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In recent months, U.S. stocks have soared, bolstering portfolios with a 30% upswing since October. However, whispers of an imminent market correction are growing louder. Amid this market exuberance, the allure of dividend stocks shines brighter for investors seeking stability.
Unlike their rollercoaster growth counterparts, dividend stocks offer a safe harbor during market storms. However, a high dividend yield does not always signify a sound investment; some companies inflate yields due to falling share prices or excessive borrowing to attract dividend-hungry investors.
For the prudent investor, reliable dividend stocks with a proven history of weathering market ebbs and flows are the bedrock of a well-balanced portfolio. Sectors like consumer staples, utilities, healthcare, and government services boast companies with robust cash flows—fuel for steady dividend repayment when markets teeter on the brink of excess.
Let’s delve into three champion stocks that have stood the test of time with unwavering dividend payouts:
PepsiCo (PEP)
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Beverage and food giant PepsiCo (NASDAQ:PEP) is a beacon of dividend reliability.
In weathering the inflationary storm, PepsiCo not only remained afloat but thrived, recording a 9.5% uptick in sales in 2023. Allocating a substantial 75% of its earnings to dividends has fortified its financial fortress, enabling a remarkable 52 years of uninterrupted dividend growth.
With a generous 2.9% dividend yield, PepsiCo surpasses the sector average of 2.2%, hinting at undervaluation. Analysts predict further upside, pegging the target price at $187.03 per share. They highlight PepsiCo’s overseas success as a catalyst for undervaluation, with its international arm now a robust $40 billion enterprise, fostering enhanced profit margins.
Starbucks (SBUX)
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Coffee behemoth Starbucks (NASDAQ:SBUX) stands tall as a dividend stalwart.
Adapting to shifting consumer tides, Starbucks brewed a 5% rise in global comparable sales amidst last year’s inflationary tempest. With a prudent 57% payout ratio, Starbucks secures a safety buffer to safeguard its dividend payments. Sporting a 2.5% yield, SBUX offers investors a gratifying income stream above the 2.2% industry average. Analysts peg the average target price at $98.56 per share for this dividend gem.
ONEOK (OKE)
ONEOK: Paving the Way for Reliable Dividend Stocks
A Solid Foundation for Income Generation
ONEOK (NYSE:OKE) remains steadfast in its commitment to furnishing a steady income stream derived from long-term natural gas transport contracts. With the ambitious goal of escalating dividends by 3-4% annually through strategic acquisitions, ONEOK recently made a significant move by acquiring Magellan Midstream Partners (NYSE:MMP) for a notable $18.8 billion, thereby catapulting itself into the echelons of a $60 billion company. The market witnessed Raymond James Financial (NYSE:RJF) fortifying its faith in ONEOK by injecting an additional $25.8 million into the company.
Prospects and Potential
Market analysts have highlighted ONEOK as one of the premier high-yielding dividend stocks, boasting a 5% dividend yield alongside anticipated share price ascensions that could scale up to $81.38. As the company braces itself to capitalize on the surge in natural gas exports to Europe due to the continued turmoil in Ukraine, a potential uptick in profitability is on the horizon, painting ONEOK as a beacon of reliability amidst the sea of dividend stocks.
