Surreal. That's about the only way to describe what's going on around the world. Entire countries closing their borders. Professional sports teams canceling their seasons. Major events of any kind grinding to a halt. The stock market crashing and wiping out more than two years of gains.
Is there any shelter in the raging storm for investors? I think so. Here are three dividend stocks you can buy right now that I view as super-safe compared to most stocks on the market.
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1. Dollar General
Most stocks have fallen hard during the coronavirus-fueled market crash. Not Dollar General (DG -0.60%). The consumer staples stock has held up better than most in the midst of the market meltdown. I think that Dollar General is super-safe for several reasons.
Well before the first COVID-19 diagnosis was announced, I picked Dollar General as my top stock to ride out a recession. My view was and still is that customers will continue buying at its stores regardless of what's going on in the world. Dollar General sells the kinds of products that people need no matter what. In addition, the company's stores are conveniently located and relatively small. The latter is important with the need for social distancing.
Also, Dollar General's financial position appears to be strong. A stock can't be super-safe if its financial situation is questionable. But Dollar General is consistently profitable with solid earnings growth. The company's debt load is manageable.
To be sure, Dollar General's dividend yield of around 1% isn't anything to jump up and down over. Again, though, the dividend should be safe with the company's coronavirus-proof business and a really low payout ratio of only 19%.
2. Digital Realty Trust
Digital Realty Trust's (DLR 1.16%) dividend yield of over 3.5% is more enticing. And its stock is even up a little so far in 2020 despite the beginning of the first bear market in more than a decade.
The company owned 225 data centers as of the end of 2019 and controls over one-fifth of the global data center market. Its customers read like a who's-who of the technology world, including Apple, Google, and Microsoft. A pandemic isn't going to reduce the need for these and other major companies to require data centers.
You might wonder if Digital Realty Trust's shares have gotten too expensive with the stock trading at a high earnings multiple. However, the company's growth prospects should remain so strong, particularly with its recent acquisition of InterXion, that its valuation doesn't look scary to me.
Digital Realty Trust is organized as a real estate investment trust (REIT). That means it must return at least 90% of taxable income to shareholders in the form of dividends. I think the company's earnings will continue to grow, just as they did during the Great Recession, pushing its dividend payout higher in the future.
3. Walmart
Walmart (WMT 0.13%) has several things in common with Dollar General. They're both discount retailers that should weather tough economic times well compared to other companies. Customers will continue to shop at Walmart even with the coronavirus pandemic. If you have any doubts, just go drive by your nearest Walmart store and look at the parking lot.
One thing that I really like about Walmart, though, is that it has upped its e-commerce game in recent years. The retail giant expects that more than half of its total revenue growth in this fiscal year will come from its online operations.
Of course, there are no worries with Walmart when it comes to financial strength. The company boasts strong cash flow, consistent profitability, and a solid balance sheet.
Walmart's dividend yield stands at a little under 2% right now. That's not too shabby. The retailer has also increased its dividend payout for 47 consecutive years -- a track record that should reassure jittery investors.
