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10 Best Safe Dividend Stocks to Buy Now

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·11 min read
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In this article, we will be going over the 10 Best Safe Dividend Stocks to Buy Now. To skip our detailed analysis of the best dividend stocks to invest in based on their track record of continuous dividend growth, you can continue ahead to see the 5 Best Safe Dividend Stocks to Buy Now.

You have probably heard, read, or seen, time and again, that dividend investing is a risky business. Not only that, but it's also something that can leave your portfolio feeling as if something is missing - namely, diversity. For someone who only chooses to invest in dividend stocks, non-dividend-paying stocks may not seem as alluring as compared to your typical, well-managed, big-name companies like perhaps The Coca-Cola Company (NYSE: KO) and Colgate-Palmolive Company (NYSE: CL). These companies have been consistently paying out dividends to their shareholders for over 50 years and seem like they will never go out of business.

If you go by company history and track record and properly do your research in terms of dividend cuts over the past decade or so, years of consecutive dividend growth, and records of financial stability - or otherwise - it is unlikely, yet not entirely impossible, that you will suffer losses because of a dividend-yielding company. Rather, dividend investing can, and has, proven to be a popular and profitable investment strategy. In fact, when comparing returns from dividend-yielding stocks to non-dividend payers, this claim becomes all the more believable. Back in the 1970s, the S&P 500 Index's total returns were made up mostly of reinvested dividends, with 84% of the total return at the time being from dividends. Moreover, between 1930 and 2020, dividend income made up about 41% of the S&P 500 Index's total returns.

As such, dividend investing has managed to remain a prevalent investing strategy offering a stable passive income for investors. However, this does not mean one must go for any stock with the highest dividend yield. Rather, stable dividend stocks with a steady record of consistent dividend increases are what investors should keep an eye out for. For instance, Hormel Foods Corporation (NYSE: HRL) with over 50 years of dividend growth, and The Procter & Gamble Company (NYSE: PG) with over 60 years of dividend growth would be good dividend stock picks. Hence, we have compiled a list of the best safe dividend stocks to buy now.

Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Photo by Yiorgos Ntrahas on Unsplash

The stocks on this list have all experienced continuous dividend growth for at least 50 years. They have been selected after considering hedge fund sentiment, analysts' ratings, fundamentals, and growth potential based on core business strengths. In addition, the stocks have been ranked based on their dividend yields, with the list running from the lowest to the highest dividend yield. So, here is the list of the 10 best safe dividend stocks to buy now without further ado.

Best Safe Dividend Stocks to Buy Now

10. Hormel Foods Corporation (NYSE: HRL)

Number of Hedge Fund Holders: 26

Dividend Yield: 2.08%

Hormel Foods Corporation (NYSE: HRL) is a consumer defensive, packaged foods company producing meat and food products for consumers internationally. The company sells its products under various brands like Black Label, Applegate, and Natural Choice. This stock has seen 55 consecutive years of dividend growth, and with its 2.08% dividend yield, it ranks 10th on our list of the best safe dividend stocks to buy now.

This May, Hormel Foods Corporation (NYSE: HRL) offered guidance for its revenue and EPS, raising its previous revenue view to $10.2 billion - $10.8 billion for the financial year of 2021, versus the consensus $10.15 billion estimate. EPS guidance is for $1.70-$1.82, versus the $1.74 consensus.

In the first quarter of 2021, 26 hedge funds held stakes worth $483 million in Hormel Foods Corporation (NYSE: HRL). This is down from 31 hedge fund holders in the fourth quarter of 2020, with stakes worth $523 million. Due to its continuous dividend growth and financial stability, it can be considered a safe dividend stock to invest in, like The Coca-Cola Company (NYSE: KO), The Procter & Gamble Company (NYSE: PG), and Colgate-Palmolive Company (NYSE: CL).

Nelson Capital Management mentioned Hormel Foods Corporation (NYSE: HRL) in their fourth-quarter 2020 investor letter. Here is what they said:

“We had a quiet fourth quarter, making just one swap within our consumer staples sector. We sold our position in Hormel (tkr: HRL). Hormel has seen tailwinds from the pandemic, as the maker of Spam and Skippy peanut butter has experienced higher demand from nervous consumers seeking out products with longer shelf lives. The stock had risen 18% year-to-date and its price-to-earnings (P/E) ratio had expanded from 25x to over 31x. Hormel pays a 2% dividend which is lower than many of its peers in the consumer staples sector. Furthermore, Hormel’s Jennie-O Turkey brand has experienced disruption in recent years as raw material over- or undersupply has caused large swings in revenue that lead to unpredictability. We decided to seek out better opportunities within the sector, particularly looking for a more attractively valued company that pays a higher dividend and sells everyday products that people will buy even in times of economic distress.”

9. Colgate-Palmolive Company (NYSE: CL)

Number of Hedge Fund Holders: 48

Dividend Yield: 2.17%

Colgate-Palmolive Company (NYSE: CL) is a household and personal products producer operating worldwide. Apart from Colgate and Palmolive, the company's trademarks also include Axion and EltaMD. This company has shown its shareholders 58 years of consecutive dividend growth, and with its 2.17% dividend yield, it ranks 9th on our list of the best safe dividend stocks.

Colgate-Palmolive Company (NYSE: CL) reported an increase of 5% in their organic sales in the first quarter of 2021, beating the 2.8% consensus mark. In addition, their net sales grew 6%. The company's share price also rose this June after Credit Suisse upgraded it from Neutral to Outperform. As a result, the price target set on Colgate-Palmolive Company (NYSE: CL) is now $95 with a 15% upside.

