A dividend stock is of no use if investors are just going to use the dividends to offset a falling share price. That's why the stocks below are a cut above many of their peers, not only providing investors with recurring cash flow but allowing them to cash in on their rising share prices as well.
1. Thermo Fisher Scientific
Thermo Fisher Scientific (TMO 0.49%) has had a strong year so far in 2019, rising more than 23% year to date. A key factor behind the company's impressive growth this year is its strong financial performance, with Q2 profits coming in above expectations. And while organic revenue was slightly below expectations, the company raised its guidance for both its top and bottom lines for the year.
The company operates in many different areas, including patient diagnostics, lab equipment, and instruments, giving it no shortage of growth opportunities. One of its strengths is diversification, with half of its revenue coming from consumables, and about a quarter each coming from services and instruments. While pharmaceutical and biotech companies are a significant part of the company's customer base, it also has customers in healthcare, academia, and government, which ensures that it isn't overly exposed to one sector, giving it a lot of stability.
Image source: Getty Images.
Thermo Fisher Scientific pays investors a modest dividend of just 0.27%, but it can still be helpful in padding onto the stock's impressive returns. And with a low payout ratio of just 8%, there's definitely a lot of room for the company to raise its dividends in the future should it decide to do so.
2. Procter & Gamble
Procter & Gamble (PG 0.68%) has risen more than 32% so far this year. While the company has performed well recently, it's cautious about 2020, knowing that there could be a slowdown next year. However, this is not a stock that's going to attract growth investors anyway, with sales in fiscal 2018 up just 2% from two years ago and the company continuing to post single-digit increases this year.
The consumer goods company is trading near its high for the year, but because it operates in a variety of different segments, like Thermo Fisher Scientific, diversity is its strength. P&G should be in a good position to battle any headwinds that may come its way.
Procter & Gamble is first and foremost a dividend stock that's most suitable for long-term investors looking to buy and hold. The dividend yield, at 2.45%, isn't terribly high. However, the company is a Dividend Aristocrat, having raised its payouts for decades. Holding the stock for the long term could pay off significantly if the company continues raising its payouts.
3. Comcast
Comcast Corporation (CMCSA -0.37%) is another stock that's been doing well this year, with shares up around 30% year to date. Although investors may be concerned about its ability to be successful with the trend of cord-cutting by consumers, the company recently made an aggressive move that should help: giving away free set-top boxes to its customers. It's a great way to keep customers while potentially winning back old ones. As more streaming services launch and the aggregate cost of streaming subscriptions rises, cable services like Comcast will start looking less expensive.
If the free devices are effective in attracting consumers, it could help give revenue a boost, which fell short of expectations in Q2. And that would help make the stock an even more attractive buy as it could be poised to go even higher.
Comcast's dividend yield currently stands at 1.9%. The company appears to be committed to dividend increases as well, with a dividend hike of more than 10% earlier this year. These rising dividends along with the potential for stronger competition against cord-cutting could make Comcast a winner over the long run.
Best pick?
All three stocks listed here could be great long-term investments looking for dividend income. Which one is the best ultimately comes down to investors' personal priorities and investment strategies.
For investors that value dividend growth, Procter & Gamble has the track record behind it to give investors confidence that it can continue raising its payouts for the foreseeable future. For risk-averse investors that value stability above all else, Thermo Fisher Scientific could be the safest pick as its broad reach of services can make the stock a very versatile company to invest in. And for investors that want a bit more growth, Comcast is the clear choice as its strong numbers along with an aggressive strategy to take on streaming companies could help the stock yield some strong returns.
