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It's summer, people. With all that nice weather and summer vacation plans, who wants to be worried about their investment portfolio on a day-to-day basis? Instead of chasing down those high risk/high reward stocks all summer long, why not add a few rock-solid dividend stocks to your portfolio that will let you enjoy your free time?
We asked three of our contributors to each highlight a worry-free stock that will let you sit back, sip a tall glass of sweet tea, and watch your dividend checks come in for this summer and many more to follow. Here's what they had to say.
Todd Campbell: Seasonality impacts retailers significantly, and while shares in many retailers tend to head higher ahead of the holiday shopping season in the fall, July might be the right time to stock up on L Brands (BBWI), the owner of the iconic Victoria's Secret brand.
L Brands shares have fallen this year because of shake-ups at Victoria's Secret, including the discontinuation of cataloging, the departure of the segment's longtime CEO, and cost-cutting layoffs. Those moves have created uncertainty regarding store foot traffic and comparable-store sales; however, uncertainty could be making L Brands a bargain.
In May, the company announced that former Spanx CEO Jan Singer is taking over the reins at Victoria's Secret. Her success at Spanx, as well as leadership experience in athletic apparel at Nike, is a plus. L Brands has also announced it's discontinuing non-core Victoria's Secret clothing to refocus on the segment's traditional lingerie and beauty product lines, a decision that could pay off over time.
Obviously, there's no guarantee that L Brands will be able to replace all of the revenue that could be lost because of changes to its promotional strategy, but the brand boasts significant customer loyalty and that gives me hope that Singer can reenergize Victoria's Secret sales ahead of the holiday season. A reacceleration of Victoria's Secret and continuing success for L Brands' Bath & Body Works business could reward investors who think ahead and buy shares now -- especially since a hike in the company's dividend means shares yield a market-beating 3.5%.
Tyler Crowe: One company that is looking better and better by the day for dividend investors is General Electric (GE 1.30%). The company's 2.97% dividend yield certainly isn't going to turn any heads compared to many other companies out there, but the moves the company has made in recent years show that it is poised to do some great things down the road that should put a smile on investors' faces.
If we want to talk first about stability, General Electric has more than $316 billion in project backlogs across its diverse operations in power, oil and gas, renewable energy, aviation, and healthcare. This wide array of sectors allows GE to see rather consistent earnings, as the ups and downs of each individual business segment can help offset one another. Plus, with a big push toward the Industrial Internet of Things -- a move to connect all of its industrial products to a common data monitoring and analysis platform -- it's generating a new continuing revenue stream that's already growing at a 29% annual rate.
What's also appealing about General Electric is the big catalyst coming up for its shareholders. Over the past couple of years, it has been shedding much of its financial assets in order to lose its Systemically Important Financial Institution designation. In doing so, it will free itself from the onerous balance sheet requirements that go with it. As part of losing that SIFI designation, management wants to return as much as $90 billion to shareholders by 2018 in the form of dividends and stock repurchases.
With a rather stable business with lots of work in the wings, a major digital platform that could completely transform the products it sells, and a major stock catalyst over the next couple of years, General Electric ensures you can kick back and enjoy the rewards of its dividend for years.
Steve Symington: Sturm, Ruger (RGR -0.41%) has climbed around 9% since I pounded the table for investors to buy shares in January. But on the heels of an impressive quarterly report from competitor Smith & Wesson (SWBI -1.02%) last week, I think there's still plenty of room for Ruger to continue to rise from here.
For perspective, Smith & Wesson jumped after it confirmed its revenue last quarter climbed a better-than-expected 22.2% year over year, driven by what management described as "robust volumes" within its firearms segment. And though Ruger isn't slated to release its own fiscal second-quarter 2016 results for another month or so, I won't be the least bit surprised if those results reflect the same robust volumes, and, consequentially, drive a similar post-earnings pop.
Unlike Smith & Wesson, however, Ruger offers investors a healthy quarterly dividend that yields around 2.3% annually at today's prices. And that dividend is variable -- management typically aims to pay around 40% of net income to shareholders through dividends each quarter -- which helps reward shareholders while at the same time providing a buffer against the inevitable ebbs and flows of the firearms market.
