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3 Dow Stocks for Dividend Investors to Buy as Stock Market Keeps Climbing

Benjamin Rains

All three major U.S. indexes continue to reach new highs in November on reported U.S.-China trade war progress, better-than-feared quarterly earnings, another interest rate cut, and solid U.S. jobs data. In fact, the Dow, S&P 500, and Nasdaq all touched fresh highs Monday.

Yields on 10-year U.S. Treasury notes have also climbed over the last two months. This helps show that Wall Street and investors’ recession fears have cooled off a bit. Therefore, it seems like investors should continue to search for stocks to add to their portfolios, even amid broader global economic slowdown worries.  

With that said, today we searched for highly-ranked, large-cap stocks using our Zacks Stock Screener that dividend investors might want to consider buying. All three of the stocks also happen to be Dow components from completely different industries.

Nike NKE

Nike made headlines last week when it announced it cut ties with Amazon AMZN to focus more heavily on its own direct-to-consumer push. Amazon was never a big part of Nike’s digital business and its own e-commerce expansion includes multiple shopping-focused apps, a massive social media presence across Instagram FB, and more. Nike has also improved its supply chain, introduced RFID tags into products, and focused heavily on digital analytics. Executives project that digital will make up 30% of Nike’s business by 2023, compared to roughly 15% right now.

Nike is the world’s largest and most popular sportswear brand despite Adidas’ ADDYY North American success and Lululemon’s LULU stellar run. CEO Mark Parker has helped Nike stay at the forefront of global sports and more recently fashion. This has helped it continue to expand at home, as well as in China and other Asian countries.

Nike, which posted stronger-than-projected Q1 fiscal 2020 results in late September, has seen its stock price climb 30% in the last year to crush the S&P 500 and its industry’s 15% jump. Our current Zacks estimates call for NKE’s sales to climb 8% and 8.6%, respectively, in FY20 and 2021. Both of these would top Nike’s revenue growth in each of the past four years. Meanwhile, its adjusted earnings are projected to surge 19% and 18%, and its revisions have trended upward.

Nike is currently a Zacks Rank #2 (Buy) that rests in the top 27% of our more than 250 Zacks industries. And in keeping with today’s theme, Nike on November 14 announced that it raised its quarterly cash dividend by 11%. Nike’s new dividend will be payable on January 2 to shareholders of record as of December 2. Nike’s dividend yield currently rests at roughly 0.95%, which comes in above Adidas. Nike is also in the midst of a four-year $15 billion share repurchase program.

Procter & Gamble PG

Procter & Gamble is one of the world’s largest makers of household goods, from Febreze and Swiffer to Head & Shoulders and Pampers. The consumer packed goods powerhouse has tried to adapt and innovate within a changing landscape that has seen upstart and digital-first brands grab more market share in recent years. This includes a chain of Tide-branded dry cleaners and a broader push into the nonprescription medicine space, through sleep aids, vitamins, supplements, and more.

P&G topped our Q1 FY20 estimates in October, with net sales up nearly 7%. Looking ahead, the firm’s adjusted full-year earnings are projected to jump 9.3% on 4% stronger sales. P&G’s fiscal 2021 sales are then expected to climb 3.3% higher than our current-year projection to help lift its EPS figure by 6%.

P&G’s strong longer-term upward earnings estimate revisions help it earn a Zacks Rank #2 (Buy) at the moment. The stock also holds “B” grades for both Growth and Momentum in our Style Scores system. Meanwhile, PG shares have surged 38% in the last two years and 31% in the past 12 months to outpace its industry’s 18% average climb.

Like Nike, P&G has returned value to shareholders through buybacks and its current annualized dividend of $2.98 per share is yielding 2.48%. This comes in well above the 10-year U.S. Treasury note’s 1.81% and not too far off Unilever’s UL 3%—but UL stock is up only 7% in the last 24 months.

Microsoft MSFT

Microsoft under CEO Satya Nadella, who took over in February 2014, has seen its stock soar over 210% in the past five years after it moved mostly sideways for the better part of 15 years. MSFT stock hit another new high Monday and its stock is now up 50% in 2019. MSFT is part of the $1 trillion market cap club, along with Apple AAPL, thanks to its cloud computing expansion, AI initiatives, acquisitions such as LinkedIn, and continued innovations within Office, Windows, and devices.

Microsoft posted strong earnings results on October 23 (Q1 fiscal 2020), with its Intelligent Cloud revenue up 27%, which easily beat our Key Company Metric estimate and topped Q4’s 19% expansion. Microsoft is now the second-largest cloud firm behind only Amazon. Overall, MSFT’s quarterly revenue jumped 14%, as other divisions, which feature Office, Windows, gaming and more, continue to grow solidly.

Peaking ahead, Microsoft’s full-year FY20 sales are projected to pop 11.3%, with fiscal 2021 expected to jump another 11% to reach $155.51 billion. At the bottom end, MSFT’s adjusted full-year earnings are expected to climb over 12.3% in each of the next two years. Plus, its longer-term earnings revisions help MSFT earn a Zacks Rank #2 (Buy) right now.

Microsoft also returned 28% more to shareholders through dividends and repurchases last quarter. On top of that, MSFT announced in September that it upped its quarterly dividend and approved a new share repurchase program. The firm currently pays an annualized dividend of $1.84, for a 1.23% yield.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Facebook, Inc. (FB) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Unilever PLC (UL) : Free Stock Analysis Report
 
lululemon athletica inc. (LULU) : Free Stock Analysis Report
 
NIKE, Inc. (NKE) : Free Stock Analysis Report
 
Adidas AG (ADDYY) : Free Stock Analysis Report
 
Procter & Gamble Company (The) (PG) : Free Stock Analysis Report
 
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