Dividend stocks can provide investors with some excellent recurring cash flow. The downside is that most of them pay a dividend every three months. That means cash isn't coming in every month. But there's a way around that -- by investing in at least three different dividend stocks with different payment schedules.
Three stocks that can provide you with above-average payouts and that together can ensure you're collecting cash every month are Cardinal Health (CAH +0.61%), General Mills (GIS 0.45%), and Duke Energy (DUK +0.39%). Here's why all three dividend stocks can be good additions to your portfolio right now.
1. Cardinal Health
Cardinal Health helps distribute pharmaceuticals and medical products, and so its business benefits from consistently strong demand. The downside is that its margins aren't always great, with the company reporting an operating profit of $1.6 billion over the trailing 12 months on revenue totaling more than $193 billion -- that's an operating margin of less than 1%.
NYSE: CAH
Key Data Points
However, from a cash-flow perspective, the business looks to be in fine shape with Cardinal Health bringing in $2.8 billion in free cash over the same time frame. That's more than enough to cover its dividend payments, which cost the company $541 million.
Although the company's bottom line looks troubling as it has been in the red of late, that's because Cardinal Health incurred a $709 million goodwill impairment charge in relation to its medical segment last quarter. In the past, it also incurred expenses related to opioid-related litigation. One-off expenses haven't been uncommon for Cardinal Health, and that's why looking at cash flow can be more helpful.
The stock's 2.8% yield is high (the S&P 500 averages a yield of 1.7%) and Cardinal Health makes payments typically every January, April, July, and October.
2. General Mills
What makes General Mills an attractive long-term investment to hang on to is that the business has over 100 brands in its portfolio that reach people all over the world. Cheerios, Betty Crocker, and Pillsbury are just some of the names that consumers are likely to know. Strong brands are what help give a company a strong competitive advantage over other businesses.
NYSE: GIS
Key Data Points
General Mills is also highly profitable, averaging a profit margin of 15% over the past four quarters. Its payout ratio is a modest 44%, leaving a good margin of safety there for the company to be able to pay its dividend even if costs increase. The company has been increasing prices amid inflation, and it expects to achieve organic net sales growth of 10% for its fiscal year 2023 (which ends in May).
The company also pays an attractive dividend that yields around 2.7%. It makes payments at the start of every February, May, August, and November.
3. Duke Energy
Utility provider Duke Energy rounds out this list and its 4.1% dividend yield is higher than that of both General Mills and Cardinal Health. It is one of the largest energy holding companies in the country, providing electricity to 8.2 million customers. It also has 1.6 million natural gas customers. With a history that goes back 150 years, Duke is a well-known name in energy.
NYSE: DUK
Key Data Points
The company is coming off a strong year in 2022 in which adjusted earnings per share of $5.27 was up 6% from the previous year as the business benefited from higher volumes. And Duke continues to expect to generate between 5% and 7% earnings growth through 2027.
At 84%, the company's payout ratio is a tad high but that's not uncommon for utility companies as they normally are asset-heavy and incur high depreciation costs. And given the reliability and relative stability of its business, plus its continued growth, investors shouldn't be too worried about its dividend.
Duke Energy makes dividend payments every March, June, September, and December. Together with Cardinal Health and General Mills, it rounds out a trio of stocks that can deliver cash flow to your portfolio every month.
