Since the second half of 2022, the economy has been volatile and this has led to many investors looking for safe and stable stocks to invest in. The market was in a rout and no industry has been spared but after all the uncertainty, we are finally looking at better days ahead. There are still concerns about a looming recession and it could have an impact on the market but there are some dividend stocks to buy now that can thrive even if there is a recession.
Investors looking to build a stable portfolio that generates income even in an uncertain climate should look for top dividend stocks to buy. They can generate passive income while also ensuring that your investment steadily grows. However, not all dividend-paying companies are worth your money.
You need to look for companies that have a solid balance sheet which means they will be able to pay dividends in the coming years. When looking at dividend stocks, it helps to look out for the dividend growth and payout ratio. This will help make a better decision about the companies that are worth your money. Some of the best companies ensure steady dividend growth and consistent payouts that help boost your income. With that in mind, let’s take a look at the dividend stocks to buy now.
Johnson & Johnson (JNJ)
An all-time favorite, Johnson & Johnson (NYSE:JNJ) is so much more than just a dividend stock. Besides the dividend yield of 2.93%, the healthcare conglomerate has seen a solid rise in its revenue in the past few years. It is a highly reliable company with a range of products that will continue to remain in demand. Johnson & Johnson spinoff the consumer healthcare division into an independent company, Kenvue (NYSE:KVUE) which will help increase the margins for JNJ as it solely focuses now on medtech and pharmaceutical segments. This is one big reason to own JNJ stock now.
It is trading for $162 today and has dropped 8% year to date. This drop is a good chance to buy the stock at a discount. In the recent quarter, it reported a revenue of $13.2 billion in the pharmaceutical segment and the management expects revenue between $96.9 billion and $97.9 billion in 2023.
Two standout drugs Darzalex and Stelara have raked in big revenue numbers at $2.2 billion each. Despite dealing with lawsuits, the company has been able to spend money on research and development. It spent a total of $14.6 billion in 2022 on R&D and this amount will pay off in the long-term. The company operates in an industry that is not going to die for many years and it has the opportunity of several price hikes. It will also have new products in the market and this means steady revenue growth.
The company is a dividend aristocrat and is set to remain in the future as well. JNJ has a steady and stable cash flow which helps the company increase dividends. It enjoys a free cash flow of $13.5 billion and has a dividend payout ratio of 73%. The management is committed to paying dividends regularly for the years to come and this is what makes JNJ one of the best dividend stocks to own.
McDonald’s (MCD)
Besides the burgers, I love McDonald’s (NYSE:MCD) as a business. It is one company that needs no introduction and it has been thriving despite an uncertain economy. Whether there is a recession or not, this company will continue to grow. The company has a dividend payout ratio of 62%, a dividend yield of 2.08%, and has recently paid a quarterly dividend of $1.52. McDonald’s is a dividend aristocrat with an enviable payout rate. MCD stock is trading at $291 today and is up 17% in a year. The stock is moving very close to the 52-week high of $298. It is trading at a premium right now but the stock is worth your money. Besides the steady dividend, you will see growth in your investment.
The company operates in 100 countries which ensures a reliable cash flow. That said, it has a successful franchise model which has helped generate steady income over the years. The brand is well-known globally and it is focusing on enhancing its digital and delivery capabilities. It has products that are targeted at a value-conscious shopper and this has driven growth even during a period of high inflation.
While consumers cut down on their luxury meals, they opted for a pocket-friendly McDonald’s burger. The company saw a 13% rise in sales in the recent quarter across all geographic locations. Its revenue reached $5.9 billion and it even managed to increase its market share. Even the EPS reached $2.45 per share, increasing by 66% year over year. MCD stock is a personal favorite and I believe it brings stability and consistency to your portfolio. If you are looking for a dividend stock to buy and hold forever, MCD is the one.
Chevron Corporation (CVX)
One of the top dividend stocks to buy now is Chevron Corporation (NYSE: CVX). It is the largest publicly traded oil and gas company globally and has operations spread across the world. The company manages everything right from exploration to marketing and transportation. It made impressive gains in 2022 when the price of crude oil was sky high. This year, the prices have dropped but the management is still sharing the earnings with its shareholders.
CVX stock is trading at $154 today and it has remained quite volatile in the last six months. The stock started the year at $173 and hit $187 in mid-January. It has been declining since then. There could be volatility due to the industry this company operates in but the oil demand is never going to slow down. This is what will keep the company going. The imbalance between demand and supply will allow Chevron to increase prices and make money.
In the recent quarter, it made a profit of $6.7 billion and beat expectations. The company has a cash balance of $15.7 billion and a debt of $23.2 billion. It enjoys a dividend yield of 3.90% and pays a quarterly dividend of $1.51 per share or $6.04 annualized dividend per share. Chevron has 36 years of consecutive dividend payments and this is what makes CVX a respected dividend stock in the industry. It is one oil company that is serious about giving value to the shareholders.
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.