In this article, we will be taking a look at 10 safe dividend stocks to invest in. To skip our detailed analysis of dividend investing, you can go directly to see the 5 Safe Dividend Stocks to Invest In.
Although dividend investing cannot be described as a risk-free investment, if you study the market and stocks thoroughly, stocks seen to be stable or rising in value consistently for over a decade or so can be called safe. Stocks such as Pfizer Inc. (NYSE:PFE), Target Corporation (NYSE:TGT), and Walmart Inc. (NYSE:WMT) can be considered safe as they have provided their investors with consistent dividends for many years.
Stocks with high dividend yields usually have high risks attached to them, however, that is not always the case. For instance, a Global X report on high yielding dividend stocks found these stocks to have generated an annual dividend yield of 6.4%. The report also found that these stocks outperformed the S&P 500 by about 3% annually. Both these findings are based on research on dividend stocks between 1960 and 2017.
Additionally, for investors wondering whether or not dividend investing is the right play for them in today’s market, we would like to highlight the finance and banking sector as a viable and profitable option. According to a Reuters report from November 28th, six of the best bank dividend stocks have announced that they will resume raising their yields and share buybacks after the two-year hiatus they observed. The news came in light of strong quarterly earnings reports. The “big six” bank dividend stocks include Royal Bank of Canada (NYSE:RY), The Toronto-Dominion Bank (NYSE:TD), The Bank of Nova Scotia (NYSE:BNS), Bank of Montreal (NYSE:BMO), Canadian Imperial Bank of Commerce (NYSE:CM), and National Bank of Canada (TSE:NA). Reuters has calculated that these stocks have a dividend yield of 3.3% on average, in comparison to the global sector median of 2.5%. Additionally, the report mentioned that the dividend increases may go as high as 10% for The Bank of Nova Scotia (NYSE:BNS) and 34% for National Bank of Canada (TSE:NA), according to analyst Gabriel Dechaine at National Bank Financial. The above may just go to show that the time is ripe for investing in dividend stocks in the banking sector.
Photo by Vitaly Taranov on Unsplash
Without further ado, let’s look at the 10 safe dividend stocks.
Our Methodology
Insider Monkey considered a number of factors when ranking the stocks in the following list. Firstly, the stocks selected for the list have consistent dividend growth for at least 15 years. Secondly, the hedge fund data for each stock is recorded and compared in terms of popularity within hedge funds. We also gave preference to the stocks that generally have positive ratings among market analysts.
Safe Dividend Stocks To Invest In
10. Archer Daniels Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 27
Dividend Yield: 2.3%
Archer Daniels Midland Company (NYSE:ADM), a giant of the U.S.A agro-produce industry, is actively engaged in obtaining, processing, storing, and transporting agricultural products and foods. Their business activities extend beyond U.S. borders, as they maintain a respectable position among the international business community. Archer Daniels Midland Company (NYSE:ADM) is among the safe dividend stocks to invest in, with a dividend yield of 2.3%.
According to Monness Crespi analyst, Chris Shaw, Archer Daniels Midland Company (NYSE:ADM) is signaled to expect greater earnings in the near future due to its persistent momentum. The analyst raised the price target on the firm from $70 to $74 just this October. The analyst also kept a Buy rating on the shares due to the company’s strong earnings beats.
In the third quarter of 2021, the number of hedge funds that held stakes in Archer-Daniels-Midland Company (NYSE:ADM) was 27 out of the 867 hedge funds that we keep track of. Their stake value totaled about $351 million for this quarter, whereas in the second quarter it totaled up to $471 million, with 26 hedge funds out of 873 holding stakes in them.
9. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 69
Dividend Yield: 2.4%
The Procter & Gamble Company (NYSE:PG) is a multinational organization that provides consumers with a diverse range of branded goods. It functions through 5 segments in the industry.
It was reported by Stifel analyst Mark Astrachan that the Procter & Gamble Company (NYSE:PG) produced satisfactory results in the first quarter of 2021. He also stated that these results will project a higher gain in most categories. He kept a price target of $148 on the Procter & Gamble Company (NYSE:PG) shares this October with a Hold rating.
The Procter & Gamble Company (NYSE:PG) had an EPS of $1.61 in the fiscal first quarter of 2022, beating the estimated EPS by $0.02. The revenue in this quarter was $20.34 billion, up 5.28% year over year and beating estimates by $445.19 million. The stock’s price gain in the last six months is 6.77% and 7.00% year to date.
The number of hedge funds that held stakes in the Procter & Gamble Company (NYSE:PG) in the third quarter of 2021 was 69 out of 867 hedge funds. The total value of their stakes was $6.4 billion in the same quarter and $6.9 billion in the second quarter, when 68 out of 873 hedge funds held stakes in the company.
Like Pfizer Inc. (NYSE:PFE), Target Corporation (NYSE:TGT), and Walmart Inc. (NYSE:WMT), The Procter & Gamble Company (NYSE:PG) is a dividend stock many elite investors are looking to invest in.
8. John Wiley & Sons Inc. (NYSE:JW)
Number of Hedge Fund Holders: 14
Dividend Yield: 2.6%
John Wiley & Sons Inc (NYSE:JW) provides students, teachers, and academics with research and learning material. It further separates into three segments, each catering to a different function that services people. John Wiley & Sons Inc (NYSE:JW), being one of the best safe dividend stocks to invest in, has a dividend yield of 2.6%.
