7 Dividend Stocks to Buy Now or Worry About Later

The recent rally in equities could take cash out of the margin. But if you’re investing in pure growth stocks and avoiding dividend stocks altogether, I urge you to be cautious.

No, I’m not talking about what the Federal Reserve is going to do with interest rates. I watch corporate layoff announcements, the weak housing market, and inflation that may not be rising (but certainly isn’t falling), at least not where Americans need it most.

I know what the bulls say. As of this writing, more than 60% of companies reporting this earnings season have posted higher earnings. However, earnings are a lagging indicator. I don’t hear a bullish outlook on the economy from many of these companies, at least for the next two quarters.

This means that there can be one or more legs down to fetch shares. One way to handle this situation is to buy dividend stocks.

I generally like to offer a little something to every investor. But this time, I’m sticking with some of the best dividend-paying stocks on the market today. For some investors, that means looking at the dividend yield. Others look at the annual payout per share. It’s the money that goes back into my brokerage account every quarter – the money that makes the compounding magic work.

So let’s go. Here are seven dividend-paying stocks you should buy now, or wish you had.

Herringbone (CVX)

Chevron (NYSE:CLC) is one of the first dividend stocks that came to mind, primarily because the company recently announced a 6% increase in its quarterly dividend. That makes it 37 straight years of dividend increases for the Dividend Aristocrat.

Chevron’s dividend is increasing this year and will likely continue to grow. The company’s payout ratio is just over 32%. Its dividend yield of 3.2% is slightly above the S&P 500 average. But it is below the industry average. That shouldn’t worry investors too much, because with this dividend increase, Chevron will have paid out $5.77 per share in dividends for the year.

CVX stock has risen and fallen with oil prices. But some economists and industry analysts suggest that Russia’s ongoing war with Ukraine and the reopening of the Chinese economy are setting a floor around $80 for crude oil prices. This means Chevron may have more room for growth, even after a 40% gain over the past 12 months.

Verizon (VZ)

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If you are looking for dividend stocks with good payout and excellent yield, you should check the current situation with Verizon Communications (NYSE:VZ). The mobile phone company announced its earnings on January 24, announcing a quarterly dividend of 65 cents per share. This gives VZ shares an annual payout of approximately $2.60 per share. Notably, Verizon has also increased its dividend for the past 18 consecutive years.

On top of that, it has one of the best dividend yields in the entire market at over 6.4%. There are concerns about the company’s payout ratio, which is currently around 50%. Indeed, Verizon’s earnings are expected to slow to $4.55-$4.85 per share in 2023 from $5.17 in 2022.

However, at just under 8x earnings, the stock is cheap. And the company believes much of the spending to build its 5G infrastructure is behind it. This creates an opportunity for the company to focus on increasing profits, although it still relies heavily on its consumer business.

Coca-Cola (KO)

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Many investors would say the stocks held by Warren Buffett are like the simple black dress – always in style. Maybe it’s a weird way to think about Coca Cola (NYSE:KO), but there is nothing strange about owning the shares of the company.

Coca-Cola fits Buffett’s definition of a “forever” stock. But critics might note that the knockout stock has only increased 30% in the past five years and is currently just above pre-pandemic levels. Also, at 26 times the payout, there are cheaper options.

But Coca-Cola’s story is its iconic brand that allows the company to generate regular revenue for shareholders. Coke has increased its dividend for 61 consecutive years, making it part of the exclusive Dividend Kings group. And its dividend yield of 2.9% is above the industry average of 2.62%.

Like this simple black dress, Coca-Cola isn’t a stock you’ll be adopting daily. But at times like these, you’ll be glad it’s in your wallet.

PepsiCo (PEP)

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When it comes to the taste of their products, there may be a difference between Coca-Cola and PepsiCo (NASDAQ:DYNAMISM). But as dividend stocks, there isn’t much of a distinction, so it’s good to have both stocks in your portfolio.

What many investors like best about PepsiCo is that the company diversified after fighting the cola wars. Pepsi has become a snack giant, home to the Frito-Lay’s and Quaker Foods brands, among others. As I wrote in early January, PepsiCo “strides the line between ‘junk food’ and healthy options.”

As for the company’s dividend, PepsiCo currently pays $4.60 per share per year with a yield of 2.7%. Like Coca-Cola, PepsiCo is a dividend king. The company has increased its dividend in each of the past 51 years. One might worry about a 65% payout ratio, but there is no indication that the dividend is in trouble.

AbbVie (ABBV)

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I can’t blame investors for thinking that AbbVie (NYSE:ABBV) is a “show me” story in this market. The upcoming expiration of the company’s patent for its key drug Humira in Europe, with an imminent expiration in the United States, means it is a biotech company with uncertain prospects. Indeed, Humira has been a cash cow for AbbVie, so investors have reason to be concerned.

So far, however, it looks like AbbVie has passed its check-up. A big reason for this is the revenue generated by Skyrizi and Rinvoq. These two drugs are expected to bring in around $15 billion over the next three years.

And then there is the dividend. AbbVie is another dividend king with a history of increasing its dividend over the past 51 years. It currently has a 4% yield and an impressive annual payout of $5.92 per share. AbbVie’s payout rate of over 70% is probably not sustainable. But ABBV stock is trading at just 19 times earnings, roughly equivalent to the S&P 500.

Lowe’s (BAS)

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Fairways and greens are a good mantra for golfers dealing with volatility. This can also apply to dividend stocks like Lowe’s (NYSE:LOW), which can keep your lawn green, as well as your wallet.

Okay, that was terrible, but that brings me to my point. Lowe’s is a home improvement company. And home improvement doesn’t stop just because the housing market is weak. People need to “love who they’re with,” so to speak, and Lowe’s is well positioned to help with products for professionals and DIYers alike.

Lowe’s is yet another dividend king on this list, with a 2.1% yield and an annual payout of $4.20 per share. The company also has an attractive price-to-earnings ratio of just 19 times earnings, equivalent to the S&P 500. And with a profit margin above the industry average, investors should be confident of the company’s earnings growth in the years to come.

United Health Group (UNH)

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Last on this list of dividend stocks is United Health Group (NYSE:A H). I included this stock because healthcare continues to be a hot sector for investors.

Joel Baglole recently reminded investors that United Health Group is “the largest healthcare company by revenue and the largest insurance company by net premium in the world.” Looking at industry leaders is a great place to start when looking for dividend-paying stocks to buy for the long term.

And if investors are looking for a near-term catalyst, the company’s pharmaceutical services arm, Optum Rx, has just launched Price Edge. This drug price comparison tool helps its members get the lowest prices for generic drugs.

Then you can see the company’s dividend. The 1.3% return is not impressive compared to the S&P 500 average. However, it is desirable among other health care stocks. And with a payout ratio that’s only 30%, the dividend looks very sustainable.

As of publication date, Chris Markoch had LONG positions in CVX and LOW. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.