High-quality dividend stocks can help the value of your portfolio stand up against market volatility. Thanks to the power of compounding and potential for capital appreciation, dividend-paying stocks can also be a path to big returns for patient investors. And they often have lower risk profiles than other stocks capable of delivering similar returns.
Whether you're a new investor with relatively high risk tolerance or are already in retirement and looking for safer plays, dividend stocks can be an effective vehicle for reaching your financial goals. Read on for a look at three top dividend stocks that are worth adding to your portfolio this April.
Verizon Communicatons (VZ -0.10%) has more paid wireless subscribers than any other provider in the U.S., and the company has racked up an impressive string of awards for quality of mobile service and customer support over the last decade. The telecommunications leader now looks poised to enjoy strong tailwinds with the rollout of next-generation 5G network services, and it stands out as a top dividend stock in the space.
Verizon stock looks attractively valued, trading at roughly 11.5 times this year's expected earnings and sporting a 4.3% dividend yield. The company should also be able to continue boosting its payout, thereby increasing the yield that investors get over time. Verizon announced its 14th consecutive year of annual payout increases last September, and it's likely that shareholders will get another payout hike this fall.
Mobile wireless has become an essential service, and the role that connectivity plays in business and everyday life will likely increase from here on out, and pave the way for Verizon to deliver more growth. 5G should present the company with new opportunities in both the consumer and enterprise markets, and the transition to the new, next-generation network technology is just getting started.
Verizon's strong brand and leading position in an essential service category should help the business ride out potential market volatility and deliver sales and earnings growth to help push its share price higher and keep checks flowing back to shareholders.
Hanesbrands (HBI -7.51%) has been conducting sizable cost-cutting over the last year and will continue to look for ways to reduce its expenses and improve performance. As part of this effort, the clothing and apparel company will likely be moving away from some underperforming brands. However, this isn't its only avenue to increasing earnings.
The company's Champion clothing brand is currently its most-exciting growth engine. Champion is now over a century old, but its popularity has seen a huge resurgence in recent years, particularly among the millennial and Gen Z demographics that are crucial to category performance.
Management plans to significantly increase spending to support Champion and other brands with growth potential through increased advertising, new product development, and building direct-to-consumer sales channels. Hanesbrands is pursuing an extensive turnaround project, but the company has some strong assets to work with, and the stock continues to pay a substantial dividend and trades at non-prohibitive levels.
Hanesbrands trades at roughly 12 times this year's expected earnings and sports a 3.1% yield, but investors should approach the stock with the knowledge that the company hasn't raised its dividend in awhile. With Hanesbrands focusing on paying down its debt and pursuing initiatives that can help accelerate long-term growth, management has opted to keep the company's payout flat since 2017.
However, the company is generating more than enough profit and free cash flow to cover its already substantial dividend, and it could return to payout growth in the not-too-distant future.
Johnson & Johnson
Founded in 1886, Johnson & Johnson (JNJ -1.86%) has gone through economic periods thick and thin. The healthcare giant looks a lot different than it did more than century ago, and its business has grown dramatically since its founding. Johnson & Johnson currently has a market capitalization of roughly $430 billion, making it one of the largest companies in the world. J&J also has one of the corporate world's most impressive dividend histories.
Johnson & Johnson has increased its payout annually for the last 58 years, putting it well past the 50 years of annual growth needed to join the ranks of Dividend Kings. There are currently only 31 companies that have gained access to this prestigious club of dividend growers, and J&J's impressive history of payout growth reflects the company's track record of resilience and innovation.
Johnson & Johnson is separated into three core segments: pharmaceuticals, medical devices, and consumer goods. With its diverse assortment of businesses, J&J has expansive exposure to the overall healthcare space. This puts the company in good position to benefit from broad trends including aging populations in developed Western markets and growth for the overall global population. The company's diversified structure also means that it's able to weather periods when one of its segments underperforms and keep cash flowing back to shareholders.
J&J pays a dividend yielding 2.5% and trades at roughly 29.5 times this year's expected earnings. This is a blue chip company that's shaping the global healthcare space, and investors who buy the stock can feel confident that J&J will continue playing that role and delivering regular dividend growth.