With broad indexes hovering near all-time highs, some may be looking to put new money into unpopular companies with consistently increasing dividends. If you’re in that camp, perusing the following list is a good starting point. dividend king — Companies that have paid and increased dividends for at least 50 consecutive years.
coca cola(NYSE:KO), target(New York Stock Exchange: TGT)and stanley black and decker(NYSE:SWK) All of them have been sold in the last few months. Here’s why these three stocks stand out as attractive buys in December.
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Coca-Cola is one of those stocks that rarely sells off or drops significantly in a short period of time. Historically, S&P500 Because of its stability and consistent dividend growth. It’s especially unusual for Coke to fall by a double-digit percentage while the index is up by double-digits.
Coca-Cola hit a record high in September despite slowing growth. So perhaps this decline is partly due to valuations simply approaching historic levels. But other factors are also at play.
As you can see from the graph, the consumer staples sector does not track the S&P 500 index. In fact, they’ve been selling off recently as investors appear to be gravitating toward growth stocks for value and income.
To be fair, Coca-Cola’s near-term growth prospects are among the worst in years. The volume of the unit case is fall slightlyindicating weakening demand. Diversification is usually a good thing for Coke, as it is a global company that generates most of its sales and operating profits outside the United States. Still, converting foreign currencies into dollars reduces Coca-Cola’s profits, which could be a headwind when the U.S. dollar is strong.
So investors who are only concerned about where Coca-Cola will be in the coming months may see little reason to buy the stock. But a better way to build wealth over time is to identify great companies, buy them at reasonable valuations, and hold them until periods of volatility or when they fall out of favor.
Coca-Cola’s valuation has fallen below its historical average, and it currently trades at a discount to the S&P 500 index. Additionally, the dividend yield is 3.1%, providing an opportunity for stable passive income.
Coca-Cola has had a difficult year and needs to rely on the strength of its brand, supply chain and distribution network. But at least over a 3-5 year horizon, Coke stands out as an incredible dividend stock to buy now.
Target has rebounded slightly from a one-day 22% plunge after it reported third-quarter fiscal 2024 results and cut its fourth-quarter outlook. However, the stock price is still slightly down compared to its peers. walmart That’s an amazing 88.3% increase.
Target’s past few years have been turbulent. Before the pandemic, Target had built out its e-commerce services and loyalty program to prove it could sustain itself under the circumstances. Amazon-Dominant retail environment. Target’s pre-pandemic expansion helped set the stage for a boom during the pandemic, and ultimately the stock’s rise in November 2021, thanks to strength in e-commerce and curbside pickup and consumer interest. It helped it reach an all-time high. Focus on products rather than services.
However, Target is struggling during this period of inflation. Its product mix is ​​more discretionary than Walmart’s, and it just hasn’t been able to demonstrate as much value to consumers. Another big problem with Target is its inability to provide clear guidance to investors. The company’s guidelines have been all over the place, and have been hit or miss in recent years, leading to stock prices soaring and then falling. Unpredictability isn’t what investors are looking for when they buy Dividend Kings.
Target has a lot of work to do to regain investor confidence. However, I think the purchase case is very simple. Despite all its struggles, Target still has decent margins and is a very profitable company. Both the company’s P/E and forward P/E are below the median P/E over the past three to 10 years, making the stock relatively cheap. Target has also increased its dividend significantly in recent years, and combined with the slump in the stock price, the yield has risen to 3.4%.
All of this adds up and Target stands out as a great high-yield value stock to buy in December.
While Coca-Cola and Target remain highly profitable despite slowing demand, tool maker Stanley Black & Decker is in a completely different category, with deep A value turnaround company.
The company has overhauled its cost structure in recent years to pay down debt, improve its balance sheet and chart a path toward higher profit margins. The company’s goal is to achieve $2 billion in cost savings by 2025 by simplifying operating margins and reducing enterprise complexity. $300 million to $500 million for strategic investments in innovation, market leadership, and responsive supply chains. Increased adjusted gross profit by 35% due to increased innovation and improved customer fill rates. If Stanley Black & Decker can meet these goals, it could look like a very cheap stock. Unfortunately, the company is already facing challenges, including weaker revenues and a potentially delayed recovery path.
The company discussed the potential benefits from lower interest rates during its third-quarter earnings conference Oct. 29. But with stronger-than-expected economic growth, interest rates could remain high for an extended period of time, further delaying Stanley Black & Decker’s turnaround.
With a yield of 3.9%, Stanley Black & Decker is a good bet for investors who are confident in the recovery in consumer spending and have a long investment horizon in case further delays hamper the company’s performance in the short term. It stands out as an interesting dividend king to buy.
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. daniel ferber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Target, and Walmart. The Motley Fool has Disclosure policy.
