It's been a great time to be invested in the stock market recently. The S&P 500 is up 22% during the past 12 months and more than 83% in the past five years. Even more, with dividends from the S&P 500 automatically reinvested during the past five years, the market index is up more than 100% during this period.
But in a market like this, it's getting increasingly difficult to find solid dividend stocks, particularly dividend stocks with dividend yields over 3%. But there are still some hanging around. Here are two: General Electric (GE 2.58%) and Williams-Sonoma (WSM 0.45%).
Industrial infrastructure and technology company General Electric has a fat dividend yield of 3.5%. Though the company has paid out 88% of its trailing-12-month net income -- a high payout ratio that suggests future dividend increases may be limited -- GE's major restructuring over the last few years is beginning to pay off, and earnings growth is likely on the horizon. Indeed, the average estimate for GE's annualized earnings-per-share growth over the next five years is an impressive 11.9%.
Investors can get a glimpse of the fruit of GE's turnaround efforts by looking at the growth in some of the company's "organic" metrics in its most recent quarter. Its organic revenue and operating profit metrics exclude the effects of acquisitions, business dispositions, and currency changes. Organic revenue and operating profit in GE's industrial business, which makes up the bulk of GE's total revenue and operating profits and spans across seven core segments, were up 7% and 15% year over year, respectively, in the first quarter of 2017.
GE is a healthy, diversified business with a mouth-watering dividend yield.
Williams-Sonoma's dividend yield is 3.2% and has a dividend yield that looks like it has room to run, based on the company's payout ratio of just 44%.
In an extremely competitive retail environment facing challenges from an evolving e-commerce landscape, Williams-Sonoma's business stands out with strong brands and a cost-effective business model. Beyond its namesake brand, Williams-Sonoma owns high-end retail brands Pottery Barn, Pottery Barn Kids, PBteen, and West Elm. With over half of its revenue coming from e-commerce, the company isn't as challenged by the rise of e-commerce as its brick-and-mortar competitors. Indeed, e-commerce may be more accurately viewed as an opportunity for Williams-Sonoma. Pairing the company's significant online sales with its brand power, the company boasts an enviable gross profit margin above 35%.
Williams-Sonoma's business also sets itself apart from competition by its ability to post revenue and EPS growth when many retailers are contracting. In Williams-Sonoma's first quarter of 2017, revenue and EPS were up 1.2% and 2.3%% year over year, respectively. Looking ahead, analysts expect more earnings growth. The consensus analyst estimate for Williams-Sonoma's annualized EPS growth over the next five years is 7.6%.
With a 3.2% dividend yield, a low payout ratio, and standout business, Williams-Sonoma is a good bet for investors looking for income.
As the average dividend yield of stocks in the S&P 500 dips below 2%, hitting 1.95% recently, these two stocks offer investors a way to juice their income -- even in a pricey market.