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3 Stocks That Pay You to Own Them

By Rich Duprey – May 28, 2020 at 8:24AM

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Having a stable source of income, even if it's not guaranteed, can give investors peace of mind during times of turmoil.

The COVID-19 pandemic made buying dividend-paying stocks a little more unpredictable, as even typically staid businesses with strong records of paying shareholders have cut or suspended their payouts.

It's an unprecedented time, though, because the government has determined some businesses are not essential and can't open, thus giving others a chance to profit at their expense. Needing to conserve cash is a priority, so cutting their dividends is a smart financial move.

However, that's not so good for income investors. Below are three companies that have not only maintained their payouts, but sometimes even raised them. Their businesses are also solid otherwise, and investors would do well to give them a closer inspection.

Word Dividends appearing through middle of torn dollar bill

Image source: Getty Images.

Constellation Brands

As the owner of the U.S. rights to the Mexican beer brand Corona, Constellation Brands (STZ 1.23%) has avoided the problems facing other brewers and has kept its dividend intact.

Last month Anheuser-Busch InBev (BUD 4.69%) slashed its payout 50% (the second time in two years), and Heineken (HEINY 4.00%) temporarily suspended its own. Molson Coors (TAP 1.38%) just announced it is also suspending its 2020 dividend.

Constellation, on the other hand, declared a quarterly dividend of $0.75 per share last month, driven by its strong performance and its financial stability. 

While the brewer has only been paying a dividend for five years, it has been steadily increasing the amount. Where the beer industry generally has suffered from lower consumption rates and production, Mexican beer growth remains robust and Constellation has dominated the category.

The yield on the brewer's payout is a modest 1.7% currently, but it seems a solid investment during these momentous times.

Realty Income

Real estate investment trusts are popular with income investors because of the requirement that they pay out most of their profits to shareholders as dividends. Realty Income (O 1.77%) has been among the most popular, even during this crisis that's seen real estate take it on the nose. For example, many retailers have gone on a rent strike as they've been forced to close.

Realty Income has a portfolio of over 6,500 properties with 650 tenants across all kinds of businesses, and the quality of its tenants has not been materially hurt by the pandemic. At the end of March, it had an occupancy rate of over 98%.

The REIT's dividend is different from others as it pays it monthly (it brands itself as "The Monthly Dividend Company"). In March, it announced its 90th consecutive quarterly dividend increase, marking the 106th hike in the payout it has made since 1994.

Stability, consistency, and strength are the hallmarks that have attracted investors to Realty Income for decades and will likely be the reason others continue to do so today. The REIT's dividend yields 5.4% at current prices.

Genuine Parts

Genuine Parts (GPC 2.33%) runs the NAPA auto parts retail store chain. Earlier this month, it said it was expecting COVID-19 to hurt its business more than expected and that it no longer expects to achieve the full-year guidance it previously provided, which it subsequently withdrew.

Despite the challenges being experienced, such as slowing sales due to shelter-in-place orders, the long-term outlook for the retailer seems strong. Rather than purchasing new cars, consumers are keeping their existing models on the road longer. That portends greater future sales for Genuine Parts, as those cars will need more maintenance and repair as they get older.

The auto parts retailer has a long history of raising its dividend each year, some 63 consecutive years of increases, making it a Dividend King. The payout yields 4.1% currently.

While that doesn't mean the company can't cut its payout, its stable business and positive outlook suggest this is a dividend stock that has many more years of dividend hikes in its future.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool recommends Anheuser-Busch InBev NV. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Realty Income Corporation Stock Quote
Realty Income Corporation
O
$60.27 (1.77%) $1.05
Genuine Parts Company Stock Quote
Genuine Parts Company
GPC
$156.47 (2.33%) $3.56
Constellation Brands, Inc. Stock Quote
Constellation Brands, Inc.
STZ
$237.40 (1.23%) $2.88
Anheuser-Busch InBev SA/NV Stock Quote
Anheuser-Busch InBev SA/NV
BUD
$48.00 (4.69%) $2.15
Molson Coors Beverage Company Stock Quote
Molson Coors Beverage Company
TAP
$49.25 (1.38%) $0.67
Heineken N.V. Stock Quote
Heineken N.V.
HEINY
$45.75 (4.00%) $1.76

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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