When you look at a company's stock, the aspect that typically jumps out is the growth or decline of its price. It's the most straightforward indicator, but stock price alone doesn't give the full picture of a stock's value.
A stock's total return is often a more appropriate measure because it considers both capital appreciation (or depreciation) and dividends received, offering a complete view of an investment's performance. Regardless of a company's stock price growth or decline, dividends reward investors for their patience and loyalty.
If you're looking for a few dividend stocks to add to your portfolio, you can't go wrong with the following three options.
1. Lowe's
Lowe's Companies (LOW -0.04%) is one of the world's largest home improvement retailers, trailing behind its main competitor, Home Depot. With a market capitalization of over $130 billion, it's also one of the world's top 100 most valuable companies.
Lowe's stock has had a good year despite its lackluster financial performance in its fiscal 2023 (ended Feb. 2, 2024). Sales were down 4.7% year over year, but much of that can be attributed to a slowdown in do-it-yourself demand.
Lowe's seems to be playing the long game, though, having spent $6.3 billion in the last year on stock buybacks (29.9 million shares). So, while the company's net sales may have been down, its earnings per share increased to $1.77 from $1.58.
Lowe's quarterly dividend is $1.10 per share, with a trailing-12-month yield of just under 2%. The dividend yield itself isn't eye-popping, but it's still above the S&P 500 average. More importantly (especially for long-term investors), Lowe's has increased its dividend for 51 consecutive years, making it a Dividend King. In the past five years, Lowe's dividend has more than doubled.
LOW Dividend data by YCharts
Despite the recent slowdown, Lowe's is a staple in its industry and has all the tools (no pun intended) for longevity. It's a stock that investors can feel comfortable holding on to for a good while.
2. Coca-Cola
Coca-Cola (KO) is a company that needs no introduction. With distribution in over 200 countries globally, Coca-Cola's brand is one of the most recognizable worldwide. Getting the distribution Coca-Cola has (and its profitably) isn't a small feat that should be taken for granted, either.
The knock on Coca-Cola recently has been a slowdown in its sales growth. Organic sales in 2022 and 2023 grew 16% and 12%, respectively, but a lot of that can be attributed to Coca-Cola increasing prices. Sales volume only increased by 5% and 2% in those years, but that's a testament to Coca-Cola's pricing power.
Coca-Cola is another Dividend King, having increased its annual dividend for 62 straight years. Its current quarterly dividend is $0.485, and the stock today offers a yield of around 3.3%.
There's a reason Coca-Cola is a blue chip stock and has been for a while now. It has an extensive distribution network, pricing power that helps during slow sales periods, and is shareholder-friendly with its dividend. More impressively, though, is that it hasn't gotten complacent despite being the industry leader.
From ready-to-go alcohol and other emerging categories like plant-based drinks, Coca-Cola has continuously shown that it will make the necessary investments to keep its portfolio growing and cater to changing consumer preferences. That all but ensures it'll be the leader for quite some time.
3. Walmart
Walmart (WMT -0.08%) is America's leading private employer and has been for a long time. That's a byproduct of the company's huge reach, with over 5,000 U.S. stores (including Sam's Clubs) and 1.6 million associates.
Reach aside, Walmart is in a league of its own when it comes to revenue generation. In its fiscal 2024, Walmart made $648.1 billion in revenue, up 6% year over year. For comparison, second-place Amazon made just under $575 billion in its latest fiscal year. When it comes to generating cash, you can (almost) always count on Walmart.
WMT Revenue (Annual) data by YCharts
Although its brick-and-mortar stores are the driving force behind its impressive financials, Walmart's emergence in e-commerce and advertising will be important for its continued growth. Global e-commerce sales grew 23% in its latest quarter, and its global advertising business grew around 33% in the fiscal year.
Walmart is yet another Dividend King (see the trend here?). In February, it announced a dividend increase, marking the 51st consecutive year. The 9% increase was also its largest in over a decade, pointing to the company's good financial health.
Some may consider Walmart's stock expensive right now, but that shouldn't deter long-term investors who are around for the long haul.
