There’s no doubt we’ve been in a growth-driven market for some time now. Fortunately, the transition from growth-driven to income-driven is a bit gentler than it was when the tech crash happened in 2000. Back then, people were saying things like “growth is the new income.”
At the time, most long-term investors were in solid total return plays, getting some decent long-term growth with a bit of income. When the dot-com boom hit, investors were being sold a whole need breed of company with completely different valuations and expectations.
Fortunately, we’re no longer in those innocent days when a triple-digit price-earnings (P/E) was a good sign for a company. And now, after the extended bull market, smart investors are once again seeing the value of having some solid stocks that will be there for them over time.
Following are seven fundamentally sound dividend stocks to buy for now and hang onto for years to come:
General Motors (GM)
Dividend Yield: 3.94%
General Motors Company (NYSE:GM) hasn’t figured into many of my ‘Top’ lists in recent years. But this nearly 111-year-old company continues to find its way through the challenges of a rapidly changing automotive industry.
It’s also interesting to note that that automotive giant only has a $54 billion market cap. That’s about the same size as Tesla’s (NASDAQ:TSLA). As a matter of fact, all of the U.S.’ “Big Three” carmakers have lower market caps than Tesla. That means either GM is wildly discounted or Tesla is wildly overvalued.
GM is trading at a current P/E just a hair below 7X. Since Tesla has negative earnings, it doesn’t even have a P/E. What’s more, GM is delivering a 3.9% dividend. It may be boring, but it will be making cars for a long time to come.
Cisco Systems Inc (CSCO)
Dividend Yield: 2.81%
Cisco Systems Inc (NASDAQ:CSCO) is a networking pioneer and one of the biggest players in the game today. Starting in 1984, when network servers were really just for major corporations, governments and institutions that could afford to buy and maintain them, CSCO was aggressively growing the market for its products.
When the dotcom boom hit, it opened up an entirely new world of possibilities. The great challenge was, numerous competitors also entered the market and CSCO needed to adapt to challenges and grow simultaneously.
While that has been a bumpy road, it has endured in very dynamic industry. And it now also delivers a respectable 2.8% dividend on top of its solid annual returns.
Eli Lilly & Co (LLY)
Dividend Yield: 2.41%
Eli Lilly & Co (NYSE:LLY) is one of the oldest (founded in 1876) and biggest U.S. drug makers.
From introducing the world’s first commercially available insulin in 1923, to the first pharma to produce and distribute the polio vaccine in 1955, to its introduction of Prozac in 1986, LLY has been on forefront of discovery. And that tradition of innovation continues.
This month has seen LLY cut a few drugs from its oncology pipeline and also announce the final divestment from its Elanco animal pharmaceutical wing. And, while 2019 may not be as big a year as last year (LLY stock is up 58% year to date), it will still keep chugging along, delivering a rock-solid 2.1% dividend on top of its capital gains.
Dividend Yield: 3.71%
Progressive Corp (NYSE:PGR) is one of top property and casualty (P&C) insurers in the US. It started in 1965 in the auto insurance business and continues to be a very skilled player in that sector.
Having grown more than 50% in the past 3 years, PGR recently announced that it was going to add 10,000 more people to its staff in 2019. Centers all around the country will be getting more staff, with the focus on its IT and customer service departments. The latter will be focused on Spanish-speaking customer service support.
PGR has always had a reputation as a tech innovator in the sector and this news shows that its dedication to finding ways to grow its margins and expand its customer base continues.
Rising rates also help insurers, since they hold a lot of premium cash in US Treasuries. Up nearly 30% year to date and still delivering a nice 3.7% dividend, PGR has what it takes to keep on growing.
Archer Daniels Midland (ADM)
Dividend Yield: 3.38%
Archer Daniels Midland Co (NYSE:ADM) is one of the largest agricultural commodity businesses in the world. It stores, processes and ships everything from seed oils to cocoa.
While Q3 came in ahead of expectations, ADM recently released Q4 numbers, which were off by a hefty margin. However, the markets haven’t punished ADM too much for the divergences. It’s likely that analysts know the China trade war has put a temporary kink in revenue and earnings, and the fortunes of the stock are held hostage by those negotiations.
But the reality is, ADM has the national infrastructure to manage the movement and the processing of massive amounts of agricultural goods, so these short-term challenges pale in comparison to the long-term power ADM holds on the global food supply.
For now, its 3.4% dividend buys investors some patience.
Dividend Yield: 1.81%
ConocoPhillips (NYSE:COP) is one of my favorite stocks of the moment. It has shown up in a number of these ‘top stock’ articles. And for good reason.
It is a rock-solid, balanced play on the expanding global demand for energy products. Whether it’s oil, natural gas, natural gas liquids (NGLs) or bitumen (the natural form of asphalt), COP is one of the leading exploration and production (E&P) companies in the world.
Given the fact that its 1.8% dividend isn’t exactly mouth-watering, I usually talk about its strength as a growth stock. However, this is long-term growth stock and given that view, the power of compounding makes that 1.8% kicker very welcome over the years.
Its continued expansion into natural gas opportunities in North America will also become good investments as exporting natural gas and NGLs around the world opens up in the coming years.
Most countries pay significantly more for natural gas than we do in the US, which means margins will grow substantially.
Extra Space Storage (EXR)
Dividend Yield: 3.45%
Extra Space Storage Inc (NYSE:EXR) is the only real estate investment trust (REIT) that made the cut.
REITs differ from your typical stock because of the way they’re structured. Because it’s set up as a trust, shareholders are considered owners and that means they get a distribution of the net profits from the REIT. As in this case (and most cases) those distributions are in the form of dividends.
Storage REITs have been one of the strongest sectors for years now, as new generations of Americans are more than willing to look for growth opportunities around the country.
While this trend started when the economy was weak, now that it’s strengthening, the same trend is only expanding with job opportunities and higher wages.
EXR is up 24% in the past 12 months and is still delivering a respectable 3.4% dividend to go along with it. As with most total return plays, the real payoff is for the long-term investor.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
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