3 Super Safe Dividend Stocks You Can Buy Right Now
Surrealist. That’s about the only way to describe what’s going on in the world. Whole countries closing their borders. Professional sports teams are canceling their seasons. Major events of any kind come to a halt. The stock market crashes and wipes out more than two years of gains.
Is there shelter in the raging storm for investors? I think so. Here are three dividend stocks you can buy right now that I consider extremely safe compared to most stocks on the market.
1. General dollar
Most stocks fell sharply during the coronavirus-fueled stock market crash. Not General dollar (CEO -0.26% ). The stock of consumer staples held up better than most amid the market slump. I think Dollar General is super safe for several reasons.
Long before the first COVID-19 diagnosis was announced, I chose Dollar General as my main stock to ride out a recession. My opinion was and still is that customers will continue to buy from his stores no matter what is happening in the world. Dollar General sells the kinds of products that people need no matter what. Additionally, the company’s stores are conveniently located and relatively small. The latter is important with the need for social distancing.
Additionally, Dollar General’s financial position appears solid. A stock cannot be super safe if its financial situation is questionable. But Dollar General is still profitable with solid earnings growth. The company’s debt is manageable.
Granted, Dollar General’s dividend yield of around 1% isn’t something to jump up and down. Again, however, the dividend should be safe with the company’s coronavirus-proof business and a very low payout ratio of just 19%.
2. Trust in digital real estate
Digital Real Estate Trustit’s ( DLR 0.29% ) a dividend yield of more than 3.5% is more attractive. And its stock is even a bit up so far in 2020 despite the start of the first bear market in over a decade.
The company had 225 data centers at the end of 2019 and controls more than a fifth of the global data center market. Its customers read like a who’s-who of the tech world, including AppleGoogle and Microsoft. A pandemic will not reduce the need for these large enterprises and other large enterprises to need data centers.
You might be wondering if Digital Realty Trust shares have become too expensive, with the stock trading at a high earnings multiple. However, the company’s growth prospects should remain so strong, especially with its recent acquisition of InterXion, that its valuation does not scare me.
Digital Realty Trust is organized as a real estate investment trust (REIT). This means that it must return at least 90% of taxable income to shareholders in the form of dividends. I believe the company’s earnings will continue to grow, just as they did during the Great Recession, which will increase its dividend payout going forward.
walmart (WMT -0.39% ) has several things in common with Dollar General. They are both discount retailers that should weather tough economic times well compared to other businesses. Customers will continue to shop at Walmart even with the coronavirus pandemic. If you have any doubts, just go to the nearest Walmart store and look at the parking lot.
One thing I really like about Walmart, though, is that it’s upped its e-commerce game in recent years. The retail giant expects more than half of its total revenue growth this fiscal year to come from its online operations.
Of course, Walmart isn’t worried about its financial strength. The company benefits from strong cash flow, consistent profitability and a strong balance sheet.
Walmart’s dividend yield currently sits at just under 2%. It’s not too shabby. The retailer has also increased its dividend payout for 47 consecutive years, a record that should reassure nervous investors.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.