Down 4% to 17%, These Monster Dividend Stocks Could Be Picking Up Steam

Dividend stocks don't often come with the glitz and glam of growth stocks, but they can be a lucrative staple in a well-diversified portfolio.

You can't predict how a company's stock price will perform, but you can be confident that particular dividend stocks will pay out their quarterly dividends regardless of broader economic and stock market conditions. It's consistent income at its finest.

Although the following three dividend stocks are down for the year, they're still good options for investors with time on their side.

Data source: Google Finance. Dividend yields as of Aug. 15.

1. Altria Group

Altria is one of the largest tobacco companies in the world, with leading brands like Marlboro, Black & Mild, Copenhagen, and many more. The past five years have been challenging for Altria's stock, as the company has had some noticeable missteps. This includes the failed $10 billion Juul purchase and the decline in its cannabis investments. 

Altria's dividend yield is one of the highest you'll find from an individual company on the stock market, and its management says it plans to increase it by "mid-single-digit" percentages every year until at least 2028. That's a good sign the company is confident in its cash flow and committed to rewarding shareholders.

Smoking rates in the U.S. have been declining, but Altria has managed to keep revenue growing through its pricing power. It's not a good thing health-wise, but the reality is that tobacco is a product that sells regardless of economic conditions. An increase in prices won't convince many smokers to suddenly quit.

Regardless, the stats point to slowing tobacco use, which means Altria will need to be effective in its "Moving Beyond Smoking" campaign and be a legitimate competitor in those segments. The company plans to grow its smoke-free portfolio from $2 billion in revenue in 2022 to $5 billion by 2028.

With a strong balance sheet and projected stock buybacks, investors should be rewarded while the company attempts to right the ship.

2. 3M

Industrial giant 3M's stock performance in recent years has also left many investors with a bad taste. While the industrial sector (based on S&P 500 companies) is up over 9% this year, 3M is trending in the opposite direction, down over 17% as of Aug. 15. The difference between the two is worse when you zoom out.

Data by YCharts.

A combination of things contributed to this, including looming legal liabilities, missed revenue guidance back-to-back to close 2022, and declining profit margins.

Most concerns about 3M's troubles are justified, but the market sentiment toward the stock has sent it well into value territory. Its forward price-to-earnings (P/E) ratio is 11.8, well below the industrial sector's 18.7 average (as of Aug. 16).

While 3M is trying to turn the corner with restructuring and cost-cutting, investors should take comfort in the fact that it has increased its yearly dividend for 65 straight years. Only seven companies on the stock market have more consecutive years of dividend increases. Regardless of business conditions, 3M will find a way to keep the dividend rolling.

3M's sales have been hurt by a sluggish economy, but at some point, the tide should change. The company won't make a complete 180-degree change even when the economy improves, but it has all the resources needed to make sure it changes course and regains its competitive edge.

3. Abbott Laboratories

Abbott Laboratories is one of the top healthcare companies in the world, specializing in medical devices, diagnostics, nutrition, and pharmaceuticals.

In the second quarter, Abbott Laboratories' sales declined by 11.4% year over year, mainly because of a drop in COVID-19 testing-related sales. This drop may explain investors' pessimism toward the stock, but it's not a problem that should linger. If anything, the drop-off had to happen sooner or later.

Healthcare isn't a sector that will see double-digit percentage growth year in and year out, but its profit pools are projected to grow to $790 billion by 2026 (up from $654 billion in 2021), according to McKinsey. With a portfolio of diverse offerings in many healthcare industries, Abbott Laboratories is in a great position to take advantage of sector growth.

Here are the company's sales by business unit:

• Medical devices: $4.3 billion.
• Diagnostics: $2.3 billion.
• Nutrition: $2.1 billion.
• Established pharmaceuticals: $1.3 billion.

A key to Abbott Laboratories' continued growth is its commitment to research and development (R&D) and expanding its offerings. The $715 million it spent on R&D in Q2 is $31 million more than in Q2 2022 and over 23% more than just three years ago.

Long-term investors are in good hands with this dividend stock.