While most of America is getting prepared to drain their wallets with holiday shopping, some of you investors might be shopping to buy dividend stocks that will fill your wallets over time instead. If that's the case, here are three Motley Fool contributors with stocks you should consider in November: PACCAR Inc. (PCAR 0.37%), General Motors (GM -0.04%), and Sysco Corp. (SYY 0.43%).
Special dividend
Daniel Miller (PACCAR): If you're looking for top dividend stocks to buy this month, PACCAR is an intriguing -- and often overlooked -- option for investors to check out. If the name doesn't ring a bell, PACCAR is a global leader in the design, manufacture, and consumer support of light-, medium-, and heavy-duty trucks under its Kenworth, Peterbilt, and DAF names.
One reason PACCAR is an intriguing dividend option during November is the timing of its special dividend. PACCAR is often overlooked as a dividend stock because its regular dividend yield is only 1.92%, too small for many investors screening for stock ideas. But the company also adds a special annual dividend that rewards in-the-know investors.
Using the most recent extra cash dividend payment as an example, the company announced on Dec. 5, 2017, that it would pay investors on record at the close of business on Dec. 14, 2017, a special dividend of $1.20. That move more than doubled the dividend investors received over the full year from its regular dividend alone, which at the time was a quarterly dividend of $0.25 per share. Investors who buy shares in November should again be rewarded with a hefty special dividend in early January 2019.
Beyond its special dividend, the company is coming off a strong third quarter. Even with driver shortages and supplier constraints, the company delivered a record number of trucks during the third quarter, just topping the previous record set during the second quarter of 2018 -- business is good right now. Management also expects margins to improve during the fourth quarter as supplier constraints ease in the near term. All in all, if investors are looking for a company with strong business results and a special dividend on the way, take a look at PACCAR.
An underrated automaker fresh off a big quarter
Jeremy Bowman (General Motors): If you're looking for a dividend stock that's in a great position to reap further gains, look no further than General Motors. The legacy automaker offers a well-funded dividend yield at 4.2% and is dirt cheap at a P/E of just 5.3.
Right now looks like a great time to buy GM stock. In addition to its valuation and yield, there are a number of catalysts that should provide tailwinds for the company in the coming years, and its low price and stable profits make it an excellent stock to ride out the current market volatility as rising interest rates squeeze higher-priced growth stocks.
General Motors is also fresh off a monster quarter, as the Chevy maker delivered an adjusted per-share profit of $1.87, up 42% from a year ago, and crushing estimates at $1.25. Revenue in the quarter increased 6.4% to $35.8 billion with strong results and both top and bottom driven by sales of higher-priced trucks and crossovers in North America.
2019 Silverado High Country. Image source: General Motors.
Meanwhile, the company's Cruise autonomous vehicle division is now valued at $14.6 billion after receiving billion-dollar investments from both the Softbank Vision Fund and Honda. The company has a strong position in electric vehicles with Chevy Volt and Bolt, and is increasing Bolt production by 20% in the fourth quarter to meet growing demand.
Though Tesla and Uber have attracted much of the attention -- and the high valuations -- in the auto industry, GM could be a winner in the driverless car revolution, as the company is planning to launch its own autonomous ride-hailing service next year. With strong profits and a bright future ahead of it, now looks like a great time to grab a piece of this reliable dividend stock.
A delicious dividend
Jordan Wathen (Sysco Corp): As a distributor to the food service industry, Sysco is effectively a royalty on restaurant sales. The company offers a one-stop shop for restaurateurs, delivering regular shipments of foods, napkins, straws, and more that restaurants need on a recurring basis to stay in business.
Food service distribution is a tough business, as prices for key inputs -- raw foods, diesel fuel, and so on -- can change meaningfully from day to day. As a result, quarterly profits can vary wildly, but over long time horizons, the business is remarkably profitable. Sysco's scale (annual revenue of approximately $60 billion) enables it to spread costs better than its smaller competitors, and extract better terms from its suppliers.
Sysco has an impressive record as a dividend payer as a member of the exclusive list of dividend aristocrats, companies that have consistently paid and increased their dividends for 25 consecutive years. So, while a current yield of 2.3% may be only modestly better than the S&P 500 average, investors can expect that Sysco will reward its shareholders with consistent dividend increases over time.
