Investing in solid, long-standing companies that pay regular dividends could be a wise strategy for those seeking stability for their retirement. These enterprises, with business models that are resilient even in economic downturns, continue to share profits with their investors. Such investors gain a measure of protection from market volatility by choosing companies with longstanding business histories, solid valuations, and high dividend yields.
Walmart, a household name in the retail sector, could be an ideal choice for such investors. Compared to other e-commerce stocks, it carries less risk, with a 5-year beta of 0.49 indicating reduced susceptibility to drastic market corrections. Despite its low beta and longevity in the market, Walmart has been generating commendable returns. Over the past year, Walmart’s stock has risen by 25% and currently pays out a 1.39% dividend yield.
In addition to its retail solidity, Walmart has proven resilient in economic downturns, specializing in affordable products and services. The company has seen a significant increase in e-commerce sales, contributing to a 15% YoY revenue growth in Q3 of fiscal 2024. Furthermore, Walmart reported a 5.2% YoY total sales increase, with international retail sales outpacing domestic and a higher growth rate for U.S. e-commerce compared to international. The company’s commitment to shareholder value is evident, with 8.7 million shares bought back for $1.3 billion and $4.6 billion in dividends paid in the nine months leading up to October 31.
Another company worth considering is Procter & Gamble, which peddles essential home care goods – one of the last things people would cut back on in a slow economy. Despite the numerous stock market dips in 2022, P&G only registered a roughly 7% decline. The company’s dividends cushioned some of these losses. P&G posted a 3% rise in net sales in Q2 of fiscal 2024 and increased its core EPS growth guidance. The company which has been paying dividends for 133 consecutive years, currently dispenses a per-share dividend of $0.9407 and is expected to increase its dividend again in April.
Microsoft, the world’s most valuable publicly traded corporation, also shows promise as a dependable dividend stock. The tech giant is leveraging artificial intelligence, an area that has been in the limelight since 2023, and is imperative to Microsoft’s future. The company’s investments in and Copilot’s widespread adoption have helped Microsoft secure a significant market share.
Other segments Microsoft has invested in include cloud computing, video games, advertising, and more. Microsoft’s Q2 FY24 results reveal a 16% YoY increase in revenue and a 33% YoY rise in net income, indicating continued growth despite a $3 trillion market cap. Its recent acquisition of Activision Blizzard is expected to further boost its gaming industry market share. Despite offering a comparatively low dividend yield, Microsoft makes up for it with high returns and a notable dividend growth rate. In a recent move, the company increased its quarterly dividend from $0.68 to $0.75 per share, a YoY rise of 10.3%.
As of the publication date, Marc Guberti has a long position in MSFT. The views expressed in this article are those of the author and do not necessarily reflect the stance of Investing Pioneers.
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