If you’re searching for ultra-reliable dividend stocks to buy, look no further. Investors understand that securing one’s future reliability is paramount. It’s very difficult to build a retirement portfolio without accounting for volatility and mitigating its risks. Thus, investors choose to put their capital into reliable stocks. And few asset classes are as reliable as dividend stocks overall.
First of all, firms that choose to pay a dividend tend to be stable in general. In order to pay a reliable dividend a firm requires reliable sources of capital. Second of all, those firms understand that missing a dividend payment will reduce their stock price dramatically. For that reason, companies that initiate a dividend payment are highly confident of their continued ability to do so.
Bearing all of that in mind, let’s look at seven ultra-reliable dividend stocks to buy that investors can use to secure their respective futures.
Altria (MO)
Altria (NYSE:MO) might seem like an odd choice to some with which to start a list of reliable dividend stocks. The company made its fortune and established its name in the dying cigarette industry. Cigarette sales continue to decline in the high single digits. That seemingly puts its high yield dividend at risk.
Indeed, Altria does face real risks. For one, the company is battling an illicit vaping market that continues to pull sales from its business. The company is facing declining cigarette sales and attempting to replace them with oral nicotine delivery products including snus.
Yet, Altria is also battling as it relates to its NJOY acquisition. The brands vape pods, pens, and E-cigarettes are selling well. Furthermore, Altria’s dividends payout ratio remains below 0.8 and hasn’t been reduced since 1970. It is highly unlikely that it will be reduced anytime soon as it is a primary point of attraction for investors. The current 9% yield on that dividend is like a magnet for investors and one that many should consider.
IBM (IBM)
IBM (NYSE:IBM) has emerged as one of the absolute best stocks for investors seeking a combination of strong dividend yields and artificial intelligence (AI) exposure.
The firm is strongly exposed to artificial intelligence via an AI platform and hybrid Cloud that will continue to gain it further exposure. Generally speaking, that sounds like the sort of wide-ranging opportunity that investors are likely to hear about any AI stock. Yet, it’s necessary to think about IBM in broad terms. It is one of the most deeply integrated IT firms globally. It has a presence in just about every country worldwide and employs 350,000 people.
It’s also one of the most prominent companies in relation to the emergence of quantum computing. In short, the company is broadly exposed to many of the pillars of future tech growth that investors continue to push their capital into.
That broad exposure and massive footprint will continue to provide IBM with stability. One or more of those burgeoning areas will emerge quickly and provide growth to the firm. That should result in reinvestment in either future growth or the capital will instead be pushed into its very reliable dividend which was last reduced in 1994. There are merits to either case, both of which continue to make IBM shares attractive.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) is one of the more unique potential investments for those seeking the reliability of firms that have long paid a dividend. The firm operates through two business segments that make it quite unique overall. It is part ultra-reliable utilities firm and part high potential green energy firm.
It’s also a stock that has suffered its fair share of troubles of late. The utilities side of the business was hammered by historically high bond yields that made its dividend pale in comparison. Concurrently, the renewable energy business suffered as the combination of unfavorable contract prices and rising interest rates made returns in the sector much weaker.
Bond yields are lower now and interest rates have normalized. It is widely expected that rate cuts will emerge in the coming months which should make the renewable energy business that much more attractive. As a result, NEE shares should rise. In the meantime, consider investing for its dividend which currently pays 3.7% and was last reduced in 1995.
Caterpillar (CAT)
Caterpillar (NYSE:CAT) is an important company in a sensitive cyclical portion of the stock market that is highly dependent on the health of the overall economy: the construction industry. Part of the reason that the overall economy is characterized as being ‘healthy’ is that firms can continue to charge higher prices. That’s important in understanding Caterpillar.
That’s especially true in the case of Caterpillar which recently saw its volumes decline while revenues increased beyond what Wall Street was expecting. One can easily argue that points to the sort of unhealthy inflation that we are trying to get past at this point. And thus, Caterpillar might arguably not be in such a great place.
However, it’s harder to argue against the industrial sector overall. It has proven especially resilient and outpaced the already strong S&P 500 in the early part of 2024. Industrial stocks are entering a period of strong cyclicality and Caterpillar is one of the most reliable dividend stocks to buy overall.
Albemarle (ALB)
Albemarle (NYSE:ALB) is one of the more prominent firms in connection with the lithium collapse. It’s also an ultra-reliable dividend stock having last reduced its payment all the way back in 1994.
As a result, there is an easy bullish narrative favoring Albemarle at the moment. it provides investors with reliable income with which to secure their future portfolios while also exposing them to strong upside potential. Albemarle’s share price is widely expected to rebound substantially and provide potential triple digit returns.
Yes, lithium sales are weak at the moment. However, Albemarle’s most recent earnings report shows that 2023 was overall an incredible year for the firm. Sales grew by 31% reaching highest ever levels. That resulted in earnings that were the second highest ever.
Sure, record high lithium prices in the earlier part of 2023 are responsible for the success. That’s inarguable. Yet, investors should also consider that Albemarle is entrenched in the continued growth of the EV sector and the ultimate rebound of lithium prices. It may take a while for things to swing back in its favor, but that is also a near inevitability.
Exxon Mobil (XOM)
Exxon Mobil (NYSE:XOM) stock is relatively cheap at the moment. That low pricing is one of the major reasons to consider it right now. Investors broadly understand that global tensions could send oil prices much higher in the near term. That would make the domestic production out of firms like Exxon Mobil and Chevron (NYSE:CVX) much more valuable.
Both ExxonMobil and Chevron make sense as ultra-reliable dividend stocks to consider at the moment. However, I would give the slight edge to ExxonMobil.
To some, that may seem illogical given that Chevron’s yield is higher by roughly 0.5%. Both firms last reduced their dividends all the way back in the 1980s. So both are ultra reliable. What gives Exxon Mobil the edge in my mind is that the company has consistently found a way to create more value than Chevron. ExxonMobil creates roughly 4.5% return from the capital it invests while Chevron creates almost zero percent return.
Both are ultra reliable but in my mind Exxon Mobil deserves the edge.
Atmos Energy Corporation (ATO)
Atmos Energy Corporation (NYSE:ATO) is a prime example of the notion that reliable dividend stocks to buy come from reliable sectors. The company is a natural gas distributor and operates from within the ultra-reliable utility sector. The company last reduced its dividend in 1983. It has also grown that dividend at an annual rate of 8.9% over the last 5 years.
Let’s consider a range of scenarios based on current analyst forecasts for Atmos Energy Corporation in consideration of its dividend. Currently, Atmos Energy Corporation’s dividend amounts to $3.22 of extra return annually.
Shares currently trade for $112.50. The low analyst forecast for those shares is $110. Thus, those shares would return $113.22 with the dividend and an investor who bought today would still make a marginal return. That’s a likely worst case scenario.
An alternative best case scenario is that shares rise to a value of $133. That would be worth $136.22 with dividends and a return of more than 18%.
On the date of publication, Alex Sirois 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.