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Coca-Cola (NYSE: KO) stands as one of the most steadfast dividend stocks, recently hitting all-time high following robust earnings. With a yield of 2.9%, it provides a reliable stream of passive income. However, there are numerous other options to enhance a diversified, income-generating portfolio.
Consider United Parcel Service (NYSE: UPS), Devon Energy (NYSE: DVN), and Air Products & Chemicals (NYSE: APD) as three compelling dividend stocks to buy now.
UPS: Testing Investor Patience
Daniel Foelber (UPS)
UPS has experienced a significant downturn, falling over 30% in the past year and 45% from its peak, currently hovering near a four-year low. The sell-off appears justified due to negative revenue growth and a plummeting operating margin now in the single digits. UPS has revised its 2024 forecast downward, expecting $93 billion in revenue, a 9.4% adjusted operating margin, $4 billion in capital expenditures, and $500 million in stock buybacks. This adjustment reflects lower expectations than previously set.
Despite recent disappointments, UPS remains a potential turnaround play.
The company overexpanded its shipping routes, misjudging sustained delivery volumes. UPS acknowledged this error and is realigning its operations to match demand. With a robust global market position and a 5.1% dividend yield—the highest in over 15 years—UPS offers an incentive for patient, long-term investors, even though the situation might worsen before improving.
Devon Energy: Poised for Dividend Growth
Lee Samaha (Devon Energy)
Over the past year, Devon Energy’s stock has declined by 13%, lagging behind the broader market and peers such as Diamondback Energy, which has seen a nearly 48% increase. Market apprehensions are due to Devon’s capital allocation strategy, which emphasizes share repurchases rather than boosting its variable dividend or acquiring oil assets. Nonetheless, these strategic decisions are aimed at positioning the company for future expansion.
Recently, Devon announced a $5 billion deal to acquire Grayson Mill Energy’s Williston Basin business, predicting significant returns based on oil prices. This acquisition suggests potential substantial dividend increases, contingent on sustained high oil prices.
Air Products: Steady Cash Flow and Growing Dividend
Scott Levine (Air Products)
Air Products & Chemicals offers a stable source of passive income, boasting a 2.7% forward dividend yield and a 41-year streak of dividend growth. The company’s commitment to financial health has been unwavering, with a conservative payout ratio averaging 62% since 2014.
Operating in over 50 countries and supplying gases to more than 30 industries, Air Products is also expanding its hydrogen assets globally. Currently trading at a discount, the stock offers an attractive entry point for investors seeking consistent dividend growth and financial stability.
Investment Consideration: United Parcel Service
Before investing in United Parcel Service, consider other top stock picks identified by The Motley Fool Stock Advisor analyst team. These stocks have the potential for substantial returns, as evidenced by past recommendations like Nvidia, which saw massive growth following its inclusion on the list.
Investing in a diversified portfolio of high-yield stocks, including reliable names like Coca-Cola, UPS, Devon Energy, and Air Products, can provide a steady stream of passive income while positioning for future growth.
