Dividend stocks can offer some solace during market turbulence. These stocks offer steady payouts during every economic cycle and are often more stable than unprofitable firms. Corporations can only give out dividends if they can reliably report profits. Those same businesses can only achieve impressive dividend growth rates if their net incomes continue to grow.
Some dividend stocks offer high yields but don’t do much other than that. Stocks in this category may exhibit high yields but significantly underperform the stock market in the long run. However, you can find great dividend stocks that offer yields and upside. These are some of the top dividend stocks to consider for long-term investing.
Visa (V)
Visa (NYSE:V) is the leading credit and debit card firm with a market cap above $500 billion. The stock has a 34 P/E ratio and a 0.77% dividend yield. It’s hard to beat the company’s 56.6% net profit margin. Revenue and earnings growth suggests that the high-profit margin will continue to grow.
Visa reported 9% year-over-year revenue growth and 17% year-over-year GAAP net income growth in the first quarter of fiscal 2024. The company’s efforts to repurchase shares also resulted in a 20% year-over-year increase in GAAP earnings per share. Visa allocated $4.4 billion toward stock buybacks and dividends.
CEO Ryan McInerney mentioned that consumer spending remained resilient to start fiscal 2024. Cross-border transactions were a key driver and grew by 16% year-over-year.
Visa stock is up by 65% over the past five years and analysts believe there is still some additional upside. The average price target suggests a potential 15% gain from current levels. Visa is currently rated as a “Strong Buy.”
Procter & Gamble (PG)
Procter & Gamble (NYSE:PG) is a consumer staples company that has been around for almost 200 years. The firm has several household names under its corporate umbrella that generate steady sales from its customers. Procter & Gamble isn’t the type of stock that outperforms the market, but it’s a great choice during market turbulence.
The firm has a 0.43 beta which makes it less volatile than the stock market. The S&P 500 can go up or down by 2% in a single day and Procter & Gamble will barely budge on those days. The stock is up by 6% year-to-date which suddenly looks more impressive as the S&P 500 and the Nasdaq 100 have been shedding most of their gains.
Procter & Gamble looks like it can continue to deliver returns for investors. The company raised its annual profit forecast and has been distributing dividends for 133 consecutive years. That also includes 67 consecutive years of dividend hikes. The stock is currently rated as a “Moderate Buy” with a projected 8% upside.
Stag Industrial (STAG)
Stag Industrial (NYSE:STAG) is an industrial real estate investment trust with more than 550 properties. The firm has properties spread across 41 states and has a total of 112.3 million square feet of real estate. Stag Industrial combines income and growth. Investors get a stock yielding 4.26% that distributes monthly dividends. Shares are up by 19% over the past five years. That doesn’t include the monthly payouts and the additional gains from dividend reinvestments.
Stag Industrial finds itself in the same position as Procter & Gamble. It’s unlikely to outperform the stock market, but its returns are less correlated to broad indices. Corporations can hold onto industrial real estate properties during bearish economic cycles. These clients may have to cut expenses elsewhere, but they aren’t likely to give up real estate.
Stag Industrial had an 88.0% retention rate in Q4 2023. The REIT also grew its core funds from operations per share by 5.5% year-over-year. Core FFO came to $0.58 per share in Q4 2023 compared to $0.55 per share in Q4 2022.
Caterpillar (CAT)
Caterpillar (NYSE:CAT) has consistently outperformed the stock market. Shares are up by 21% year-to-date and have gained 155% over the past five years. The impressive gains also come with a 1.47% dividend yield and a 17.5 P/E ratio.
The company has a stellar dividend growth history. Caterpillar has an annualized dividend growth rate of 8.20% over the past decade. The construction equipment giant is due for a dividend hike this summer.
The construction firm has maintained top-line growth and expanding profit margins. Caterpillar continued the pattern in Q4 2023 with 3% year-over-year revenue growth and 84% year-over-year net income growth.
Investors seeking more insulation during market turbulence may want to consider Caterpillar. The company has been around for almost 100 years and serves a vital industry. Caterpillar has endured many economic cycles while rewarding long-term investors. The stock is currently rated as a “Moderate Buy” among 18 analysts. The highest price target of $440 per share suggests a potential 24% upside from current levels.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is a leader in numerous verticals. The corporation has multiple growing companies under one umbrella, but the most impactful segment is cloud computing. Microsoft Cloud brought in more than half of the company’s total revenue. Microsoft Cloud revenue increased by 24% year-over-year in Q2 FY24 and helped the company as a whole generate 18% year-over-year revenue growth.
During this quarter of high growth, the firm also expanded its profit margins. Net income increased by 33% year-over-year which will support more dividend growth in the years to come. Microsoft has already been doing a good job with its dividend growth. The company has maintained an annualized dividend growth rate of 10.86% over the past decade.
Microsoft stock continues to attract enthusiastic analysts. The stock has a projected 19% upside and is rated as a “Strong Buy” among 34 analysts. Shares are up by 208% over the past five years and are off to an 8% gain to start the year.
Main Street Capital (MAIN)
Main Street Capital (NYSE:MAIN) is a high-yielding business development corporation that is up by 9% to start the year. Even though the corporation has a yield above 6%, it’s still generating returns for shareholders. Commentary from preliminary estimates for Q1 2024 earnings painted a positive sign of things to come. Here’s what Main Street Capital’s CEO Dwayne L. Hyzak said about the dividend and net earnings.
“Despite the significant increases in the total dividends paid to our shareholders over the last few years, which increased by another 20% in the first quarter of 2024 compared to the first quarter of 2023, our positive performance in the first quarter allowed us to continue to generate distributable net investment income per share that significantly exceeded the total dividends paid to our shareholders,” Hyzak stated. “Our estimated distributable net investment income for the first quarter of 2024 exceeded the monthly dividends paid to our shareholders by over 52.5% and the total dividends paid to our shareholders by over 7.5%.”
The firm has its $7.2 billion in capital under management spread across 190 cumulative investments. Main Street Capital prioritizes funding for companies with revenue between $10 million and $150 million. These companies must also have EBITDA ranging from $3 million to $20 million.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) recently became a dividend stock after issuing its first payout. The quarterly dividend starts at $0.50 per share and is likely to see an annualized growth rate above 10% for several years. Meta Platforms also authorized a $50 billion stock buyback after issuing the dividend.
The company has enough cash to support further dividend hikes. Meta Platforms has $41.8 billion in cash and cash equivalents on its balance sheet. Its current liabilities fall well below its current assets.
Meta Platforms is still in growth mode despite issuing a dividend. The company reported 25% year-over-year revenue growth in Q4 2023 along with a 201% year-over-year jump in net income. Meta Platforms also released upbeat guidance that suggests high growth rates are here to stay.
Analysts are bullish and have rated Meta Platforms as a “Strong Buy.” The stock has a projected 14% upside from its current price level.
On this date of publication, Marc Guberti held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.