With many experts continue to see hard times ahead for the stock market, it might be time to look at dividend stocks for the rest of 2022.
Dividend stocks are a way to diversify a portfolio that may be chasing growth a little too obsessively. They generate income in good times, in bad times and, most importantly today, in times of high inflation. (US consumer prices rose 8.5% in July from a year earlier.)
They also tend to outperform the S&P 500 over the long term.
A prominent portfolio that is heavy on dividend stocks belongs to The Bill & Melinda Gates Foundation Trust. Because the trust is used to pay for so many initiatives, revenue must continue to flow into it.
Dividend stocks help make it happen.
Here are three dividend stocks that make up a significant portion of the foundation’s holdings.
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Waste Management (WM)
It’s not the most glamorous industry, but waste management is essential.
No matter what happens to the economy, municipalities have no choice but to pay companies to get rid of our mountains of trash, even if those costs increase.
As one of the largest players in the space, Waste Management remains in an established position.
The stock has more than doubled in the past five years. And management anticipates 10% revenue growth for the year.
Currently offering a yield of 1.5%, Waste Management’s dividend has increased for 19 consecutive years.
The company has paid out almost $1 billion in dividends over the past year, and its estimated $2.5 billion in free cash flow for 2021 means investors needn’t worry about receiving their checks.
As a company whose fortunes tend to follow that of the larger economy—that’s what will happen when your equipment is a fixture on construction sites around the world—Caterpillar is in an intriguing position after the pandemic.
The company’s revenue is feeling the effects of a paralyzed global supply chain, but still historically low interest rates and President Joe Biden’s recently passed $1.2 trillion infrastructure bill mean there could be an awful lot in the U.S. in the near future construction.
Caterpillar’s mining and energy businesses also provide exposure to commodities that are prone to do well during times of high inflation.
The company’s shares have driven commodity and oil prices up more than 55% over the past five years.
After announcing an 8% increase in June, Caterpillar’s quarterly dividend is currently $1.20 per share and offers a yield of 2.5%. The company has increased its annual dividend 28 years in a row.
Because grocery stores are considered a core business, Walmart has been able to keep its more than 4,700 U.S. stores open throughout the pandemic.
Not only has the company grown both profits and market share since COVID made its way across the planet, but its reputation as a cheap haven makes Walmart the retailer of choice for many consumers when prices rise.
Walmart has consistently increased its dividend for the past 49 years. Its annual payout is currently $2.24 per share, which translates into a dividend yield of 1.6%.
Walmart is currently trading at $136 a share, well above its 52-week high of $160.77 set in April.
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This article provides information only and should not be construed as advice. Provided without any warranty.