7 Dividend Stocks to Watch for Stable Income

Dividend Stocks

So far, 2022 has been a rocky year for the U.S. stock market. All major stock indices have losses, and a plethora of stocks lost a lot of ground as well. Looking for stable income amid the high volatility is not an easy task. However, it can become easier if you focus on dividend stocks that can generate that stable income for you.

No, they are not high-growth stocks or meme stocks. The names to focus on are called dividend aristocrats — high-quality stocks dedicated to growing their payouts to shareholders.

Dividend aristocrats are those with a remarkable dividend history. “There are 65 members of the S&P 500 that haven’t just paid dividends for at least 25 consecutive years – they’ve raised their dividends for a minimum of 25 straight years.”

You could choose all these stocks for stable income, though today we’ll focus on seven. These are top brands, though buying shares when they are declining or have reached a price level you consider is attractive for your risk tolerance is better than chasing them higher.

So let’s get into the dividend stocks on today’s list:

KO The Coca-Cola Company $61.01
CLX The Clorox Company $131.31
CL Colgate-Palmolive Company $76.18
ED Consolidated Edison $93.57
EMR Emerson Electric $88.81
XOM Exxon Mobil Corporation $101.94
FRT Federal Realty Investment Trust $103.20

The Coca-Cola Company (KO)

a line of Coca-Cola (KO) cans

Source: MAHATHIR MOHD YASIN / Shutterstock.com

Dividend Yield: 2.9%

The Coca-Cola Company (NYSE:KO) is one of the most well-known beverage companies worldwide. Some of its products include Coca-Cola, Diet Coke, Coca-Cola Zero Sugar, Fanta, Fresca, Schweppes, Sprite, Thums Up, and Aquarius. the Atlanta company was founded in 1886.

The forward dividend and yield are $1.76 and 2.9%. The one-year target is $69.84, an upside potential of around 15%.

Coca-Cola shares actually have gains of approximately 3% in 2022.

The dividend frequency is quarterly and the forward payout ratio of 66.39% seems safe. It has 61 consecutive years of dividend increases.

Sales for Coca-Cola increased 17.25% in 2021, gaining momentum after growth of -11.39% in 2020. The profitability is strong, and Coca-Cola delivers very consistent and positive free cash flows. With a return to normality in the post-Covid era socializing outdoors should be a favorable factor for further strong sales.

The Clorox Company (CLX)

Clorox (CLX) bleach bottles lined up on a store shelf.

Source: TY Lim / Shutterstock.com

Dividend Yield: 3.5%

The Clorox Company (NYSE:CLX) manufactures and markets consumer and professional products worldwide in four segments: Health and Wellness, Household, Lifestyle, and International. Some of its brand names include Clorox, Scentiva, Pine-Sol, Tilex and Formula 409. The California company was founded in 1913.

The CLX stock has a forward dividend and yield of $4.64 and 3.5% respectively. Interestingly the one-year target of $137.20 is about 4% above the opening price on June 13 of $131.31.

The shares are down around 25% in 2022, and now seem to be attractive. The company has 53 years of dividend increases. Admittedly, the forward payout ratio of 85.24% seems high. Nevertheless, there is still room for future dividend increases. The dividend frequency is quarterly.

The Clorox Company generates solid free cash flow which is essential for continuing to pay a dividend. The sales growth shows strength over the past two consecutive years, coming in at 8.16% for 2020 and at 9.22% for 2021.

As a company with a diverse brand portfolio and sales in more than 100 countries, things look bright for Clorox to continue being among the best dividend stocks.

Colgate-Palmolive Company (CL)

Colgate toothpaste and mouthwash in a cup with a toothbrush

Source: monticello / Shutterstock.com

Dividend Yield: 2.5%

Colgate-Palmolive Company (NYSE:CL) manufactures and sells consumer products worldwide, operating in two main segments: one encompassing the Oral, Personal, and Home Care items and the other focused on Pet Nutrition. It makes toothpaste, toothbrushes, mouthwash, deodorants and antiperspirants, and skin health products. The New York company was founded in 1806.

The CL stock has a forward dividend and yield of $1.88 and 2.5% respectively. The shares are down about 11% in 2022. Colgate-Palmolive has 59 years of dividend increases, paying a quarterly dividend.

The forward payout ratio of 56.07% is considered very safe — and conservative, too. There is a lot of room for the firm to increase its future dividends.

