Are you looking to plug into some above-average dividend yields in this uncertain economy? Now's certainly the time. The Federal Reserve just upped the federal funds rate by another quarter of a point; dividend-paying stocks' yields are moving accordingly higher. The Federal Reserve's governors, however, are hinting that this one may be the last rate hike we see for a while.
As the elevated rates work their way toward slowly correcting the economy, here's a rundown of three great dividend stocks to consider adding to your portfolio sooner than later.
1. Kraft Heinz
Kraft Heinz (KHC 1.31%) is, of course, the name behind beloved Heinz 57 ketchup and Kraft cheese slices. But did you know Oscar Mayer, Ore-Ida, Jell-O, Kool-Aid, and Velveeta are also brands in the Kraft Heinz family? This diverse product base allows for relatively predictable, stable revenue -- the company's always got something to sell to someone. That's great for supporting dividend payments too.
And there's no denying things are going well for Kraft Heinz. While most consumer goods outfits have been threatened by rising costs paired with a lethargic, COVID-19-crimped economy, this company has clearly been able to push through that headwind. Last quarter's overall sales were up 7.2% year over year and higher to the tune of 9.4% on an organic basis. Profits improved by 7.1%, with the food behemoth able to pass along the bulk of its now-cooling cost increases to its customers.
The real highlight from its fiscal first-quarter report, though, is its guidance for the remainder of the year. The Kraft Heinz Company still believes sales will grow between 4% and 6% for the entirety of 2023. But it's also now calling for a 4% to 6% improvement in its full-year earnings before interest, taxes, depreciation, and amortization (EBITDA). That's up from its previous forecast growth range of 2% to 4%.
Read between the lines. Kraft Heinz is rolling, benefiting from the combination of a so-so economy and higher prices for everything, which keeps consumers cooking at home. Further, bear in mind that this company is in the habit of topping earnings estimates, having done so every quarter since the first quarter of 2020.
You can step into Kraft Heinz shares here while their dividend yield stands at just over 4%.
2. Ford
Rumors of Ford Motor Company's (F -0.04%) death have been greatly exaggerated. This iconic Detroit name is still alive and well.
That's the takeaway from its first-quarter report, anyway. Driven mostly by sales of traditional combustion-powered vehicles, the company turned $41.5 billion worth of sales into per-share operating earnings of $0.63. Revenue was up 20% year over year, easily topping estimates of $36.1 billion. Net earnings also beat estimates of $0.41 and came in markedly better than the year-ago comparison of $0.38 per share.
It's still a tough name for some investors to own. Gas-powered automobiles are the past. Electric vehicles (EVs) are the future. Ford makes a handful of EVs, but they still only account for about 2% of the company's revenue, and Ford's electric vehicle arm lost over $700 million last quarter alone.
Would-be investors will want to look where Ford is going rather than where it's been, though. By 2030, up to half of its total automobile production is projected to be EVs. As it scales up this output and learns more about making electric vehicles, look for per-car production costs to come down. In the meantime, its conventional car business is doing just fine -- and is profitable -- allowing the company to take on such a sweeping production shift without too much financial strain.
Investors that need absolutely reliable dividends will want to think twice about relying on Ford, though. The company suspends these payments when things turn tough. For instance, Ford didn't make any dividend payments between 2006 and 2012. An internal regrouping, paired with a recession around that time, just made dividends too expensive to sustain. The company suspended its dividend payments in the early days of the pandemic as well. Moreover, the payment isn't exactly consistent, and certainly not a consistent grower.
If you can stomach the uncertainty and keep close tabs on the stock, though, it may well be worth it. Ford's current dividend yield of a little over 5% is one of the biggest current payouts among blue chips of its ilk.
3. Coca-Cola
Last but not least, add Coca-Cola (KO 1.11%) to your list of top dividend stocks to scoop up now. Its current yield is paltry at just under 2.9%. Its pedigree and payout-growth track record, however, more than make up for its ho-hum yield.
You know the company. Coca-Cola is, of course, parent to the world's best-known cola brand. It's also the name behind Barq's Root Beer, Dasani water, Gold Peak tea, Minute Maid, Powerade, and more. Like Kraft Heinz, it's always got something to sell to someone. Unlike Kraft Heinz, though, The Coca-Cola Company arguably enjoys incredible brand loyalty. It's the United States' single strongest brand, according to a poll performed by TradingPlatforms.com. Consumers may shop around for a different brand of sliced cheese when the cost becomes a concern. But people rarely swap out their favorite beverage when they've found one they love.
The company's big appeal to current and would-be investors isn't its brands, though. It's the dividend -- or, more specifically, its dividend history. Not only has Coca-Cola paid a dividend in every quarter for several decades, but it's now raised its annual per-share payout for 61 consecutive years. It's not likely to break that streak anytime soon.
These aren't petty increases, either. The new quarterly payment is 18% bigger than the dividend from five years ago and more than 60% higher than the quarterly payout 10 years back.
Better still, Coca-Cola can readily afford these payments. The current annualized dividend of $1.84 per share only consumes about three-fourths of the company's per-share profits. The rest can be retained and invested in the company's future growth, buybacks, or other value-building initiatives.
