When investors are in a risk-on mood, they often gravitate to growth-oriented technology stocks. When investors are in a risk-off mood, however, they often rotate out of tech and into other areas. High-yielding dividend growth stocks is one area that often sees increased interest when fear is on the rise.
Three dividend growth stocks you’ll want to look at if you are considering shifting out of tech are AbbVie (ABBV +0.56%), Procter & Gamble (PG +0.77%), and Enterprise Products Partners (EPD +0.18%). Here’s why each one is worth buying and holding for the long-term.
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AbbVie is a Dividend King drug maker
Pharmaceutical giant AbbVie was spun off from Abbott (ABT 0.42%) and, for tracking purposes, retains Abbott’s dividend record. Because AbbVie has continued to increase its dividend since its spin-off, it is a Dividend King. That means it has over five decades worth of annual dividend increases, making it a highly reliable dividend payer.
AbbVie also has an attractive 3.2% dividend yield. For reference, the S&P 500 (^GSPC +0.37%) is yielding around 1.1%, and the average pharma stock yields 0.7%. While investors have been concerned about generic competition for AbbVie’s Humira, new immunology drugs Skyrizi and Rinvoq appear to be even more effective. That bodes well for the future and doesn’t even account for the company’s strong positions in oncology, neuroscience, and aesthetics.
Today’s Change
(0.56%) $1.20
Current Price
$215.70
Key Data Points
Market Cap
$379B
Day’s Range
$215.70 – $220.01
52wk Range
$181.72 – $244.81
Volume
5.4M
Avg Vol
6.7M
Gross Margin
70.58%
Dividend Yield
3.14%
With an attractive yield, a great dividend history, and a still-strong position in the drug sector, AbbVie could be a good option for investors exiting technology stocks. A $10,000 investment will let you buy around 45 shares of the stock.
Procter & Gamble is a Dividend King consumer staples stock
Another Dividend King to look at today is Procter & Gamble, one of the world’s largest consumer staples companies. Consumers will continue buying the toilet paper, deodorant, and dish soap that P&G sells regardless of the stock market environment or economic conditions. Its products are viewed as necessities, and the company’s focus on innovation and product superiority tends to keep consumers loyal to P&G’s brands.
That said, P&G’s industry-leading position often affords it a premium on Wall Street. However, a recent drawdown has pushed the company’s price-to-sales, price-to-earnings, and price-to-book ratios below their five-year averages. That suggests that this industry-leading business is attractively priced right now. Notably, the 3% dividend yield is well above the industry average of 2%. A $10,000 investment will allow you to buy around 70 shares of P&G.
Today’s Change
(0.77%) $1.10
Current Price
$144.50
Key Data Points
Market Cap
$334B
Day’s Range
$143.55 – $144.64
52wk Range
$137.62 – $170.99
Volume
206.3K
Avg Vol
9.7M
Gross Margin
50.88%
Dividend Yield
2.97%
Enterprise isn’t a Dividend King, but it’s working on it
Enterprise has “only” increased its distribution annually for 27 consecutive years, falling well short of the 50 needed to be a Dividend King. But don’t count this reliable income stock out, since its 27-year streak means this energy business has basically increased its distribution every year since its initial public offering.
While the energy sector can be volatile, Enterprise is really just a boring toll-taker. It charges fees for the use of its massive portfolio of North American energy infrastructure assets, such as pipelines. The volume of energy moving through its system is more important than the price of that energy. Given the importance of oil and natural gas to the global economy, demand for Enterprise’s services tends to remain strong throughout the energy cycle.
Enterprise Products Partners
Today’s Change
(0.18%) $0.07
Current Price
$39.54
Key Data Points
Market Cap
$85B
Day’s Range
$39.26 – $39.71
52wk Range
$30.01 – $40.16
Volume
171K
Avg Vol
4.5M
Gross Margin
13.45%
Dividend Yield
5.55%
However, the big draw with Enterprise will likely be its ultra-high 5.5% distribution yield. The master limited partnership (MLP) has an investment-grade credit rating and covers its distribution with distributable cash flow by 1.7x, so there’s little risk of a cut. Continued slow-and-steady distribution growth is far more likely. A $10,000 investment will get you 250 units.
If tech stocks have you worried, lean into boring dividends
When investors look to reduce risk, they often shift into dividend stocks. But don’t just choose any dividend stock. Pick ones with strong businesses and long histories of rewarding investors with growing income streams. That’s exactly what you’ll get with AbbVie, P&G, and Enterprise, making them attractive options if you are rotating out of tech stocks.