Colgate-Palmolive shows stability in net income over the past five consecutive years and the free cash flow trend is also relatively stable despite the negative growth of 16.65% in 2021.  Investors should continue to expect stable income from Colgate-Palmolive in the long term.

Consolidated Edison (ED)

Con Edison electricity gas and steam power company truck vehicle van parked on Manhattan street.

Source: BrandonKleinPhoto / Shutterstock.com

Dividend Yield: 3.3%

Consolidated Edison (NYSE:ED) delivers electric, gas and steam in the U.S. market. The company was founded in 1823 and is based in New York. In 2022 the shares of Consolidated Edison have performed exceptionally well with gains of 11%. The ED stock offers a forward dividend yield of 3.3%.

Should you be worried that the one-year estimate target of $88.33 is now below Monday’s opening stock price of $93.57? No, for two reasons. First, the company has a five-year monthly Beta of 0.22, making it a defensive stock. And second, like all the dividend stocks in this article, it offers safe and stable income.

Consolidated Edison has 48 years of dividend increases and a healthy payout ratio (FWD) of 65.55%.

This dividend stock pays out quarterly, and its financial performance is both relatively stable and strong. I am concerned that the firm is generating negative rather than positive free cash flows over the past five consecutive years. Still, sales increased by 11.72% in 2021 and net income is very stable.

Emerson Electric (EMR)

abstract tech background made of different element printed circuit board

Source: spainter_vfx / Shutterstock

Dividend Yield: 2.4%

Emerson Electric (NYSE:EMR) is a  technology and engineering company that has customers in industrial, commercial, and residential markets worldwide. The Missouri company was founded in 1890.

The EMR stock now has a forward dividend yield of 2.4%. The one-year target estimate of $107.65 signals an upside potential of over 26%. Not bad at all.

The firm has an impressive history of 65 years of dividend increases.  The payout ratio (FWD) of 38.05% is low, showing Emerson is a very conservative company. Investors should expect more dividend hikes in the future. The company has a very strong and stable free cash flow trend.

In 2021 the free cash flow increased 17.64% to $2.99 billion.

Exxon Mobil Corporation (XOM)

Exxon Mobil (XOM) logo outside of a corporate building

Source: Harry Green / Shutterstock.com

Dividend Yield: 3.4%

Exxon Mobil Corporation (NYSE:XOM) explores for and produces crude oil and natural gas in the United States and internationally. The Texas company was founded in 1870.

Soaring oil prices in 2022 have made the energy sector a top performer, and XOM stock has followed this rally with gains of 57% year-to-date. The forward dividend yield is 3.4%.

The sales growth is volatile, and the net income trend is also not stable, but this oil company generates tons of positive free cash flow over the past five years, except for 2020. In 2021 Exxon Mobil reported a free cash flow growth of roughly 1,500% to $36.05 billion.

Exxon Mobil has 38 years of dividend increases and the payout ratio (FWD) of 40.96% suggests more dividend hikes to follow. In fact, if oil prices remain elevated throughout 2022, the company may even declare a special cash dividend.

Federal Realty Investment Trust (FRT)

IVR stock Real estate investment trust (REIT) on a black notebook on an office desk.

Source: Shutterstock

Dividend Yield: 4.2%

Federal Realty Investment Trust (NYSE:FRT) is a REIT, or real estate investment trust, with properties in markets like Washington, D.C.; Boston; San Francisco; and Los Angeles. The firm was founded in 1962.

REITs are well-known as a source of high and consistent dividend yields. They must pay at least 90% of their taxable income as dividends to their shareholders.

Federal Realty Investment Trust has a very strong dividend yield. It has 54 years of dividend increases, which is ideal for long-term, sustainable income growth.

There is a concern that the Payout Ratio (FWD) is well over 100%, which is very high. The firm has a volatile net income trend too, and the free cash flow trend is also volatile. The forward yield of 4.2% is not too high compared to other REITs.

The essence is consistency. If the company continues to remain profitable, the dividends should be taken for granted. In this area, the Federal Realty Investment Trust performs very well. It is highly profitable. In 2021 net income grew 99.13% to $260.29 million and Funds from Operations (FFO) have been both stable and growing too. This is very healthy for this REIT.

On the date of publication, Stavros Georgiadis, CFA  did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.

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