With the potential for rough waters to materialize, investors may want to think ahead with the most reliable dividend stocks to buy. Sure, on paper, the headline print seems to be moving in the right direction. Primarily, the official June jobs report came in at 209,000 new employment positions added, lower than the anticipated 240,000. In other words, the economy is gradually slowing, which helps the disinflation cause.
However, not everything has gone according to what the Federal Reserve desires. Notably, the pace of wage growth remained steady, whereas economists had hoped for a decline. Also, the unemployment rate dipped to 3.6% from 3.7% in May. Stated differently, disinflation is not occurring fast enough. Therefore, the Fed may raise the benchmark interest rate again, which may bode well for July dividend stocks.
Here’s the thesis: the Fed may overdo it with its rate hikes, which may spark a sharp downturn rather than gentle disinflation. Plus, higher borrowing costs won’t benefit risk-on assets. Instead, they’ll favor consistent dividend stocks, if anything. Ultimately, then, you may want to consider the below passive income providers for protection.
HP (HPQ)
Featuring a product and service portfolio of personal systems, printers, and 3D printing solutions, HP (NYSE:HPQ) may be more relevant than some folks give it credit for. Despite any reservations that investors may have about HPQ, it objectively makes a case for reliable dividend stocks to buy. Currently, the company carries a forward yield of 3.37%, well above the technology sector’s average yield of 1.37%.
Significantly, the forward payout ratio – or the metric used to determine if a company’s earnings can support the current dividend payment amount – sits at 29.23%. That’s quite low, bolstering confidence regarding yield sustainability. Also, HP commands 13 years of consecutive annual dividend increases. That’s a status management won’t want to give up too cheaply.
Financially, HP also makes a compelling argument for July dividend stocks. Operationally, the company prints a three-year revenue growth rate of 15.9% on a per-share basis, above 80.14% of its peers. Also, the market prices HPQ at a forward multiple of 8.57. As a discount to projected earnings, HP ranks better than 88.31% of the competition.
Sonoco Products (SON)
A U.S.-based international provider of diversified consumer packaging, industrial products, protective packaging, and packaging supply chain services, Sonoco Products (NYSE:SON) offers broad relevancies. That’s part of the reason why it qualifies as one of the reliable dividend stocks. While boring, its business is unlikely to go out of style anytime soon.
Regarding passive income, Sonoco features a forward yield of 3.57%. In contrast, the materials sector’s average yield is only 2.82%. Just as importantly, Sonoco’s forward payout ratio sits at 34.19%, assuaging concerns about yield sustainability. Further, the company commands 41 years of consecutive dividend increases. It’s not just a Dividend Aristocrat. Rather, it’s well on its way to becoming a Dividend King.
Financially, Sonoco carries a solid operational profile. Its Piotroski F-Score is 7 out of 9, reflecting decent operational efficiency. Also, its three-year revenue growth rate pings at 11.4%, above 70.17% of its peers. Even with these performance stats, SON is undervalued. Therefore, it makes a great case for (relatively) high-yield dividend stocks.
Exxon Mobil (XOM)
A stalwart in the hydrocarbon space, Exxon Mobil (NYSE:XOM) is no stranger to the category of reliable dividend stocks. Sure, critics can point to the burgeoning electric vehicle market as a possible existential challenge to big oil. I don’t see it, in part because EVs at large scale will almost surely require an infrastructure overhaul.
At the moment, that’s just too expensive. For now, investors can rely on its forward yield of 3.53%. While this stat sits below the energy sector’s average yield of 4.24%, Exxon’s payout ratio is 39.63%. Therefore, prospective investors won’t have to worry about yield sustainability (barring an apocalyptic event). Also, Exxon features 40 years of consecutive dividend increases. Again, that’s a status management that won’t give up too cheaply.
Financially, Exxon offers a well-balanced profile. It features significant strengths in the balance sheet, as evidenced by its Altman Z-Score of 5.15. Also, its Piotroski F-Score clocks in at 9 out of 9, reflecting excellent operational efficiency. Thus, it’s one of the consistent dividend stocks to buy.
