The stock market has been volatile over the past few months, partly thanks to President Donald Trump's proposals for new tariffs aimed at China and other trading partners. However, patient investors can ride out the storm with three of my favorite dividend stocks -- AT&T (T 1.82%), Johnson & Johnson (JNJ -0.09%), and Las Vegas Sands (LVS 1.97%).
A classic dividend play
AT&T has raised its dividend annually for over three decades, making it a Dividend Aristocrat. AT&T currently pays a forward dividend yield of 5.6%, which is nearly triple the S&P 500's average yield of 2%. It spent just 68% of its free cash flow on dividends over the past 12 months, meaning it has enough money to cover the dividend, making a dividend decrease unlikely.
AT&T is America's second-largest wireless carrier, top wireline services provider, and biggest pay TV provider. If its planned takeover of Time Warner (NYSE: TWX) is approved, it will also become one of the biggest media companies in the world.
That massive ecosystem gives Ma Bell plenty of bundling options -- selling people more than one service -- which widens its edge over competitors like Verizon and T-Mobile. AT&T's stock is currently weighed down by near-term headwinds -- including slowing smartphone upgrades in the U.S., losses of video subscribers, high debt levels, antitrust concerns about the Time Warner buyout, and higher interest rates knocking down interest in dividend stocks.
But over the long term, AT&T has repeatedly bounced back from micro and macro challenges while generating steady income for patient investors. The stock is fairly insulated from the trade clashes between the U.S. and China, and its downside potential should be limited by its high yield and its low forward https://www.fool.com/investing/general/2015/01/17/how-to-use-the-pe-ratio.aspxP/E of 10.
A healthcare stock for all seasons
Johnson & Johnson's three core businesses -- pharmaceutical products, consumer healthcare, and medical devices -- are so well-diversified that it's tough for any headwind to knock the 132-year-old company off course. J&J's growth might look glacial on a quarterly basis, but it's generated slow and steady growth over the years.
Between 2007 and 2017, its annual revenue rose 25% and its adjusted earnings per share jumped 76%. Its stock nearly doubled over the past decade. The company pays a forward dividend yield of 2.6%, and it's raised its payout annually for over five decades -- which makes it another dependable Dividend Aristocrat. Those hikes, which used up just 50% of J&J's free cash flow over the past 12 months, should continue for the foreseeable future.
Trade tensions, a soft dollar, and generic competition for former blockbuster drugs like Remicade are all near-term headwinds for J&J, but analysts still expect its revenue and earnings to rise 6% and 11%, respectively, this year. Those are solid growth figures for an all-weather stock that trades at just 16 times forward earnings.
Let the house pay you
Las Vegas Sands is the biggest casino operator in the world. It owns the Venetian and Palazzo in Las Vegas, the Marina Bay Sands in Singapore, and five major properties in Macau. Sands generates most of its profits from Asia.
Last quarter, 59% of Sands' consolidated hold-normalized adjusted property EBITDA, came from Macau, 30% came from Singapore, and the remaining 11% came from the United States. Sands' dependence on Asia will rise as it proceeds with its potential $10 billion expansion into Japan, which recently opened the door to integrated casino resorts.
Gaming revenues in Macau rose 22% annually in March, beating expectations for 13%-18% growth and marking the region's 20th straight month of year-over-year growth. That's why analysts expect Sands' revenue and earnings to rise 5% and 9%, respectively, this year.
Sands stock might not seem cheap at 21 times forward earnings, but it still trades at a discount to its rival Wynn, which has a forward P/E of 24. Sands also pays a forward dividend yield of 4.2%, and it's raised that payout annually for five straight years. It spent 79% of its free cash flow on those dividend payments over the past 12 months, indicating a dividend cut is not imminent.