John Wiley & Sons Inc (NYSE:JW) had an EPS of $0.54 in the fiscal first quarter of 2021, beating estimates by $0.15. The revenue was $488.39 million, and it beat estimates by $19.94 million. The stock has shown price gains of $14.80% year to date and 48.93% in the past year.
In 2021’s third quarter, the number of hedge funds that held stakes in John Wiley & Sons Inc (NYSE:JW) was 14 out of 876 hedge funds tracked by Insider Monkey. Their total stake value was $118 million. In the previous quarter, 16 out of 873 hedge funds held stakes in the company. The total stake value for the second quarter was approximately $171 million.
7. AFLAC Incorporated (NYSE:AFL)
Number of Hedge Fund Holders: 34
Dividend Yield: 2.9%
AFLAC Incorporated (NYSE:AFL) functions in the financial sector and provides people with financial services. It offers insurance, benefits, and supplemental insurance products. The company is one of the most noteworthy safe dividend stocks to buy with a dividend yield of 2.9%.
Mark Dwelle, an analyst from RBC, raised the firm’s price target to $61 from $59. He also kept a Sector Performing rating on the shares of AFLAC Incorporated (NYSE:AFL) just this November.
The EPS of AFLAC Incorporated (NYSE:AFL) for the third quarter of 2021 was $1.56, $0.24 more than the estimated EPS of $1.32. AFLAC Incorporated (NYSE:AFL) had a revenue of $5.24 billion in the third quarter of 2021. The price gain for the AFLAC Incorporated (NYSE:AFL) year to date is 28.66% and 22.73% in the past year.
In the third quarter, 34 out of 867 hedge funds held stakes in AFLAC Incorporated (NYSE:AFL), with a total stake value of $223 million. In the previous quarter, 33 hedge funds out of 873 held stakes in the company, worth up to $268 million in that quarter.
Like Pfizer Inc. (NYSE:PFE), Target Corporation (NYSE:TGT), and Walmart Inc. (NYSE:WMT), AFLAC Incorporated (NYSE:AFL) is a safe dividend stock for income investors today.
Madison Funds, an investment management firm, mentioned AFLAC Incorporated (NYSE:AFL) in their second-quarter 2021 investor letter. Here’s what they said:
“This quarter we are highlighting Aflac (AFL) as a relative yield example in the Financial sector. AFL is a leading provider of life and supplemental medical insurance in Japan and the U.S. AFL products offer financial protection against loss of income for policy holders based on qualifying health events. Aflac Japan generates approximately 70% of total revenues, and the company has dominant market share in Japan. In the U.S., AFL provides voluntary insurance for policy holders at businesses with products sold through payroll deduction by its large sales force which sells primarily through face-to-face interactions. We believe AFL’s dominant market position in Japan and its large U.S. sales force create a sustainable competitive advantage for the company.
Our thesis on AFL is that its sales will recover from the impact of the COVID pandemic, and it will return significant amount of capital to shareholders. Sales were negatively impacted in both Japan and the U.S. but appear to be in early stages of recovering. We believe sales will improve further as economies open and new products are introduced in Japan. In the U.S., agents will be able to return to face-to-face interactions as people get vaccinated, something that was restricted last year.
In terms of capital returns, AFL committed to returning $8-9 billion between 2020-2022, which is expected to be 75% of operating earnings. The company returns capital via share buybacks and dividend increases. AFL is a Dividend Aristocrat that has increased its dividend 39 years in a row including 10% annually over the last five years; it also recently announced an 18% dividend increase. Other favorable attributes include an A- rated balance sheet by Standard and Poor’s and an attractive valuation with a relative yield near the high end of its historical range.
We believe its valuation is cheap with its forward expected Price/Earnings (P/E) ratio just 9x and a relative P/E of 0.4x versus the S&P 500 despite an industry leading return on equity. At the time of purchase, AFL had a dividend yield of 2.5% and its relative dividend yield vs. the S&P 500 was 1.8x, as shown. Some risks to the thesis include a prolonged economic downturn, loss of market share due to unsuccessful new product roll outs and potential losses in its investment portfolio.”
6. Westamerica Bancorp. (NASDAQ:WABC)
Number of Hedge Fund Holders: 12
Dividend Yield: 3.1%
As a bank holding company, Westamerica Bancorp. (NASDAQ:WABC) provides a range of banking services to different customers in Northern and Central California. It is among the top safe dividend stocks to invest in with a dividend yield of 3.1%.
Westamerica Bancorp. (NASDAQ:WABC) had an EPS of $0.82 in the third quarter of 2021, beating the estimated EPS of $0.80 by $0.02.
According to Insider Monkey’s data, 12 out of 867 hedge funds held stakes in The Westamerica Bancorp. (NASDAQ:WABC) in the third quarter of 2021. These stakes were worth $17 million. In the second quarter, 10 hedge funds out of 873 held stakes in the company worth $21 million.
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Disclosure: None. 10 Safe Dividend Stocks to Invest In is originally published on Insider Monkey.