ManpowerGroup (MAN)
One of the largest staffing firms in the world, ManpowerGroup (NYSE:MAN) makes for one of the most reliable dividend stocks, at least in my opinion. To be sure, I’m probably in the minority that thinks this way. However, with fears associated with the Covid-19 crisis firmly in the rearview mirror, employers are increasingly skeptical about the benefits of remote operation. Also, with layoffs rising, more enterprises will be discerning about their hiring.
ManpowerGroup can leverage its acumen and provide real value to its enterprise-level clients. Better yet, the company can also provide value to its shareholders through its forward yield of 3.7%. Conspicuously, this rate ranks much higher than the consumer discretionary sector’s average yield of 1.89%. As well, MAN’s forward payout ratio lands at 39.74%. Finally, it prints 13 years of consecutive dividend increases.
On a financial note, the challenges of the post-Covid environment presented headwinds to ManpowerGroup’s operations. However, right now, the market prices MAN at a forward multiple of 12.37. As a discount to projected earnings, the company ranks better than 64.67% of the competition.
Evolution Petroleum (EPM)
An oil and gas company, Evolution Petroleum (NYSEAMERICAN:EPM) states on its corporate profile that it focuses on delivering a sustainable dividend yield to its shareholders through the ownership, management, and development of producing hydrocarbon properties onshore in the U.S. As stated with Exxon Mobil, the fossil fuel industry may be much more relevant than folks give it credit for. Thus, EPM should be on your radar for reliable dividend stocks to buy.
To be fair, Evolution Petroleum presents a riskier profile than its supermajor peers. That said, you’re probably not going to get a forward yield of 6.02% from the top dogs. Also, what should entice onlookers is the payout ratio of 45.71%, which offers much confidence for yield sustainability. If you’re looking for high-yield dividend stocks, it’s tough to ignore EPM.
Turning to the financials, Evolution carries a robust balance sheet. Specifically, its cash-to-debt ratio clocks in at 93.81 times, better than nearly 83% of its peers. Also, it trades at a trailing multiple of 5.39, which is undervalued.
LyondellBasell Industries (LYB)
A multinational chemical company, LyondellBasell Industries (NYSE:LYB) represents the largest licensor of polyethylene and polypropylene technologies. It also produces ethylene, propylene, polyolefins, and oxyfuels, per its public profile. Thanks to its broad industrial relevancies, LYB ranks among the reliable dividend stocks to buy.
Let’s be honest: LyondellBasell probably won’t make the charts as the sexiest public enterprise. However, it just so happens to be one of the high-yield dividend stocks. Right now, the company carries a forward yield of 5.52%. That’s well above the materials sector’s average yield of 2.82%. Also, with a payout ratio of 45.76%, it offers reasonable confidence in yield sustainability. Also, its 12 years of consecutive dividend increases are nothing to scoff at.
Looking at its financials, it scores relatively highly for its operational prowess. Specifically, its three-year revenue growth rate comes in at 16.1%, above 69.56% of its peers. Just as importantly, the market prices LYB at a forward multiple of 10.01. As a discount to projected earnings, LyondellBasell ranks better than 74.36% of its rivals.
Pfizer (PFE)
A pharmaceutical giant, Pfizer (NYSE:PFE) obviously came to much prominence during the Covid-19 crisis. However, with fears of the SARS-CoV-2 virus fading – even with mutations and new variants forming – Pfizer lost much relevance. Still, it can leverage its newfound biotechnologies, making PFE one of the most reliable dividend stocks to buy.
Regarding passive income, Pfizer commands a forward yield of 4.62%. That’s notably higher than the healthcare sector’s average yield of 1.58%. Also, its payout ratio sits at 46.87%. While higher than the other consistent dividend stocks, it’s well within what most investors would consider a sustainable yield. Finally, on this point, Pfizer enjoys 12 years of consecutive dividend increases.
On the financial front, the company enjoys a balanced and robust profile. Specifically, its three-year free cash flow growth rate pings at 34.7%, above 75% of its peers. Also, its gross, operating, and net margins land at rates much higher than the underlying sector averages. To close, the market prices PFE at a forward multiple of 10.6. As a discount to projected earnings, Pfizer ranks better than 76.19% of the competition.
On the date of publication, Josh Enomoto did not have (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.
