3 Dividend Kings to Buy for Safe Dividend Growth: October 2023

Stocks to buy

With the market just demonstrating the possibility of a downcycle in the future, investors may want to target dividend stocks. Fundamentally, the case for passive income is rather obvious. Companies that have enough profits left over tend to operate reliable, predictable businesses. These qualities can help them weather the storm better than many purely growth-oriented enterprises.

And within this viable framework stands an elite category: dividend kings. Similar to dividend aristocrats but at a much higher level, the crown jewels of the passive income sphere have a track record of 50 years or more of consecutive dividend growth. To be clear, no guarantees exist in the capital markets. However, the kings represent as much of a sure thing as is possible.

Also, for full disclosure, dividend stocks generally tend to be boring affairs. Unless you’re already rich already, you’re probably not going to be a billionaire investing exclusively in passive-income providers. However, it’s likely that these enterprises should keep your nose clean. And on that note, below are three dividend kings to consider.

Dividend Stocks: Walmart (WMT)

Source: Ken Wolter / Shutterstock.com

Synonymous with the dramatic rise and dominance of the big-box retail concept, Walmart (NYSE:WMT) may not be the sexiest entity available. What’s more, it’s not immune to criticism. However, for all the turbulence that the company has gone through – along with serious concerns tied to consumer sentiment – WMT has performed well. Since the January opener, shares moved up over 13%.

Right there, Walmart makes a solid case for dividend stocks to buy. On a fundamental note, the company should march steadily higher irrespective of consumer behavioral shifts. Sure, a move away from discretionary purchases may impact profitability, especially if we’re talking about higher-margin electronics. Nevertheless, with Walmart’s one-stop-shop approach, it can soak up rising demand for essential products.

As for passive income, WMT only offers a forward yield of 1.4%. That’s rather modest, I agree. However, you’re also dealing with a payout ratio of only 32%. Therefore, yield sustainability shouldn’t be an issue.

Also, analysts rate WMT a strong buy with a $179.82 target, implying over 10% upside.

Colgate-Palmolive (CL)

Source: monticello / Shutterstock.com

One of my favorite dividend kings, Colgate-Palmolive (NYSE:CL) should enjoy cynically consistent demand, even under a downcycle. Thanks to its myriad toothcare products – from brushes to toothpaste and other maintenance and preventative solutions – Colgate practically commands a permanently relevant business. You see, consumers might not want (or be able to) go to the dentists’ office. But at-home toothcare is relatively simple and cheap.

Also, proper oral hygiene isn’t just for aesthetics – although that is very important. For instance, you don’t want to go into a critical job interview with bad hygiene. Even more importantly, proper selfcare contributes to overall health and wellbeing. Again, for just a small expenditure, Colgate products can go far. Thus, its current 7% year-to-date loss should be a long-term discount.

On the passive income side, CL offers a forward yield of 2.62%. No, it’s not the most generous yield among dividend stocks. However, it’s a trustworthy one considering that management will not want to give up its 61 year consecutive dividend growth track record.

Lastly, analysts peg CL a moderate buy with an $80.77 target, implying just over 10% growth.

Genuine Parts (GPC)

Source: Shutterstock

Arguably the riskiest idea on this list of dividend kings, Genuine Parts (NYSE:GPC) will probably repel investors that would be most attracted to trustworthy passive income providers. While the company focuses on replacement parts for the automotive and industrial industries – a relevant service – the market remains unconvinced. Since the start of the year, GPC slipped 24%.

Again, it’s perfectly understandable why some investors would be freaked out about the red ink. However, the fundamentals for Genuine Parts intrigue. Specifically, data from S&P Global Mobility demonstrated that the average of passenger vehicles on U.S. roadways hit 12.5 years, a fresh record. In other words, consumers aren’t buying replacement vehicles; instead, they’re buying replacement parts.

Adding to the bullish narrative, Genuine Parts features a forward yield of 2.96%. Also, the payout ratio is very reasonable at 38.4%. Finally, analysts rate GPC a moderate buy with a $154.38 target, projecting upside of over 20%.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

Articles You May Like

Next Bull Run: 3 Stocks Set to Soar in the Coming Rally
Don’t Wait Any Longer: 3 Stocks You’ll Wish You Bought Sooner
3 Underappreciated Tech Stocks With Massive Long-Term Potential  
Buy SoFi Stock Before It Sizzles Off the Market’s Back Burner
3 Tech Stocks to Buy That Are Growing Dividends at a High Rate