Inflation, central bank policy tightening, and the escalating war between Russia and Ukraine have all been severe headwinds for the global economy since the start of 2022, putting pressure on the secular, 13-year bull market in US markets.
While lowering its growth forecast for the United States last week, Goldman Sachs warned the likelihood of a recession in the coming year may be as high as 35 percent, owing to rising oil costs and the consequences of the Ukraine conflict. According to Bank of America, the likelihood of an economic slump is low right now but will increase next year. It’s difficult to choose the correct companies for your retirement portfolio in this very unpredictable climate, especially when a dramatic slowdown in economic development looms. Buying solid dividend growth stocks, on the other hand, is a tried and true approach that many retirees have used to ensure a steady stream of income.
Companies that boost their cash dividends quarter after quarter show that they can provide consistent and predictable income for investors not just in good times but also in bad times.
Dividend growth stocks can also help investors beat inflation. Unlike bonds, which pay a fixed principal plus interest, these firms’ shares give regular pay raises to shareholders in the form of growing dividends to improve purchasing power.
We’ve compiled a list of three stocks to help you make a consistent income.
1. Texas Instruments
• 5-Year Average Dividend Growth: 21%
• Dividend Yield: 2.76%
• Payout Ratio: 50%
Texas Instruments (NASDAQ: TXN) manufactures electronic components, such as critical microchips, for a variety of sectors. Its stable long-term market position and consistent dividend history make it a safe bet for your retirement fund. The stock ended at $166.72 on Monday.
The chip behemoth from Dallas is the world’s largest manufacturer of analog and embedded computing circuits, which are used in everything from household appliances to space technology. TI has the greatest reach in the market, resulting in a highly diversified revenue stream. This means the firm will be able to withstand a downturn better than its competitors. The company’s dividend program, which is expanding each year, is the largest draw for long-term investors. TI presently pays $1.15 per share quarterly, with an annual dividend yield of roughly 3%, and has risen 21 percent each year over the last five years.
With a payout ratio of more than 50%, TI is well-positioned to increase its dividend in the foreseeable future. Furthermore, considering the increasing quantity of electronics being installed in automobiles and machines, the company’s long-term growth prospects are promising. In addition, the corporation reported strong results in January.
2. CN Rail
• 5-Year Average Dividend Growth: 11%
• Dividend Yield: 1.85%
• Payout Ratio: 35%
Canadian National Railway (NYSE: CNI), Canada’s largest railroad firm, is another good option for increasing dividend income. CNI is particularly appealing since it has a distinct competitive edge inside the North American economy. The stock ended at $123.50 on Monday.
CN, headquarters in Montreal, moves more than C$250 billion ($195 billion) in commodities yearly, ranging from oil and energy items to consumer goods, through a rail network spanning Canada and mid-America, linking the Atlantic, Pacific, and the Gulf of Mexico. CNR is a safer long-term option because of its vast economic moat.
Strong demand for commodities including metals, timber, and oil helped CN turn a profit in 2021, nearly doubling its earnings from the previous year when the COVID-19 epidemic hit. CN Rail pays $0.73 per share quarterly, and its stock has increased by nearly 11% yearly on average over the last five years. In January, the corporation also reported higher-than-expected earnings.
• 5-Year Average Dividend Growth: 18%
• Dividend Yield: 2.47%
• Payout Ratio: 50%
During market downturns, shares in global food corporations can provide a safe haven for long-term investors. Their low-cost meal alternatives, worldwide reach, and earnings stability are just a few of the advantages that shield them from the tremendous volatility that may befall high-flying growth firms in uncertain times.
Starbucks (NASDAQ: SBUX), a multinational coffee company, is one such income investment that we suggest. On Monday, it finished at $79.29. The stock of the Seattle-based specialty coffee and food purveyor is presently under selling pressure as a result of growing expenses and the company’s second-largest market, China, where the local government is still imposing lockdowns to avoid COVID infections.
However, we believe that this negative period is an excellent purchasing opportunity, giving investors the opportunity to invest in a firm with strong long-term growth potential and a strong dividend track record. The company’s approach of maintaining low pricing in order to acquire market share is sound since it can pay off in the long run. SBUX sales are still high in North America, and it’s only a matter of time until they rebound in China. Despite the fact that profits did not meet projections in the previous quarter, the firm is still profitable.
Another reason to invest in Starbucks is the company’s commitment to distributing more income to shareholders through dividends. The stock now pays a quarterly dividend of $0.49 per share, resulting in a 2.47 percent annual yield. During the last five years, its payment has increased by around 18% every year.