When I receive dividends in my bank account, they always bring a smile to my face. There's nothing sweeter than enjoying the fruits of your investment labor. But selecting a great dividend stock requires careful consideration in light of the pandemic's effects. The business needs to remain resilient in the face of economic challenges, while also being able to withstand possible disruptions to the business landscape arising from changes in human behavior or practices.
A few other criteria I have is that the company should display a great track record of paying out dividends through good times and bad, and that these dividends should also be growing over time. It's usually a good bet to select stocks that occupy a strong market position within their respective industries and that have clear catalysts driving growth.
With all these attributes laid out, here are three dividend stocks I'd love to buy today.
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Nike
As one of the most reputable sports footwear and apparel firms in the world, Nike (NKE 1.06%) has demonstrated its ability to stay nimble and innovative even when faced with obstacles. The company reported a sparkling set of earnings for its fiscal year, which ended May 31, as physical retail stores started reopening worldwide. Revenue jumped by 19% year over year to $44.5 billion, with the U.S. reporting record totals, up 141% year over year for the fourth quarter alone. China was even more impressive, chalking up seven consecutive years of double-digit growth.
Nike's net income more than doubled year over year to $5.7 billion, and the company declared a full-year dividend of $1.07 per share, up 12% from the $0.955 it paid out a year ago. It was paying a quarterly dividend of just $0.078 back in fiscal year 2011, and its dividend has soared by more than 250% since then to $0.275 per quarter. This impressive track record is a key reason the company qualifies as a strong dividend candidate.
CEO John Donahoe has reiterated that Nike's digital advantage gives it the edge it needs to continue growing. The company now has more than 300 million members in its database, and digital accounts for 35% of its revenue, more than three years ahead of plan. With this focus on sharpening its digital edge, the business looks set to continue doing well, with a high chance that it will increase its dividend, too.
PepsiCo
Beverage and snack giant PepsiCo (PEP 0.25%) has also demonstrated resilience during this crisis. Despite global supply chain disruptions and weak consumer spending, the company still reported strong numbers for its fiscal 2021 first-half earnings. Net revenue for the first six months of this year rose 14.1% year over year to $34 billion, operating profit climbed by 28.2% to $5.4 billion, and net income surged by 36.5% to $4.1 billion.
The better numbers were the result of a decline in operating costs that helped boost margins. The company also announced an expansion and extension of its restructuring initiatives through the end of 2026, in which the business plans to leverage technology to deliver up to $1 billion in annual savings.
Meanwhile, it declared a quarterly dividend of $1.075 per share for its latest quarter, up 5% from a year back. Compare this to 2011 when the company's quarterly dividend was just $0.48, and it's clear that PepsiCo has managed to steadily increase its payout over the years, making it a quality dividend stock to own.
American Tower
American Tower (AMT +0.16%) is a big beneficiary of the online shift accompanying the pandemic. This real estate investment trust (REIT), which owns and operates more than 214,000 communication sites, enjoys a steady stream of cash flows from long-term leases to wireless service providers and telecommunication companies. This stability of income has enabled the business to pay out a steadily increasing dividend over the years, making the REIT a perfect vehicle for income-seeking investors.
The annual dividend stood at $0.90 in 2012, and eight years later, it had soared more than fivefold to $4.53 in 2020. For its fiscal 2021 second quarter, the dividend per share was up 15.5% year over year at $1.27, continuing its uninterrupted increase. Built-in rent escalations and high lease-renewal rates underpin the stability of the dividend and enable it to grow steadily over time.
American Tower is also growing its portfolio through acquisitions, such as the Telxius Towers purchase announced in January this year. The deal closed just two months ago, adding over 7,000 communication sites in Brazil, Peru, Chile, and Argentina. These assets are set to drive long-term growth for the REIT and will contribute to dividend growth over time.
