After an ugly 2018, fears persist that a recession and a global economic slowdown are just around the corner. Whether the jitters are justified or not, no one knows. But if keeping it conservative sounds like the tune to play right now, dividend-paying stocks can help.
This month, three of our Foolish contributors picked…
Home Depot (NYSE:HD), Six Flags Entertainment (NYSE:SIX), and General Motors (NYSE:GM) as being worthy of your consideration. After a generous dividend hike from the home-improvement giant, and with the fat yields that the beaten-down theme park operator and forgotten automaker are paying, each of these stocks is worth a look.
The best paycheck is a growing paycheck
Nicholas Rossolillo (Home Depot): The U.S. housing market — along with global economic growth expectations, U.S. consumer retail purchases, and the stock market — took a hit at the close of 2018. The “sky is falling” mentality barely dented Home Depot, though. The world’s largest home-improvement chain notched a 10.6% year-over-year increase in sales during the holiday shopping period.
Even better than the headline number was the bottom line. Earnings per share increased 37.5% during the fourth quarter and 33.5% for the full fiscal year ending February 3, 2019. As Home Depot continues to invest in its online and physical store selling strategy, it expects its results to continue climbing higher. For the new year, management anticipates same-store sales (which measures the number of sales and customer ticket size per location) to grow 5%. Not too shabby for a retail chain as big as Home Depot.
But this is an article about dividends, not stock growth. Nevertheless, Home Depot is using its expanding war chest to reward shareholders, too. During the fourth quarter, management announced a 32% increase to the quarterly dividend, good for a 2.9% annualized yield as of this writing. A new $15 billion share repurchase program was also announced, a cashless return to owners of the stock that helps boost the amount of profit per share owned.
Home Depot isn’t the highest-dividend-paying company out there, but that’s OK. The best paycheck is one that increases every year, and a growing bottom line that could support more share appreciation wouldn’t be a bad thing either. Thus, I say Home Depot is worth a fresh look if you’re into dividends…
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