11 Best Low-Risk Dividend Stocks to Invest In

Published on December 7, 2022 at 4:54 pm by Vardah Gill in Dividend Stocks, Hedge Funds, News

In this article, we discuss 11 best low-risk dividend stocks to invest in. You can skip our detailed analysis on dividend investment and their returns in the past, and go directly to read 5 Best Low-Risk Dividend Stocks to Invest In.

The stock market has been rocky throughout this year, making investors anxious about the outlook of the financial situation. The S&P 500 is down 17.83% year-to-date through December 7, and analysts are predicting more volatility in the upcoming months, possibly leading to a recession. In these times, investors tend to minimize risks of potential losses by prioritizing low-risk investments.

Dividend investment is considered a safe option in the current economic landscape as these securities have historically outperformed the broader market with less volatility. According to a report by Fidelity, high-dividend stocks outperformed the broader market during the last two bear markets. The report also mentioned that dividends have accounted for nearly half of the total returns of the S&P 500 over the past 30 years.

This year’s returns have also exhibited the strong performance of dividend stocks over other asset classes. The Dow Jones US Select Dividend Index is down by just 0.95% year-to-date, which is very mild considering the broader market’s returns. Chris Senyek, chief investment strategist at Wolfe Research, spoke to Barron’s in December about the overall performance of dividend stocks. He said that during periods of slow economic growth, investors load up on dividend stocks because of their defensive qualities. He further mentioned that dividend strategies are expected to outperform in 2023 as well, with high dividend growth companies stealing the limelight. Senyek named the S&P 500 Dividend Aristocrats Index one of his favorite plays, as the companies in the index are mainly known for their consistent dividend growth.

Some dividend stocks that are popular amongst investors this year include McDonald’s Corporation (NYSE:MCD), The Coca-Cola Company (NYSE:KO), and Exxon Mobil Corporation (NYSE:XOM). Further in this article, we will discuss some of the best low-risk dividend stocks to invest in.

Photo by Sharon McCutcheon on Unsplash

Our Methodology:

We analyzed the following low-risk stocks through their business fundamentals, dividend policies, and overall financial health. The betas for these companies were below 1.0, as of December 7, which means that they are less risky and less sensitive to the market’s movements. The stocks are ranked according to their dividend yields, as recorded on December 7.

Best Low-Risk Dividend Stocks to Invest In

11. Walmart Inc. (NYSE:WMT)

Dividend Yield as of December 7: 1.49%

Beta Value: 0.53

Walmart Inc. (NYSE:WMT) is an American multinational retail company that operates a chain of hypermarkets and department stores. Following the company’s solid quarterly earnings, Atlantic Equities raised its price target on the stock to $165 with an Overweight rating on the shares. The firm also appreciated the company’s long-term fundamentals.

Walmart Inc. (NYSE:WMT) currently pays a quarterly dividend of $0.56 per share and has a dividend yield of 1.49%. The company is one of the best dividend stocks on our list as it has raised its payouts for 49 years consecutively. It can be added to dividend portfolios alongside McDonald’s Corporation (NYSE:MCD), The Coca-Cola Company (NYSE:KO), and Exxon Mobil Corporation (NYSE:XOM).

In the first nine months of the year, Walmart Inc. (NYSE:WMT) generated $15.7 billion in operating cash flow and its free cash flow came in at $3.6 billion. The company remained committed to its shareholder obligation, returning $1.5 billion in dividends. It generated $152.8 billion in revenues during Q3, which showed an 8.8% growth from the same period last year.

As of the end of Q3 2022, 68 hedge funds tracked by Insider Monkey were bullish on Walmart Inc. (NYSE:WMT), compared with 67 in the previous quarter. The collective value of stakes owned by these hedge funds is over $4.08 billion.

Leaven Partners mentioned Walmart Inc. (NYSE:WMT) in its Q3 2022 investor letter. Here is what the firm has to say:

“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%^[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”

10. Archer-Daniels-Midland Company (NYSE:ADM)

Dividend Yield as of December 7: 1.76%

Beta Value: 0.84

Archer-Daniels-Midland Company (NYSE:ADM) is a Chicago-based multinational food processing company that operates over 270 food processing plants across the globe. The company showed strong results in Q3 2022, posting revenue of $24.6 billion, up 21.3% from the same period last year. At the end of September, it had over $1 billion in cash and cash equivalents. The company also paid $677 million in dividends to shareholders during the quarter.

On November 2, Archer-Daniels-Midland Company (NYSE:ADM) declared a quarterly dividend of $0.40 per share, which fell in line with its previous dividend. The company is just one year away from becoming a Dividend King as it has been raising its payouts for the past 49 years. The stock’s dividend yield on December 7 came in at 1.76%.

Baird lifted its price target on Archer-Daniels-Midland Company (NYSE:ADM) in October with a $98 price target, as underlying demand for the company’s products is expected to remain strong.

At the end of Q3 2022, 37 hedge funds tracked by Insider Monkey reported owning stakes in Archer-Daniels-Midland Company (NYSE:ADM), compared with 42 in the previous quarter. These stakes are valued collectively at nearly $600 million. With over 1.4 million shares, Markel Gayner Asset Management was the company’s leading stakeholder.

Diamond Hill Capital mentioned Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 2022 investor letter. Here is what the firm has to say:

“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”

9. McCormick & Company, Incorporated (NYSE:MKC)

Dividend Yield as of December 7: 1.85%

Beta Value: 0.61

McCormick & Company, Incorporated (NYSE:MKC) is an American multinational food company. In November, Exane BNP Paribas initiated its coverage on the stock with an Outperform rating with a $94 price target. The firm called the company ‘best in class’ and expects it to resume its record of outperformance in the upcoming quarters as well.

