All three major market indexes are now in bear market territory as the impact of rampant inflation, rapidly rising interest rates, supply chain congestion, and the still-lingering impact of the pandemic take their toll.
As devastating and painful as these corrections are, there remains a ray of hope and light behind the clouds because just as day follows night, bull markets always rise in their wake. And while the typical bear market lasts 15 months, on average, since 1928 the average bull market has lasted more than twice as long, or 36 months. Even better, from 1970 on, they tend to last more than six years on average.
Still, investors can't get ahead of themselves. While the tech-heavy Nasdaq Composite has been in a bear market almost from the beginning of the year, the S&P 500 and the Dow Jones Industrial Average only recently entered one, so there might be more room to fall. That's why in difficult times particularly, investors should consider dividend stocks.
By regularly making payouts, dividend payers can help offset declines in capital appreciation while offering a vote of confidence in their continued profitability. They also tend to outperform non-dividend payers, and among the best to buy are Dividend Kings, or those stocks that have increased their payouts for 50 or more years. Here are three that should be on your buy list today.
1. ABM Industries
Famed investor Peter Lynch recommended buying boring companies, or those that did disagreeable jobs. ABM Industries (ABM -0.24%) could fit the bill because it's been providing janitorial services to businesses for well over a century. That means it has not only been through recessions and depressions, but also world wars, political upheavals, natural disasters, and a global pandemic or two.
While ABM has a long track record of success, it doesn't mean it can't be impacted by these events. During the COVID pandemic, for example, its business was wrecked by the forced lockdowns that were imposed; yet it was able to respond by adapting to conditions, quickly developing a sanitizing service that companies adopted when they reopened. Demand for that has fallen over time, but it shows the kind of innovative thinking that comes from having weathered numerous storms over the years.
ABM has made a number of smart acquisitions that help drive revenue and profit expansion while still generating significant organic growth. The cleaning and maintenance services specialist has paid a dividend for more than 56 years and raised it for 50 consecutive years. It's a stalwart that investors can count on in good times and bad.
2. Genuine Parts
In that same vein is aftermarket auto parts retailer Genuine Parts (GPC -0.03%), best-known for its chain of NAPA Auto Parts stores. Founded in 1928, it's been through most of the same cataclysms as ABM and continues to thrive until today.
The NAPA store chain is its primary revenue generator, accounting for two-thirds of total revenue, but it also runs an industrial replacement parts and supplies business serving more than 107,000 customers in North America and the Australasia region.
Even as the stock market has soured, Genuine Parts has soared because the strains on the economy have made both new and used cars more expensive. That means car owners will maintain their existing vehicles more to enhance their resale value, as well as to just keep their jalopies running.
That's translating into stellar earnings performance. For the second quarter, chairman and CEO Paul Donahue said Genuine Parts "achieved another record quarter, consisting of double-digit sales and earnings increases and a steady cadence of continued growth."
Genuine Parts has also paid dividends for nearly 100 years and has increased the payout every year since 1948. The dividend currently yields 2.4% annually.
3. Tootsie Roll Industries
There may be few companies that are as well-known, but little thought about as Tootsie Roll Industries (TR 0.03%), the candy company is recognized for its tiny, chocolate-flavored taffy logs, but it also owns Andes mints, Cella's chocolate-covered cherries, Charleston Chews, Dubble Bubble gum, Junior Mints, and more.
Founded two years after Hershey in 1896, Tootsie Roll is one of the oldest confectioners in the country and has been owned by the Gordon family since the 1930s. While that has provided its source of stability, it is also considered a drawback because they own a majority of the voting shares of the business. That gives them control to determine the direction the company goes, and as you can tell from its product lineup, Tootsie Roll has stayed in its lane.
Where Hershey has diversified into new verticals, like healthy snacks, and has "ambitions to become a snacking powerhouse," the Gordons prefer to keep Tootsie Roll doing what it does best.
CEO Ellen Gordon is 90 years old, so the potential for change is high. One could be an increased dividend. Tootsie Roll has consistently made a payout for more than 50 years, but the dividend yields just 1% annually. Still, this candy stock has been a safe haven for investors for years.