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Given the current economic climate, it’s understandable that dividend stocks are among the most popular investments. By owning them, you don’t give up the opportunity for long-term appreciation, but you also earn instant passive income from steady quarterly payments. Dividend stocks also tend to be financially strong. That’s because management teams in dividend stocks have extra incentive to maintain positive and growing profits every year. These characteristics are very attractive in times of economic uncertainty.
However, not all dividend stocks are worth incorporating into your income portfolio. There are winners and losers in this area of investing, just like in any other area of the market. With that in mind, let’s take a look at his three standout options currently on sale at attractive prices.
1. Garmin
garmin (GRMN 0.54%) is a technology company focused on revenue growth, but it still pays a solid dividend, with a current yield of over 2%. We have an outstanding track record as a specialist in GPS equipment. Third-quarter revenue increased 12% year-over-year as four of the five major segments set sales records. The performance demonstrated the power of Garmin’s diversified revenue streams, as gains in areas such as fitness trackers and smartwatches offset slower growth in the marine and aviation divisions.
Garmin generates strong cash flow, which management has focused on generating further growth, primarily through areas such as research and development. This is because stable product launches are necessary to lay the foundation for increased revenue. However, its high profit margin (more than 21% of last quarter’s sales) also leaves room for generous dividend payments to strengthen shareholder returns in the long term.
2. McDonald’s
mcdonalds (MCD -0.23%) The company is not only one of the most profitable companies in the fast food industry; It is also one of the most profitable companies on the stock market. This restaurant owner’s operating margin recently exceeded his 45% of sales thanks to strong demand, rising prices, and a steady flow of franchise fees, royalty fees, and rent from partners. .
Certainly, this business faces some challenges. McDonald’s reported a slight decline in foot traffic in its core U.S. market last quarter, but investors hope this is just a temporary dip in the company’s broader positive growth story.like a rival Chipotle Mexican Grill is increasingly targeting the drive-through channel, aiming to take share from industry leaders as well.
But McDonald’s has dealt with many such challenges in its history, as evidenced by its 47 consecutive years of annual dividend increases. The dividend for 2024 is expected to be 10% higher than last year, making the overall return particularly attractive for shareholders.
3.Costco Wholesale
costco wholesale (Fee 1.43%) differs from traditional retail because most of its revenue comes from membership fees rather than product markups. Wholesale Club makes essentially nothing from its large merchandise sales base. However, Costco remains a cash-rich company, as evidenced by management’s recent decision to send out $7 billion worth of special dividends to distribute to shareholders. After this payment, the cash balance should still be well over $10 billion.
You may prefer more steadily increasing dividend payments to these sporadic one-time checks. But Costco’s investors could take the company’s leeway in this area, given the company’s impressive track record of growing market share in the highly competitive retail industry. That’s why when you look back in a few years, there’s a good chance you’ll be glad you included this dividend in your portfolio.
Demitri Kalogeropoulos has held positions at Chipotle Mexican Grill, Costco Wholesale, and McDonald’s. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Costco Wholesale, and Garmin. The Motley Fool has a disclosure policy.
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