For those looking to earn a steady and periodic income using their asset portfolios, there hardly is a better option to consider than dividend-paying stocks. These are stocks that return value to shareholders by paying out a specified portion of earnings, whilst retaining the remainder for reinvestment and growth. Typically, large companies that do pay out dividends prefer to gradually increase their payouts periodically. This setup results in an annuity-like income stream for investors. Dividend stocks are a safe investment and are indicators of robust and stable companies that possess sufficient cash holdings to be able to pay out their shareholders.
In this article, we attempt to shed light on some of the best dividend-paying stocks one could consider adding to their portfolios. We present a list of five distinct stocks, each of which is uniquely suited to result in profitability shortly.
ZIM Integrated Shipping
We begin our list with the container shipping company, ZIM Integrated Shipping Services Ltd (ZIM). ZIM is a great long-term stock to hold, given its robust business model. The company focuses on niche market areas, within the shipping domain, where it can maximize its profitability. It is also a safe investment, given that it hedges its operations against the volatilities of the spot market. ZIM does this through fixed contracts on long-term charters. It was partly due to this strategy that ZIM has so significantly outperformed the wider market. Since January 2021, the S&P 500 had gained a mere 5%, whereas ZIM saw a climb of almost 284%.
What is most incredible about ZIM, however, is its dividend characteristics. The stock offers one of the higher payout rates seen in the financial markets. Its management has previously stated its commitment to maintaining payout between the 30% and 50% ranges. This means investors can look forward to being paid a higher portion of company profits than they would with other stocks. Even more impressive is the stock’s forward dividend yield of an incredible 26%. As per company policy, these dividends are paid out every quarter.
There is no time to lose in buying this dividend king. In the last month, ZIM had fallen by 11% which indicates that the stock is presently trading at a discount. ZIM is evidently a clear money-maker and the best dividend-paying stocks company.
The second stock on our list is the internet-providing company, Cogent Communications Holdings, Incorporated (CCOI). The reason we here at Stocks Telegraph are so optimistic about CCOI is because of its steady dividend growth. Few companies are so consistent in increasing their dividend payment every consecutive quarter. Yet CCOI has consecutively achieved this for the last 40 quarters while holding an impressive dividend yield of 5.6%.
For investors that are highly focused on dividend metrics, there is no better time to buy CCOI. Given its price fall amidst the wider bearish stock tumble, the stock has fallen by over 22% of its position since the prior year. As a result, its dividend yield is at its highest point of all time. This comes despite no adverse impact on the company’s financials. In fact, the high-speed internet services business is one of immensely high promise, with its revenues climbing each year without fail since 2017. Analysts project further growth by the end of 2023 due to which the company comfortably adjusts itself in the list of the best dividend-paying stocks companies.
The Ukraine-Russia crisis proved catastrophic for communication giants. Yet Cogent remained relatively immune, as Russian customers made up less than 0.3% of its total revenue, whereas Ukraine represented merely 0.4% of its customer base. Cogent is a safe dividend king, especially when considering the wider set of global circumstances.
Altria Group Inc
Up next, we present the tobacco industry giant, Altria Group Inc (MO). Its ticker of MO is in reference to its globally renowned cigarette brand, Marlboro.
Despite government policies, and the FDA working against the interests of the company, MO continues to thrive in terms of its dividend profile. Its price plummet in the last month bought its share price down 11%, which has presently raised its dividend yield to 8.6%. Considering that MO too increases its dividend per share each quarter, present circumstances offer a rare opportunity.
Altria Group is not a stock that receives much positive press in the media, given the nature of cigarettes and their health impacts. The company is also struggling to replace its dying customers with new ones every subsequent year. Despite this, the global cigarette market holds a substantial scale, with a very high customer lifetime value. Cigarette users rarely cut down on their consumption even in the worst of recessions.
And for a giant like Marlboro, which has a market capitalization of $75 billion, even after its hard plummet, it is unlikely for its growing dividend trend to stop any time soon. Moreover, the company has been making efforts to break into new market sectors with different offerings in order to work on the sustainability of its business model.
American International Group
The fourth stock on our list is the insurance industry giant, American International Group (AIG). AIG is special not just because it is a clear dividend king, but also because it is one of the few recession-resilient stocks. Insurance is not an industry that sees a downward slide when there is market uncertainty, which strengthens its growth prospects. This is in part why the dividend income stream from AIG is highly stable and sustainable for investors.
AIG offers a relatively low dividend payout of 23.84%, whilst retaining the rest for its growth. Furthermore, it maintains its annual dividend at $1.28 per share without regular growth. However, despite these drawbacks, AIG remains a must-have for any dividend investor. The reason for this is its unyielding stability in the wake of macroeconomic shocks, which places it among the best dividend-paying stocks companies. For a strengthened dividend portfolio, there is a strong need for at least one stock of this nature, to ensure non-ending cash payments.
The last stock on our list, but certainly not the least is one of the largest global healthcare conglomerates, Abbott Laboratories (ABT). The first aspect of this stock is that it is not just a dividend king but is the healthcare industry’s most reliable growth stock. In the last 5 years, ABT had climbed by nearly 200%. It has managed to maintain such an impressive growth climb despite massive restructuring in recent years, following the outbreak of Covid-19. Demand for healthcare has no sensitivity to wider market conditions such as inflation or recessions. Due to this, the stock is a reliable investment option to include in one’s portfolio.
The dividend aspect is perhaps the most important feature of ABT. Abbott shareholders have seen dividend payments climb at varying intervals and rates since 2013. Average growth in the last 5 years amounted to almost 9%. After the company’s success in meeting Covid-related demand, it boosted its dividend income by a whopping 25% at the end of 2020 and become one of the best dividend-paying stocks companies. It manages to sustain such growth by reinvesting 55% of earnings back into the company. This money maker brings steady dividend growth that investors would enjoy even decades down the line.
Dividend seekers aim to hold a robust portfolio that consists of various money makers, both stable and high growth. A go-to investment indicator that such an investor jumps toward is an established company that has maintained consistent dividend growth over time and is the best dividend-paying stocks company.
To realize this goal, the best option at one’s disposal is a portfolio that consists of highly promising dividend-paying stocks that have strong indicators pointing to stable income and business growth. The stocks presented in this article, each of which spans different industries and markets, have inherently unique strengths, which one can consider for a dividend-paying portfolio. These are ideal for giving traders a steady income stream with potential growth. The aforementioned stocks would ensure investors’ exposure to increasing dividend payouts that companies are likely to carry out in the future.