Best Stocks that Pay Quarterly Dividends
We’ve covered the basics of how to invest in dividend stocks, and we’ve outlined the best stocks that pay monthly dividends; but most companies (and some of the best) pay their dividends quarterly. This article will look at those quarterly paying dividend stocks and try to identify the best ones for your portfolio. So, let’s dive in…
What are Dividend Stocks?
Before we begin, let’s quickly run through the basics of dividend stocks.
A dividend is a form of shareholder return, usually in the form of cash, which is paid consistently every month, quarter, or year depending on that company’s preference.
The amount you receive will also depend on that company’s preference. Usually, a company that pays a smaller dividend (like Apple), is choosing to invest more money into growing the company’s profits. On the other hand, slower growing companies like Coca-Cola pay a larger yearly dividend and invest less capital in R&D.
Benefits of Dividend Stocks
So, what is the big appeal with dividend investing?
Dividend stocks have been around as long as the global stock market. They are a great way for investors to earn a bit of extra cash each month, without lifting a finger – true passive income. But it’s important to choose the right dividend stocks for you and your portfolio.
When you look at the benefits of this investment strategy, it’s clear to see why it carries such popularity. Here are some key benefits:
Predictable Income – Dividend stock’s main appeal to investors is the consistent, predictable income that you can rely on. This extra income can be used to supplement your retirement or be saved for a rainy day. It can even be reinvested into more dividend stocks, which will compound to further increase your passive income.
Lower risk – If you choose to invest in dividend stocks, you will find yourself buying stocks in bigger, more-established companies. These kinds of companies tend to have much lower risk levels associated with them than typical growth stocks like Tesla or Meta. As a result, your portfolio will see much less volatility and much less risk of losing money when market sentiment changes.
Profit without selling – Dividend investors can generate profits without the need for constant buying and selling. This gives a peace of mind mentality, knowing you are making money without all the extra work involved in constant stock traders.
What to Look for in Dividend Stocks
- Dividend Yield – The dividend yield represents the income you can generate from dividend stocks per year. For example, if you buy 100 shares in Microsoft at $1 per share, and they have a dividend yield of 5%, you can expect $5 in dividend income per year.
- Pay-out Ratio – The pay-out ratio tells you what percentage of a company’s earnings is being paid out to shareholders in the form of dividends. A lower ratio is usually better, something like 70% or less.
- History of Increasing Dividends – One sign of a good dividend stock is a long-standing history of increased dividends. This not only shows that the company was able to continue paying its dividend throughout several global and economic crises, but also was able to increase that dividend year in year out.
- Strong Balance Sheet – When assessing dividend stocks, it’s always important to look deep at the company paying the dividend. What does their balance sheet look like? Are they up to their necks in debt, or have cash to spare?
- Increasing Revenues – Dividend stocks should be considered only with a long-term attitude. This means choosing companies with consistent, increasing revenues. If the company has very volatile revenues (up one year, down the next), it may be a sign of trouble.
Best 5 Dividend Stocks
Chevron – 3.36%
Chevron is an American energy company specializing in the production of oil and gas products. Founded in 1879 and headquartered in San Ramon, California, Chevron is active in more than 180 countries around the world. They currently offer a respectable dividend yield of 3.36%.
Coca-Cola – 2.95%
Coca-Cola is an iconic brand that we all know and love. Since 1892 the Coca-Cola company has been providing the world with its well-known sugary drinks, plus a wide portfolio of other non-alcoholic beverage products.
Coca-Cola has an excellent track record and long history of paying and increasing its dividend – currently sitting at 2.95%.
Cisco Systems – 3.22%
Cisco is an American tech company providing digital communication services across the globe. Known for providing a leading VPN service, and an international media service Webex, Cisco is backed by a strong balance sheet and the potential for huge growth in the future. Dividend sits at 3.22% right now.
Unilever – 3.55%
Unilever is a British consumer goods company operating globally from its London based HQ. The company has a vast portfolio of brands including Ben & Jerry’s, Hellmann’s, Vaseline and Domestos. Having been in operation since 1894, Unilever is another long-standing dividend payer, with a dividend yield currently sitting at 3.55%
3M – 5.3%
3M is a multinational consumer goods company specializing in the production of adhesives and health care supplies amongst other products. They currently employ around 95,000 people worldwide and have a solid set of financials to back it. 3M also pays the highest dividend on this list, currently at 5.3% per year.
Dividend stocks are a great asset to generate passive income, and these quarterly paying dividend stocks are some of the best on the market.
When putting your portfolio together, it’s important to consider the steps outlined in this article. Always spend time doing your own research, understand the company you want to invest with, and look out for any warning signs. If you do this, you will be on the right path to passive income through dividend stocks.