April was a tough month on the market. The S&P 500 index dropped 4% last month, erasing some of the big gains from the past several months. Here in early May, the market is now up 8%, down from an 11% gain in the first four months of 2024.
Long-term investors look forward to volatility like that because it sparks discounts that have nothing to do with the long-term outlook of a given company.
With that in mind, let's look at a few large dividend stocks that seem like no-brainer buys right now.
1. Procter & Gamble
Procter & Gamble (PG 1.21%) stock has fallen out of favor on Wall Street through the tech-fueled rally this past year. Shares have inched up by just 5% since early 2023 versus a 25% spike in the wider market. P&G might not bounce right back, but that's no reason to ignore this high-performing business.
Consider how well the consumer staples giant has been doing through this tough selling environment for its industry. P&G in late April revealed that organic sales rose 3% in the fiscal third quarter, beating peers like Kimberly Clark. Shoppers are spending less aggressively on essentials like laundry detergents and beauty care, sure, but P&G is still finding ways to boost its sales volumes, prices, and earnings.
Management raised its short-term earnings outlook in April and affirmed plans to deliver as much as $15 billion to shareholders through dividends and stock buybacks in 2024. Choose to have those dividends automatically reinvested, and you can amplify your returns in holding this stock over the next several years.
2. Walmart
Winners tend to keep right on winning, and that's clear enough from Walmart's (WMT 1.34%) latest operating results. The world's leading retailer recently posted accelerating growth results, rising margins, and gushing cash flow to kick off its fiscal 2024 year.
The stock has responded by rising in 2024, but there are likely more gains ahead for patient shareholders. Consider how Walmart operating income is headed back above 5% of sales from 3% during the post-pandemic slowdown last year.
The company is pushing into higher-growth tech avenues as well, including with an e-commerce business that just crossed the $100 billion annual revenue mark. Walmart's digital advertising business is providing a nice lift to both sales and earnings growth, to boot. Toss in a well-covered dividend that recently was hiked by 9% and you've got a recipe for excellent long-term returns.
3. Coca-Cola
Coca-Cola (KO 1.55%) is one of the highest-yielding dividend stocks on the Dow, delivering a 3% payout to shareholders as soon as they purchase the stock. You can expect much higher income over the years, though. The beverage giant controls one of the more dominant market positions in any industry, after all, which has helped it fund over 60 years of consecutive dividend raises.
Sales growth has been strong lately, even if the company has had to rely on price increases to drive most of those gains. Organic sales rose 11% this past quarter thanks to 1% higher volumes and a 10% price hike. The stock's underperformance this year is mostly due to the fact that investors are worried that growth will continue decelerating as the pace of price increases stalls.
Smart investors can look past that short-term challenge to pick up this attractive stock at a discount. Coke has some big growth avenues available to it, including new pushes into energy drinks, alcoholic beverages, and sparkling waters. It is among the most profitable and cash-rich businesses on the market, too.
For the price of about 6 times sales you can own that dominant business and gain exposure to that growth potential, plus enjoy an immediate income stream of 3%. That's a great deal.
