In these economically uncertain times, with tariffs causing havoc in multiple industries and countries, and a threat of a market pullback looming, it can make sense to turn to dividend-paying stocks. After all, healthy and growing dividend payers have a good chance of keeping those payouts coming no matter what the overall stock market is doing.
Here, then, are several to consider for your long-term portfolio. I've also included a bonus dividend stock with a 17% dividend yield at the moment that you'll want to avoid.
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1. UnitedHealth Group
Let's start with UnitedHealth Group (UNH 2.17%). Share prices of the insurer have been down as much as 60% year to date (currently down 36%), in part due to the fact that the company is being investigated by the Department of Justice for alleged Medicare fraud. This is unlikely to doom the company, though (it has become "too big to fail"). Instead, the price drop makes UnitedHealth's valuation more attractive to those who believe it will overcome its challenges. Remember -- the growing and aging population in the U.S. will keep needing healthcare and medications. (UnitedHealth owns the pharmaceutical specialist Optum.)
NYSE: UNH
Key Data Points
Want more reasons to consider buying? Well, the stock is in the portfolio of Warren Buffett's Berkshire Hathaway, and he has been adding shares. Also, compared to many companies, UnitedHealth is fairly tariff-resistant.
And yes, it's a dividend payer, with a recent dividend yield of 2.73%. (Add in share buybacks this year, and its total yield for shareholders is more like 5.75%).
2. Bank of America
Bank of America (BAC +0.31%) happens to be another holding of Berkshire Hathaway, and Berkshire recently owned about 8% of the bank. It has been paring back its position, though, potentially due to decreasing interest rates that can put pressure on the bank.
NYSE: BAC
Key Data Points
But Bank of America has many growth drivers, including brokerage accounts, wealth management services, and financial advising, which aren't as affected by interest rates. These "consumer investment" divisions are actually growing briskly.
Meanwhile, the stock's dividend yield was recently 2.15%, and it's a payout that has been growing. The total annual payout per share was recently $1.06, up from $0.72 in 2020 and $0.20 in 2015.
3. Lennar
Lennar (LEN +1.64%) is a major American homebuilder, with a promising future -- since America needs many more homes (particularly affordable ones for young first-time homebuyers).
NYSE: LEN
Key Data Points
Those aforementioned falling interest rates have the potential to help Lennar a lot, as lower rates tend to encourage more people to buy homes. Meanwhile, Lennar's way of doing business is attractive, as it enjoys economies of scale and tries to keep things simple, such as via a limited menu of floor plans.
Lennar's recent dividend yield of 1.7% is solid enough, but rewards for shareholders have been greatly enhanced because the company has been buying back a lot of its stock. (To understand why this can benefit investors, imagine a pizza cut into six pieces instead of eight. Each piece will be bigger. It's the same with every share's claim on the company, when there are fewer shares.)
In Lennar's third-quarter report, it noted a backlog of nearly 17,000 homes worth a total of $6.6 billion, new orders rising by 12% year over year, and $507 million worth of shares repurchased. Lennar offers us a way to invest in real estate without a mortgage.
4. Vanguard International High Dividend Index ETF
The Vanguard International High Dividend Index ETF (VYMI 0.61%) isn't exactly a stock -- it's an exchange-traded fund (ETF) -- a fund that trades like a stock. And it's one focused on dividend payers outside the U.S. borders. This should especially appeal to anyone worried about the U.S. stock market in particular.
The ETF recently sported a dividend yield of 3.9%, and its top holdings included the HSBC Holdings bank, the Novartis pharmaceutical company, and Nestle. Its five-year average annual return was recently 14%.
FMC: A dividend stock to avoid
Finally, here's a dividend you might do well to steer clear of: FMC (FMC 1.08%), a specialist in crop protection and nutrition, seems to have a dividend yield of 17% when you look at the various financial sites. That yield is high largely because the stock is sharply down, dropping nearly 73% year to date.
What's going on? Well, the company posted disappointing earnings results recently, and also cut its per-share dividend by 92% (from $0.58 a quarter to $0.08 a quarter). So that yield is going to plummet the next time a dividend is issued.
Much of FMC's troubles can be tied to its India business, which it's selling off. So its troubles may not last forever. Still, it remains a riskier proposition than the slew of better alternatives out there.
So as you seek dividend payers for your portfolio, give these suggestions some consideration. Remember, too, that there are many terrific dividend-focused ETFs worth considering, too.
