These 8 Dividend Stocks Are Gifts That Keep on Giving

Author: Demitrios Kalogeropoulos | November 30, 2018

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A more rewarding way to give

A classic way to look at spending money for pleasure is to consider whether you’re buying stuff or experiences. The latter category tends to build enduring memories. The thinking goes, that you’ll value experiences and memories more than you’d prize a new TV or the latest smartphone.

Arguably, buying dividend stocks is a better way you can spend some extra money, since it promises to reward you with growing cash returns every year. Let’s take a look at a few of the most attractive of these gift-givers this holiday season. 

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1. Apple

Millions of consumers will receive Apple (Nasdaq: AAPL) branded products this holiday season, from tablets to smartwatches to phones. But why not skip the tech devices and buy the stock instead? Apple’s massively profitable business allows it to pay out one of the biggest dividends on the market. The payout has expanded by double digits in five of the last six years, too, including a 16% hike in 2018. And with the dividend taking up less than a quarter of profits, there’s room for robust growth ahead.

ALSO READ: 1 Undervalued Dividend Stock to Buy in November

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2. Procter & Gamble

Selling branded consumer staples can make for an extremely stable business. Unlike with discretionary products like cars, after all, people don’t tend to scale back dramatically on their use of toothpaste, paper towels, or diapers during a market downturn. That fact has helped Procter & Gamble (NYSE: PG), the owner of franchises like Pampers diapers and Gillette razors, raise its dividend in each of the last 61 years for one of the market’s longest-running streaks. Its sales growth pace is finally starting to speed up this year, meanwhile, following a tough multi-year stretch for the business.

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3. Cedar Fair

Theme park specialist Cedar Fair (NYSE: FUN) is having a challenging financial year as attendance is on pace to decline despite the strong overall economy. The good news is that the operating stumble has pushed the stock lower and so income investors can receive an annual yield of over 6% today. Cedar Fair’s management plans to diversify its parks over time, by adding things like hotels, restaurants, and indoor experiences, so that attendance isn’t so dependent on favorable weather during peak summer months. It owns 1,000 acres of undeveloped land adjacent to resorts set aside just for that purpose of maturing into a more full-featured theme park experience.

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4. McCormick

McCormick (NYSE: MKC) currently pays investors a modest but significant dividend yield of around 1.5%. That rate has declined lately thanks to a sharp stock price rally, but that doesn’t mean investors should ignore this dividend payer.

McCormick has demonstrated a commitment to its payout over the past few decades. It should get even easier to boost the dividend, too, now that its sales and profitability metrics are surging higher thanks to its recent acquisition of the French’s and Frank’s condiment brands. McCormick’s financial priority right now is to pay down the debt it took on to fund that purchase while keeping the dividend inching higher. At that point, expect significant annual payout boosts to follow.

ALSO READ: McCormick Rides Portfolio Additions to Record Sales

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5. Hasbro

Its peer recently slashed its dividend payout, but there’s little reason to worry about Hasbro (NYSE: HAS) doing the same thing. Sure, the toys and games giant is battling through a challenging selling period that’s been made worse by the liquidation of Toys ‘R’ Us, a key customer. Revenue dropped 12% last quarter, in fact, and sales are down by about the same amount so far in 2018. Management believes they’ll get back to profitable growth in 2019, though, and that optimistic outlook is supported by its lean inventory position going into the key holiday period, and its strong catalog of both owned and licensed toy brands.

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6. McDonald's

A daily fast food habit isn’t the best thing for your waistline. Owning a fast food business, on the other hand, might be just what your portfolio needs. McDonald’s (NYSE: MCD) has translated its industry leadership position into massive global profits that today are rising faster than sales due to a refranchising program that’s replacing company-owned locations with franchised stores. Mickey D’s operating trends are looking strong, too, especially internationally. The U.S. segment isn’t growing as quickly as management would like, but that should change as the company modernizes its restaurants and adds in-demand services like delivery to its offerings. 

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7. Home Depot

A recent slowdown in the housing industry suggests it might get harder for home improvement retailers to find growth in the coming quarters. Home Depot (NYSE: HD) has been through weak periods before, though, including a massive industry contraction from 2007 through 2009. The company has made impressive strides since then, with operating margin more than doubling as annual sales crossed $100 billion. And, at least for the immediate term, its outlook keeps marching higher as the chain soaks up market share while aggressively returning cash to shareholders through dividends and stock repurchase spending.

ALSO READ: Where Will Home Depot Be in 5 Years?

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8. TJX Companies

TJX Companies (NYSE: TJX), the owner of popular the off-price retailing franchises of TJ Maxx, Marshall’s, and HomeGoods, has a lot going for it as an income investment. The chain tends to thrive in periods of strong, and weak, economic growth, as demonstrated by the fact that sales have risen in each of the last 22 consecutive years. Those sales gains deliver healthy profits, too, which have funded an impressive streak of annual dividend raises since 1995. Two more yearly boosts will be enough to qualify TJX Companies as a Dividend Aristocrat, but investors don’t have to wait until then to pick up shares of this high-performing retailer that today boasts an annual yield of about 1.5%.


Demitrios Kalogeropoulos owns shares of Apple, Hasbro, Home Depot, and McDonald's. The Motley Fool owns shares of and recommends Apple and Hasbro. The Motley Fool has the following options: long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, short February 2019 $185 calls on Home Depot, and long January 2020 $110 calls on Home Depot. The Motley Fool recommends Cedar Fair, Home Depot, McCormick, and The TJX Companies. The Motley Fool has a disclosure policy.

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