Embarking on the journey of passive income investing can be likened to planting a sturdy oak tree—a venture that, while requiring patience, holds the promise of enduring financial stability. Establishing a robust portfolio often involves seeking out dividend stocks, which, when chosen wisely, can serve as the bedrock of long-term wealth accumulation.
When selecting dividend stocks, it’s paramount to shift your focus beyond mere yield figures. Instead, prioritize examining the company’s financial health and the sustainability of its dividend payments. Opt for stalwart enterprises that have a history of consistently rewarding their shareholders, even during periods of economic volatility. These companies are the stalwart oaks of the financial world—reliable, resilient, and nurturing to your financial growth.
As a passive investor myself, I derive immense satisfaction from witnessing companies raise their dividends quarter after quarter. This upward trajectory enables me to reinvest those dividends, fostering the incremental growth of my wealth. For those seeking dividend stocks to bolster their portfolios, here are three stellar picks priced under $100 to consider this April.
Source: Coca-Cola
Trading at $60, the stock of the venerable Coca-Cola (NYSE:KO) appears attractively undervalued. This global titan has cemented its position in the industry, with its diverse array of beverages continually propelling revenue growth. While the stock has experienced a 3% decline this year, it has demonstrated stability within the $52 to $64 range over the past 12 months. While meteoric rises may not be in the immediate horizon for this stock, its dividends present a steady avenue for returns.
Coca-Cola stands as a proud member of the elite Dividend Aristocrats club, having raised its dividends for a remarkable 62 consecutive years. Its latest dividend increase marked the 62nd occasion of such an upsizing, elevating the quarterly dividend to 48.5 cents per share—a 5.4% jump. With an annual dividend yield of 3.23% and a 78% dividend payout ratio that outshines many competitors, Coca-Cola’s financial fortitude remains formidable.
Despite trailing behind market benchmarks, the company’s underpinning fundamentals are robust, spotlighted by its ability to generate substantial free cash flow to sustain its dividend commitments. Over the past four quarters, Coca-Cola amassed a robust $9.5 billion in free cash flow and executed stock buybacks worth $1.7 billion.
Not content with resting on its laurels, Coca-Cola has ventured into the realms of health beverages and energy drinks to meet evolving consumer desires. The company’s proactive stance towards expansion, underscored by innovative marketing strategies, limited-edition flavor launches, and targeted promotional endeavors, echoes the enduring ethos of its success. As the preferred stock holding of investing luminary Warren Buffett, Coca-Cola remains a steadfast investment choice with enduring potential.
Fortifying Fortunes with Morgan Stanley (MS)
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Positioned at $92, shares of Morgan Stanley (NYSE:MS) have surged by an impressive 16% in the past six months, attesting to the bank’s robust operating model. Despite this commendable uptick, the stock price hovers around the same levels observed in May 2021, rendering it a compelling pick among sub-$100 dividend stocks this April.
While breaching the $100 threshold has proven elusive for MS stock in recent years, the company is steadily reinforcing its footing in the market landscape. Amidst interest rate adjustments and an anticipated economic upswing, Morgan Stanley is poised to unveil commendable financial outcomes.
The bank has transcended the tumult of the financial crisis, solidifying its standing as a prominent player in investment banking and wealth management arenas. Continual fee accruals on assets under management (AUM), mirroring the ascending trajectory of these assets, serve as a dependable revenue stream bolstering Morgan Stanley’s bottom line.
A sizeable portion of the company’s revenue emanates from underwriting transactions—an aspect that witnessed a remarkable 25% expansion in the fourth quarter. Anticipating a promising second half of the year, underpinned by declining interest rates, Morgan Stanley is poised to capitalize on a fixed revenue model that shields it from the cyclical ebbs of the economy.
A promising outlook heralds favorable prospects for the company, which bodes well for investors. With a 3.67% dividend yield coupled with a modest 66% payout ratio, ample headroom exists for growth. Sustained business expansion could catalyze forthcoming dividend escalations—keeping investors primed for extended financial rewards.
Brewing Prosperity: Starbucks (SBUX)
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With a track record of 14 consecutive years of dividend increases, Starbucks (NASDAQ:SBUX) emerges as a compelling dividend stock pick as it trades below the $100 mark. Priced at $89, the stock navigated a choppy start to the year, marked by a 6% dip year-to-date and a 14% slump over the past year.
Flaunting robust financial metrics despite a sales setback in China triggering stock depreciation, Starbucks holds promise for an enduring growth trajectory. The company’s free cash flow has exhibited stalwart expansion, with dividends witnessing an 18% surge over the last decade.
Establishing its presence as a global behemoth, Starbucks has cultivated steadfast brand loyalty and embarked upon an ambitious expansion crusade. Aiming to unveil 55,000 stores by 2030, the company anticipates an exponential uptick in revenue anchored on this growth trajectory.
Markedly, Starbucks is delving into novel beverages catering to diverse consumer palates worldwide. While competition intensifies, Starbucks stands as an indomitable presence in the coffee chain sphere, underpinned by unwavering consumer allegiance.
The stock bestows a dividend yield of 2.55% alongside a 61% dividend payout ratio, heralding ample room for income investors. While the company encountered revenue projection stumbles in the initial quarter, with full-year guidance revisions prompting stock price contractions, these challenges remain transient. An upturn in consumer expenditure, coupled with the impending summer months, hints at potential sales resurgence for Starbucks.
On the date of publication, Vandita Jadeja did not hold (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.
