Walmart is currently trading at $136 per share, well above the 52-week high of $160.77 in April.
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This article provides information only and should not be construed as advice. It comes without any kind of warranty.