If you're unsure about the direction of the stock market or just want a way to collect some recurring income each year, dividend stocks can be a great option for your portfolio. The businesses that normally pay them are stable and generate plenty of cash flow.
Three safe long-term dividend stocks to hold today include CareTrust REIT (CTRE -0.74%), Algonquin Power & Utilities Corp (AQN -2.59%), and Unilever (UL 0.43%). Their payouts are higher than the S&P 500 average of 1.3%, and investing $25,000 in each of these three companies can be enough to ensure you earn at least $3,500 in annual dividend income.
1. CareTrust REIT
CareTrust is a real estate investment trust (REIT) that invests predominantly in skilled nursing and assisted living facilities across the U.S. It has more than 200 properties across 28 states. The business has been growing over the years and normally reports an operating margin that's at least 50% (or more) of its revenue.
REITs need to be stable since they have to pay out at least 90% of their earnings back to investors. And with CareTrust, the company's strong margins allow it to continue to make increases to the dividend. The company last raised its dividend in March 2021, when it bumped up its quarterly payments from $0.25 to $0.265, an increase of 6%. CareTrust has grown its dividend along with its improving free cash flow, which, in the past five years, has always come in higher than the dividends that it has paid out.
Although there hasn't been any negative news out this year that would hurt the REIT's prospects, CareTrust's shares have nonetheless fallen by more than 13% since the start of 2022 (the S&P 500 has fallen by 7%), with the stock hitting a new 52-week low in the process.
For opportunistic investors, now can be a great time to buy this healthcare stock, as its yield is up to around 5.35%. A $25,000 investment here could bring in more than $1,330 in annual dividend income.
2. Algonquin Power & Utilities
Algonquin Power & Utilities has a broad range of facilities to serve its customers. Gas, electric, and water utilities make up the core of its regulated services group. Algonquin is also in the renewable energy business, offering many different types of green energy, including wind, solar, and thermal. The company has more than 1 million customers, which are by and large based in North America. It has also posted a profit in each of the past five years, with its operating profits typically being around one-fifth of revenue.
The stock has been relatively stable compared to the S&P 500 this year, declining by just 3% since January. Although its margins aren't as high as CareTrust's, this is still a relatively safe dividend stock as Algonquin's payout ratio is less than 70%. Its yield is 4.9%, and investing $25,000 into this utility stock would generate over $1,220 in recurring annual dividends at that rate. And odds are that you'll be collecting more over time; Algonquin has raised its dividend payments by more than 61% in the past five years.
Rounding out this diverse list is the consumer goods company Unilever. From its Ben & Jerry's brand of ice cream to Dove personal care products, the business is broad and touches many different sectors. Unilever has more than 400 brands that it says are household names, and 13 of them reported sales of at least 1 billion euros in 2020.
Unilever continued to demonstrate strong growth in 2021, with sales of 52.4 billion euros rising by 3.4% from the previous year. Its net profit of 6.6 billion euros rose by 9%. Although costs have been increasing due to inflation and supply chain problems, the company says it "responded with pricing actions" that helped bolster its results and offset the effect of those challenges.
The strong brands that Unilever has in its portfolio make it easier to raise prices if the company needs to without devasting its sales numbers. That can make the stock an attractive investment to hold at a time when inflation is the highest it has been in decades. Year to date, its shares are down a relatively modest 3%.
Unilever has the lowest yield on this list at 3.8%, but that can still be enough to generate $950 in dividends on a $25,000 investment. Together, with the other investments noted above, that would bring you to around $3,500 in annual dividends, while also allowing you to hold a diverse set of stock that you can build your portfolio around. And at around 74%, Unilever's payout ratio also looks safe.