Many investors are looking to dial back their portfolio's overall risk and ramp up its income-producing potential right now. The market is moving into what's historically a tepid time of the year for stocks and this year we're moving into the slow summertime with an overhang of uncertainty. Russia's invasion of Ukraine, rampant inflation, and a lingering pandemic all raise a few too many questions.
With this serving as the backdrop, if you've got a spare $400 -- or more, or less -- you know you won't need to spend any time soon, here's a closer look at three smart dividend stocks you can step into right now and start generating some cash soon.
As far as biopharma stocks go, Amgen (AMGN -1.10%) is somewhere in the middle of the risk scale. It's not as aggressive as, say, Sarepta Therapeutics, which is still miles away from turning a profit with its gene therapy-focused portfolio. It's more aggressive than a name like Bausch Health Companies, though, which is just as apt to acquire or license an existing, approved drug as it is to develop one of its own. Amgen boasts a portfolio of 25 different drugs, many of which were at least partially developed internally, and none of which account for more than one-fifth of its total business.
The company has roughly another 60 drug trials underway as well, and while not all will end in an approval, a bunch of those efforts are simply expanded tests of already-approved drugs. At least some of them should get the nod from the U.S. Food and Drug Administration, and it's not a stretch to suggest Amgen will win approval for a few brand new treatments as well.
It's an ideal scenario for a dividend-paying name from an industry not exactly known for prioritizing dividend payments.
To this end, while the stock's current dividend yield of 3.1% may not be jaw-dropping, the current quarterly payment of $1.94 per share is nearly seven times bigger than the quarterly dividend Amgen was dishing out just ten years ago. And, the biopharma outfit has reliably upped its annual payout every year between then and now. It's a reflection of Amgen's proven drug portfolio and pipeline.
Not to be confused with New York's utility company Consolidated Edison, Edison International (EIX -1.63%) is the parent company of Southern California Edison, which serves 15 million people in southern, central, and coastal California. The company also operates energy-management consulting company Edison Energy, though providing power to consumers makes up the bulk of its business.
It operates in an unattractive industry. In fact, until the latter part of last year, Edison International and its peers didn't participate in any of the broad market's bullishness coming out of the early 2020 crash linked to COVID-19's arrival in North America. Even with the rally logged over the course of just the past few days that the rest of the market didn't experience, Edison shares are still clear laggards.
Don't be fooled, though. The dividend here isn't in any real jeopardy. The current annualized payout of $2.80 per share is only a little more than half of the $4.59 per share the company earned last year, and Edison is looking for roughly the same bottom line this year.
While utility companies must be conscientious about their costs and how they run their operations, it's rare for a power provider to not get permission to raise rates. Since most locales only allow one utility company to operate in that market at one time, the business is tantamount to a legalized monopoly -- albeit a well-regulated one. It's also an industry well-suited for supporting dividends just because people typically do whatever it takes to keep the lights on.
Investors can step into this name while it's yielding a hefty 3.9%, although the above-average yield is only part of the bullish argument. Even more compelling is Edison's 18 consecutive years of raised dividend payouts that have more than kept pace with inflation.
Finally, add KeyCorp (KEY -0.93%) to your list of smart dividend stocks to buy if you've got an extra few hundred bucks to spare, locking in (for you) its current dividend yield of 3.8%. Better yet, you're plugging into a dividend name that's upped its annual payout at least a little every year since 2011.
If you're wary of owning any bank stocks here, you're not alone. The foreseeable future is uncertain at best, and possibly rocky at worst. Inflation appears to be untamed, and the Fed's only real weapon to fight it -- higher interest rates -- seems too little, too late; never even mind the economic damage that higher rates may cause themselves. Factor in the fallout from Russia's invasion of Ukraine and growing political tension among the United States' key trade partners, and what you've got is a recipe for problems, and maybe even a recession.
What's typically forgotten by too many investors, however, is that the worst-case scenario rarely comes to fruition. Most of the time the economic environment is a relatively boring one, with most forces working just to keep it even-keeled.
Sure, while bigger and more diversified banks like JPMorgan and Citigroup may feel the effect of waning loan demand as well as the downside of a weakening investment banking market, locally-focused regional banks like KeyCorp are better shielded from such headwinds because they were never waist-deep into these ancillary businesses to begin with. Only about a tenth of last year's income produced by KeyCorp came from investment banking, and that was a particularly good year for this sliver of its business. The bulk of this bank's bottom line still comes from conventional, local banking services like deposits and lending it offers through its 1,100 branches mostly found in Ohio, New York, and Pennsylvania, but also in Washington and Oregon. This is a more profitable business when interest rates are higher, as they're about to become.