In times of tightening financial conditions, many investors are choosing to focus on stable stocks rather than high-growth companies. In this context, companies that pay dividends to their shareholders are likely to attract the attention of fund managers.
What are Dividends?
Dividends refer to the distribution of a company’s earnings to its shareholders. Not all shareholders are eligible to receive dividends equally. This is because shareholders can own different classes of a company’s stock, hence they receive different dividends as well.
However, shareholders who own common shares of a company are usually eligible for dividends, assuming they bought the stock before the ex-dividend date.
But it is important to note that not all companies pay dividends. While most well-established companies pay dividends on a regular basis, there is no law that makes paying dividends mandatory.
The distribution of dividends is determined by the company’s board of directors, with shareholders using their voting rights to approve them. There are several types of dividends including cash, stock, and property dividends, among others.
What are Important Dividend Dates?
Dividends are typically distributed following a certain schedule, with associated dates determining which investors are eligible to receive the payments.
The first important date is the announcement date – the day the company announces dividends that are set to be authorized by the shareholders.
The ex-dividend date is the date on which the qualification for dividends expires. In other words, if the ex-dividend date is set for April 20, investors who buy the stock on or after that date are NOT eligible to receive dividend payments. In contrast, shareholders who purchased the stock before April 20 will qualify for dividends.
The record date is a date determined by the company on which shareholders must be on the company’s books to receive the payment. Ultimately, the company distributes the dividends on the payment date.
What is Dividend Yield?
The dividend yield represents the annual dividend payment displayed as a percentage of the current stock price. This financial ratio is calculated by dividing the annual dividend per share by the stock price per share.
Investors and shareholders often look at the dividend yield to evaluate potential income in the future if they buy the stock at the current market price.
Now that we know more about dividends and how they work, here are 7 safe dividend stocks to buy now:
It is the second-largest hardware retailer in the United States and in the world, behind The Home Depot. Lowe’s manages nearly 2,200 home improvement and hardware stores in North America.
Based in Mooresville, North Carolina, Lowe’s was founded in 1921 when Lucius Smith Lowe opened the first store named North Wilkesboro Hardware.
The company offers numerous different home improvement products for lawn and garden, kitchen, bath, hardware, flooring, seasonal/outdoor living, lightning and electrical products, tools, paint, and others.
The annual dividend yield is 1.6% based on a quarterly dividend set at $0.80.
Johnson & Johnson (NYSE: JNJ) or just J&J, is an American holding company that develops, manufactures, and sells healthcare products. The company’s operations are divided into three main segments including Consumer Health, Pharmaceutical and Medical Devices.
Founded in 1886, J&J is one of the most valuable companies in the world and is currently ranked at 36th place on the 2021 Fortune 500 list of the
largest U.S. companies by total revenue. It is also one of just two AAA-rated U.S. companies, along with Microsoft Corp.
J&J manages 250 subsidiary businesses and has operations across 60 countries around the world. Some of its most famous products include Tylenol drugs, Band-Aid bandages, Johnson’s Baby products, Acuvue contact lenses, and Neutrogena products, among others.
In November, J&J announced plans to split its business into two public companies dedicated to consumer products and pharmaceuticals.
The annual dividend yield is 2.3% based on a quarterly dividend set at $1.06.
Target Corp. (NYSE: TGT) is a merchandise retail company offering general merchandise and food such as apparel, accessories, beauty and household products, home furnishing and decor products, food and beverage, and more.
The company sells products through its stores and online business. It is one of the largest retailers in the U.S. and a component of the benchmark S&P 500 index.
As of last year, Target manages 1,926 stores in the U.S. and is ranked 37th on the 2020 Fortune
500 list of the largest U.S. based companies by total revenue. Some of its best-known brands include Art Class, Threshold, JoyLab, Auden, Ava & Viv, Smartly, Mondo Llama, and Colsie, among others.
The annual dividend yield is 1.48% based on a quarterly dividend set at $0.90.
Microsoft (NASDAQ:MSFT) is a global technology company developing a wide array of products and services. The company is best known for its software products including Microsoft Windows operating systems, Microsoft Office, Internet Explorer, and Edge browsers, but also for harwade products including Xbox gaming consoles and Microsoft Surface touchscreen PCs.
Microsoft’s primary business segments are Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.
The tech giant was founded by Bill Gates and Paul Allen in 1975. The duo initially developed BASIC interpreters for the microcomputer Altair 8800. Gates and Allen then focused on developing operating systems, releasing MS-DOS in 1981, before developing and releasing Microsoft Windows in 1985. A year later, the company launched an initial public offering (IPO), making three billionaires and roughly 12,000 millionaires within the company.
Since then, Microsoft has focused on numerous different areas apart from operating systems and made several major acquisitions including LinkedIn for $26.2 billion and Skype for $8.5 billion.
The annual dividend yield is 0.88% based on a quarterly dividend set at $0.62.
Apple (NASDAQ:AAPL) is a technology company that designs, develops, and sells hardware and software solutions and services. It is the largest company in the world by market capitalization and the largest information technology company by revenue, as well as the second-largest phone maker in the world.
Apple’s most successful products include the iconic iPhone, Mac, iPad, Apple Watch and
other wearables, the iOS operating system, and a number of other products and services.
The tech behemoth was founded by Steve Jobs, Ronald Wayne, and Stephen Wozniak in 1976, with its headquarters in Cupertino, California. The trio was developing Wozniak’s Apple I personal computer. The product was incorporated as Apple Computer in 1977, with the following version of the PC, Apple II, becoming the best seller.
Apple made its public debut in 1980 and has found only success since.
Apple’s main competitors include other tech giants including Google owner Alphabet, Microsoft, Meta, and Amazon.
The annual dividend yield is 0.53% based on a quarterly dividend set at $0.22.
Public Storage (NYSE:PSA) is a global self-storage company based in Glendale, California. The company build its first self-storage facility in 1972 and today it is the largest self-storage services provider in the United States, with more than 2,200 locations across the U.S. and Europe.
The company owns over 142 million net rentable square feet of rentable real estate, plus an
additional 28 million rentable square feet of commercial and industrial space from its PS Business Parks interest.
The company is one of the largest landlords on the globe. The company is managed as a real estate investment trust (REIT), focused on purchasing, developing and running self-storage locations in the U.S. and beyond.
The company was founded by B. Wayne Hughes and Kenneth Volk Jr. who raised funding from real estate limited partnerships to grow its business to 1,000 locations by 1989. The company revamped and became a publicly traded REIT in 1995.
The annual dividend yield is 1.93% based on a quarterly dividend set at $2.00.
Procter & Gamble (NYSE:PG) is a U.S. consumer goods company offering a line of products and services for kitchens, rooms, bathrooms, laundry rooms, and more.
The company’s best-known products include Crest, Tide, Oral-B, Charmin, Tide, Gain, Febreze, and many others.
Procter & Gamble was founded by William Procter and James Gamble in 1837, based in Cincinnati, Ohio. The company specializes in personal health and care, beauty, baby care, hair care, grooming, and family care products, among others.
In 2014, P&G sold around 100 brands from its portfolio to focus on the remaining 65, which accounted for approximately 95% of its profits.
Two years ago, the company said it will change its operations to make them climate-neutral by 2030, extending its earlier target to cut emissions in half over the following 10 years.
The annual dividend yield is 2.32% based on a quarterly dividend set at $0.91.
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