On November 29, McCormick & Company, Incorporated (NYSE:MKC) declared a quarterly dividend of $0.39 per share, showing a 5.4% growth from its previous dividend. Through this increase, the company extended its dividend growth streak to 37 years, which makes it one of the best dividend stocks on our list. As of December 7, the stock has a dividend yield of 1.85%.

In the third quarter of 2022, McCormick & Company, Incorporated (NYSE:MKC) remained committed to its shareholder obligation, returning over $300 million in dividends. The company’s revenue for the quarter came in at $1.6 billion, which showed a 3.2% growth from the prior-year period.

At the end of Q3 2022, 29 hedge funds in Insider Monkey’s database owned investments in McCormick & Company, Incorporated (NYSE:MKC), compared with 33 in the previous quarter. These stakes have a total value of nearly $1.3 billion.

8. Starbucks Corporation (NASDAQ:SBUX)

Dividend Yield as of December 7: 2.08%

Beta Value: 0.90

An American multinational coffeehouse chain, Starbucks Corporation (NASDAQ:SBUX) specializes in coffee and related beverages. In fiscal Q4 2022, the company reported revenue of $8.41 billion, which showed a 3.2% growth from the same period last year. At the end of October, the company had $2.8 billion available in cash and cash equivalents.

Starbucks Corporation (NASDAQ:SBUX) currently pays a quarterly dividend of $0.53 per share for a dividend yield of 2.08%, as of December 7. The company is one of the best dividend stocks on our list as it has raised its payouts consistently for the past 12 years.

In November, Evercore ISI held an Outperform rating on Starbucks Corporation (NASDAQ:SBUX), appreciating the company’s Q4 results. The firm also acknowledged the company’s efficient management.

At the end of September 2022, 54 hedge funds tracked by Insider Monkey owned stakes in Starbucks Corporation (NASDAQ:SBUX), compared with 55 in the previous quarter. These stakes are worth $2.26 billion collectively. Ken Fisher, Ken Griffin, and Ray Dalio were the company’s leading stakeholders in Q3.

Polen Capital mentioned Starbucks Corporation (NASDAQ:SBUX) in its Q2 2022 investor letter. Here is what the firm has to say:

“Starbucks, which garners a lower weighting in the Portfolio, had slightly better than average three-month performance. Samestore sales were up double-digits in the U.S. and International exChina, with solid revenue growth across those regions. The company is experiencing cost pressures from wages and input costs though, and China same-store sales were down 23% due to zero-COVID policy restrictions and lockdowns.”

7. Hormel Foods Corporation (NYSE:HRL)

Dividend Yield as of December 7: 2.35%

Beta Value: 0.15

Hormel Foods Corporation (NYSE:HRL) specializes in the packaging of a wide range of food products. The company recently announced its fiscal Q4 2022 earnings, reporting revenue of $3.2 billion, which fell by 4.9% from the same period last year. However, its operating cash flow for the quarter showed a 13% year-over-year growth at $1.1 billion. Moreover, it paid $558 million to shareholders in dividends, which places it as one of the best dividend stocks on our list.

Hormel Foods Corporation (NYSE:HRL) currently pays a quarterly dividend of $0.275 per share and has a dividend yield of 2.35%, as recorded on December 7. The company maintains a 57-year streak of consistent dividend growth.

At the end of September 2022, 29 hedge funds owned investments in Hormel Foods Corporation (NYSE:HRL), up from 27 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $455.8 million. Renaissance Technologies was the company’s largest stakeholder in Q3.

6. The Home Depot, Inc. (NYSE:HD)

Dividend Yield as of December 7: 2.39%

Beta Value: 0.96

The Home Depot, Inc. (NYSE:HD) is a Georgia-based multinational home improvement company that specializes in related products and services. In December, Bernstein initiated its coverage on the stock with a Market Perform rating and a $337 price target. The firm mentioned that the company’s long-term fundamentals remain sound and also appreciated its grocery and home improvement sectors.

In the third quarter of 2022, The Home Depot, Inc. (NYSE:HD) paid $5.8 billion to shareholders in dividends, which makes it one of the best dividend stocks on our list. It currently pays a quarterly dividend of $1.90 per share for a dividend yield of 2.39%, as of December 7. The company holds a 12-year streak of consistent dividend growth.

In addition to some of the best dividend stocks like McDonald’s Corporation (NYSE:MCD), The Coca-Cola Company (NYSE:KO), and Exxon Mobil Corporation (NYSE:XOM), investors are also paying attention to The Home Depot, Inc. (NYSE:HD) due to its strong credentials.

As of the close of Q3 2022, 89 hedge funds in Insider Monkey’s database owned stakes in The Home Depot, Inc. (NYSE:HD), growing from 80 in the previous quarter. These stakes are collectively valued at over $5.6 billion.

Diamond Hill Capital mentioned The Home Depot, Inc. (NYSE:HD) in its Q3 2022 investor letter. Here is what the firm has to say:

“The Home Depot, Inc. (NYSE:HD) shares were more resilient in Q3 as the company continues to perform well and reiterated guidance despite increasing market concerns regarding general inflationary pressures and the impact rising mortgage rates may have on the housing market. We view the longterm prospects and multi-year fundamental outlook as unchanged. Home improvement through repair and remodel is likely to be one of more resilient housing-related industries given the relative attractiveness for consumers to renovate existing homes rather than reset their current low fixed mortgage rate to higher rates that we’re seeing today.”

Click to continue reading and see 5 Best Low-Risk Dividend Stocks to Invest In.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on May 1, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on May 2, 2024 at by Insider Monkey Staff

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