If you've saved up money and can afford to invest it in stocks, ones that pay dividends can help make the most of your investment. A $10,000 investment could be a good target to aim for since you need money to make money, and it's a good amount to help accumulate some meaningful income; a 3% yield would produce $300 in annual dividend income.
Three dividend stocks you can pick up at reduced prices today include Patterson Companies (PDCO 0.62%), JPMorgan Chase (JPM 1.21%), and Clorox (CLX 1.03%). They're all trading near their 52-week lows and all provide better yields than the S&P 500 average of 1.4%.
1. Patterson Companies
Patterson Companies sells and distributes animal health and dental products. Those are two solid, steady streams of income as they focus on essential industries. The company doesn't normally generate huge margins, but over the trailing 12 months through Jan. 29, it accumulated a profit of $168 million on revenue of $6.4 billion.
That's $1.71 in diluted per-share earnings versus the $1.04 that the stock currently pays in dividends over a 12-month stretch. Its 61% payout ratio makes the dividend fairly safe. But despite its stability, year to date the stock has declined by 4% -- although that's still better than the S&P 500, which is down 23%. As a result, Patterson is near its 52-week low of $26.51.
This can make now an opportune time to load up on the healthcare stock, which yields 3.7% annually.
2. JPMorgan Chase
Top bank JPMorgan has also been wallowing near its 52-week low of late. Although bank stocks can profit from a higher spread due to the interest rate increases that are taking place this year, there's also potential for them to underperform amid a weak economy. JPMorgan's stock has fallen 27% thus far in 2022 as concerns about whether it will hit its target of a 17% return on tangible equity this year have weighed down its shares.
But regardless of how it performs in this year, over the long term this is still a solid bank stock to own as it is the largest in the U.S. by assets. Betting on its success is, in effect, a bet on the U.S. economy, which is normally a good position to take. JPMorgan normally nets a profit margin that's more than 24% of revenue, which provides investors with plenty of stability over the long haul. Plus, there's also its attractive dividend.
JPMorgan's payout ratio is less than 30%, which is incredibly conservative. That's great news for investors wanting to collect its dividend, which now yields 3.5% -- higher than some of its peers, including Bank of America and Wells Fargo, which are both paying around 2.5%.
3. Clorox
Clorox was a popular stock to own in the early stages of the pandemic when there was a big focus on cleanliness and hand sanitizers. Nowadays, businesses have been looking to get rid of an excess supply of hand sanitizers. The hype is gone and with inflation on the rise, Clorox has gone from being a red-hot buy to a lackluster one. Year to date, its shares have fallen by close to 30%. The stock has given back all of the gains it generated since the pandemic and is now trading at lows not seen since 2018.
The company expects its net sales to decline between 1% and 4% this fiscal year (which ends in June) while diluted per-share earnings are expected to drop by more than 30% to no more than $3.85. That would fall below its annual dividend payment of $4.64 per share. However, that still doesn't mean the dividend is in trouble.
During the company's most recent quarter, which covered the first three months of 2022, Clorox generated free cash flow of $166 million, which was more than the $143 million it paid in dividends in the period. If it can maintain sufficient free cash, the payout should be fine. Today, the stock yields 3.8%.
While investors may be worried about the stock, they should remember that Clorox has been paying and increasing its dividend for decades; the company has faced adversity before, and its payout has remained intact. Buying Clorox's shares while near their 52-week low is a bit of a contrarian move, and one that could pay off.