For the first quarter of 2021, the company reported a revenue of $4.34 billion, beating estimates by $80.51 million. It also beat EPS estimates for the quarter by $0.01 with $0.80 in EPS.

In the first quarter of 2021, 48 hedge funds held stakes worth $2.3 billion in Colgate-Palmolive Company (NYSE: CL), up from last quarter's 46 hedge fund holders holding stakes worth $1.51 billion.

Like The Coca-Cola Company (NYSE: KO), The Procter & Gamble Company (NYSE: PG), and Johnson & Johnson (NYSE: JNJ), Colgate-Palmolive Company (NYSE: CL) is a safe dividend stock to buy.

First Eagle Investment Management mentioned Colgate-Palmolive Company (NYSE: CL) in their first quarter 2021 investor letter. Here is what they said:

“The leading detractors in the quarter (included) Colgate-Palmolive Company. After a strong 2020 fueled in part by lockdown-driven demand, consumer staples stocks generally cooled during the first quarter as investors shifted attention to the more economically sensitive areas of the market likely to benefit from re-openings and improved discretionary spending. The effects of this rotation could be seen in the share price underperformance of names like Colgate-Palmolive.”

8. The Procter & Gamble Company (NYSE: PG)

Number of Hedge Fund Holders: 70

Dividend Yield: 2.54%

The Procter & Gamble Company (NYSE: PG) produced branded consumer packaged goods for North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. Some of its renowned brands include Head and Shoulders, Pantene, and Olay. The company has experienced 64 years of consistent dividend growth, and with its 2.54% dividend yield, it ranks 8th on our list of the best safe dividend stocks to buy now.

This July, UBS initiated coverage of The Procter & Gamble Company (NYSE: PG) with a $138 price target and a Neutral rating. The company also backed its financial year 2021 revenue view of an increase of 5-6% in revenue this April, while stating that it expected its EPS to grow by 8-10% as well.

The Procter & Gamble Company (NYSE: PG) reported an $18.11 billion revenue, beating estimates by $147.79 million in the fiscal third quarter of 2021, while also managing to beat EPS estimates for the quarter by $0.07 with their $1.26 EPS figure.

70 hedge funds held stakes in the company in the first quarter of 2021, worth $8.5 billion. This is down from 83 hedge fund holders in the previous quarter holding stakes worth $10.4 billion.

Like The Coca-Cola Company (NYSE: KO) and Colgate-Palmolive Company (NYSE: CL), The Procter & Gamble Company (NYSE: PG) is a good safe dividend stock to invest in.

7. Johnson & Johnson (NYSE: JNJ)

Number of Hedge Fund Holders: 81

Dividend Yield: 2.50%

Johnson & Johnson (NYSE: JNJ) is a healthcare provider operating worldwide. Some of its trademarks include the Johnson's brand and the Neutrogena and Tylenol brands. The company has a record of 59 consecutive years of dividend growth and has a dividend yield of 2.50%, like The Procter & Gamble Company (NYSE: PG) above. Thus it ranks 7th on our list of the best safe dividend stocks to buy now.

This May, Morgan Stanley assumed coverage of Johnson & Johnson (NYSE: JNJ) shares with an Overweight rating and a $187 price target. Analyst David Risinger expects the company's business segments to perform strongly, prompting a positive rating.

In the first quarter of 2021, Johnson & Johnson (NYSE: JNJ) reported a $22.32 billion revenue, beating estimates by $308.14 million. The company also managed to beat EPS estimates for the first quarter of 2021 by $0.24, with $2.59 in EPS. Johnson & Johnson (NYSE: JNJ) also gained 9.9% in the past 6 months and 5.11% year to date.

At the end of the first quarter of 2021, 81 hedge funds held stakes in Johnson & Johnson (NYSE: JNJ), with their total stake value standing at roughly $6.91, and while the number of hedge fund holders between the previous quarter and the first quarter of 2021 has remained the same, the stake value has significantly increased from the fourth quarter of 2020 figure of $5.82 billion.

Like The Coca-Cola Company (NYSE: KO), The Procter & Gamble Company (NYSE: PG), and Colgate-Palmolive Company (NYSE: CL), Johnson & Johnson (NYSE: JNJ) is a safe dividend stock to invest in.

6. The Coca-Cola Company (NYSE: KO)

Number of Hedge Fund Holders: 61

Dividend Yield: 3.08%

The Coca-Cola Company (NYSE: KO) is a beverage company operating worldwide. It provides everything from sparkling soft drinks to tea and coffee, and some of its renowned brands include Fanta, Sprite, and Minute Maid Pulpy. The company has had 59 consecutive years of dividend growth and has a dividend yield of 3.08%. Hence it ranks 6th on our list of the best safe dividend stocks to buy now.

This July, Deutsche Bank raised its price target on The Coca-Cola Company (NYSE: KO) from $57 to $58, while in June, Argus also raised its price target on the shares to $63 with a Buy rating on the stock.

In the first quarter of 2021, The Coca-Cola Company (NYSE: KO) had a $9.02 billion revenue, beating estimates by $388.98 million. The company also beat EPS estimates in Q1 by $0.05 with their EPS of $0.55. The Coca-Cola Company (NYSE: KO) also gained 4.43% in the past 6 months and 5.02% year to date.

By the end of the first quarter of 2021, 61 hedge funds held stakes worth roughly $24.9 billion in The Coca-Cola Company (NYSE: KO). In the fourth quarter of 2020, the number of hedge fund holders was higher, at 62, but the stake value since then has increased from the fourth quarter value of $24.6 billion.

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Disclosure: None. 10 Best Safe Dividend Stocks to Buy Now is originally published on Insider Monkey.