Investing in dividend stocks is a preferred method for those looking to enjoy a passive income stream in retirement. Of course, there’s plenty of market uncertainty right now that could dissuade investors from this group. That said, there’s always pockets of the market with strong fundamentals, and I think certain dividend stocks can still provide long-term investors with stability and security.
I’m focusing on companies that consistently raise their payouts. Dividend growth is an important factor to consider. Additionally, the companies on this list all have strong fundamentals, and are among the steadiest blue-chip names I’m considering for the long-run.
Of course, when it comes to dividend investing, it is important to know which stocks to buy and when. Few companies have proven that they can handle inflation well, and with a potential recession on the horizon, defensiveness is an important attribute to consider. Thus, it’s not all about the dividend yield – investors will need to take a more holistic view of their dividend stocks, to ensure a better understanding of their risk profile moving forward.
With that said, here are three dividend stocks I think investors should focus on right now.
Rio Tinto (RIO)
At the top of my list of dividend stocks to buy is Rio Tinto (NYSE:RIO). A well-known name among dividend-paying companies, RIO stock pays investors a current yield of more than 7%.
Currently, RIO stock is up approximately 25% over the past six months. I think this trend will ultimately continue. That’s because, while Rio Tinto recently reduced its dividend due to a slowdown in China, its dividend of $4.92 per share still far exceeds its peers. Additionally, even when investors factor in potentially lower profits amid slowing Chinese demand, Rio’s solid dividend distribution remains juicy.
Rio’s operational performance has also been solid, as is its valuation. With free cash flow of $9 billion, Rio Tinto has plenty of room to continue to pay its high yield. Additionally, the company’s core metals and materials mining business is evergreen. Demand for the key metals Rio Tinto produces will only grow over time, as electrification and green energy trends continue to dominate.
Additionally, once China fully reopens and global demand stabilizes, we could see higher growth. Indeed, if you look at the future potential of the company, it’s staggering. Rio Tinto will likely play a major role in the development of key industries, given its exposure to lithium mining.
With plans to invest $25 billion over the next two years, Rio Tinto is projected to provide investors with significant revenue growth, and thus higher dividends. Goldman Sachs (NYSE:GS) has a buy rating on the stock, and believes the company has a compelling relative valuation as compared to its peers.
One stock that can outperform all energy stocks is Chevron (NYSE:CVX). That’s partly due to the fact that Chevron recently increased its dividend by 6% following record earnings, now paying out $1.51 per share.
Chevron investors enjoy a dividend yield of 3.9%, and have enjoyed these dividends for 37 consecutive years. That sort of stability and growth over time is what I’m looking for in a top dividend stock to buy.
Besides its stable financials and consistent dividends, Chevron has attracted a lot of investor interest due to its buyback program worth $75 billion. The buyback will come into effect onApril 1. Notably, Berkshire Hathaway (NYSE:BRK-B) is the single largest shareholder in the company, a positive factor that requires no discussion whatsoever.
In its recent quarterly results, Chevron announced a profit of $35.5 billion for 2022, which is a record year. With oil prices seeing strength, it’s likely Chevron will continue to pump out record profits. And even if oil prices decline, there’s ample financial flexibility with this stock to handle a downturn.
Coca Cola (KO)
If you are looking for a blue-chip, reliable dividend stock to invest in, Coca-Cola (NYSE:KO) is a good pick.
The company provides investors with a dividend yield of over 3%. And, like other names on this list, Coca-Cola is also a dividend aristocrat.
Coke has paid dividends consistently for 61 years, enticing some of the greatest dividend investors of all time to own this stock. In fact, Warren Buffet has been a long-term investor in the company, receiving a massive dividend payment each and every year.
One of the key reasons I think Buffett likes Coca-Cola is the fact that this is one company that can survive any market environment. If another pandemic or major recession takes hold, Coca-Cola will be able to weather the storm. It’s a highly-reliable stock investors can simply buy and forget about.
Additionally, Coca-Cola is no longer just a beverage company, diversifying into healthy snacks. A well-known name with a long-standing history, Coca-Cola is a stock that will add value to your portfolio. Do not expect the stock to show major upside anytime soon, but it will stay steady over the near term. In this market, that’s the kind of dividend stock investors should be looking for.
On the date of publication, Vandita Jadeja 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.