Many investors look to dividend-paying stocks to help build their wealth. If you've got a hankering for yield, check out the write-ups below for some insight from some of our top Motley Fool contributors covering consumer goods and technology stocks. They've got five dividend stocks (mostly from consumer goods) for you to consider.
Rick Munarriz: It's not cool to shop at Wal-Mart (NYSE:WMT) these days. It's even less cool to talk about investing in Wal-Mart. The world's largest retailer is struggling. Wal-Mart may have thrived when the economy was in a funk -- forcing middle- and upper-class shoppers to stretch their buying power -- but it's the one that's in a funk now. U.S. store traffic has posted year-over-year declines for seven consecutive quarters.
Given Wal-Mart's meager markups as it passes on savings to consumers, slower registers sting. Analysts see a slight decline in profitability this year before bouncing back next year. That's turning off the market at the moment, but it creates an opportunity to buy in ahead of the inevitable bounce. Wal-Mart will bounce back. There are economies of scale at play here that allow Wal-Mart to offer the best prices on products among physical retailers, and that includes product categories that online retailers won't be able to satisfy.
Along the way, Wal-Mart continues to line the pockets of its believers. Wal-Mart has boosted its dividend for 39 years in a row. The 2.6% yield may not seem like a lot, but it will reward patient investors as they wait out the turnaround.
Andrés Cardenal: Procter & Gamble (NYSE:PG) is a global powerhouse in several consumer staples product categories. The company owns 23 brands generating more than $1 billion each in global annual revenues. this includes widely recognized household names such as Gillette, Tide, Pampers, Pringles, Duracell, Always and Oral-b, among many others.
Procter & Gamble is streamlining its portfolio and planning to sell up to 100 of its underperforming brands in order to focus on its most convenient opportunities for growth and profitability. In addition, Procter & Gamble has embarked in an ambitious cost-cutting program aimed at reducing $10 billion in costs over the coming years.
Sometimes less is more, and it's nice to see Procter & Gamble losing some fat and optimizing its financial and strategic resources. If management executes as expected, this should mean a more dynamic company with better potential for growth and higher profitability.
Procter & Gamble has a truly extraordinary trajectory of dividend payments over the long term. The company has paid uninterrupted dividends since 1890, and it has raised its payments over the last 58 years in a row. The dividend yield is quite generous for such a reliable dividend powerhouse, in the area of 3.2% at current stock prices.
Coca-Cola is a wonderfully simple consumer goods business, firmly within Buffett's circle of competence. It's a global enterprise with a well-known brand name. Come hell or high water, the long-term stability of this juggernaut is unquestioned.
This rock-solid business generates fantastic cash flows. In turn, the torrential cash powers a world-class dividend. Coca-Cola's dividend yield stands at a generous 2.9% today. That's a good start, but far from the whole story.
More to the point, Coca-Cola is committed to increasing its dividend payouts. Over the last 10 years, earnings and share prices nearly doubled. But dividend payouts rose by 144%, outpacing Coca-Cola's share price and earnings growth.
As a result, Coca-Cola investors who reinvested their dividends over that 10-year span boosted their returns from 93% to 157%.
And if you're worried about the dividend checks outgrowing Coca-Cola's cash supply, you should know that only 59% of the company's trailing free cash flows go into dividend payouts today.
Coca-Cola matches fantastic fundamentals with rapidly growing payouts, garnished with spacious headroom for further dividend growth. Warren Buffett surely agrees: That's a mighty tasty dish.
Steve Symington: Shares of Coach (NYSE:COH) have fallen hard this year as younger, fast-growing competitors continue to take market share. But last week marked the widely anticipated commercial debut of Coach Creative Director Stuart Vevers' inaugural collection, which has drawn high praise from fashion critics and could spur a turnaround in its core North American business. This marks an important step in what CEO Victor Luis has described as a "multi-year journey" to ensure "brand vibrancy and healthy, long-term growth."
But it's not all about this month's product launch. Earlier this summer, Coach embarked on a transformation plan which involves updating its global store fleet, realigning inventory levels, implementing various operational efficiencies, and closing around 70 underperforming retail stores in North America. That plan is expected to cost as much as $220 million to implement when all is said and done, but should result in savings of $70 million this fiscal year, and $150 million in ongoing annual savings thereafter.
This will take some time to bear out, and investors should be mindful of the risk that Coach's transformation might not succeed as planned. But with shares down more than 30% so far in 2014, I'm perfectly happy collecting Coach's 3.6% dividend yield while I wait.
Tamara Walsh: When it comes to reliable dividend stocks, AT&T (NYSE:T) is at the top of its game. Not only has the wireless service provider been paying a dividend for more than 30 years, but it has also increased its payout every year over that period.
In fact, last year marked the second consecutive year in which AT&T returned a whopping $23 billion directly to shareholders through dividends and share buybacks. Today, AT&T pays an annual dividend of $1.84 and boasts a dividend yield of 5.23%. That's significantly higher than the S&P 500 average yield of 1.90%.
Moreover, as a market leader AT&T is able to generate strong cash flow. Throw in the stock's reasonable payout ratio of 53% and you have a winning dividend pick. The stock has enjoyed a nice run recently, up 11% in the past year. However, shares are still trading about 7% below the stock's 52-week high, which I believe makes this a smart dividend stock for long-term investors today.
Steve Symington owns shares of Coach. The Motley Fool recommends Coach, Coca-Cola, and Procter & Gamble. The Motley Fool owns shares of Coach and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.