The coronavirus pandemic has added a high level of uncertainty in the markets. Currently, investors should focus on stocks of companies that continue to do well despite economic cycles. Besides protecting your portfolio, these companies should also offer consistent dividend income.
Two such stocks are Procter & Gamble (NYSE:PG) and Walmart (NYSE:WMT). Their defensive business model, strong financial position, ability to generate strong cash flows, and a long history of dividend payments make them must-have stocks in your portfolio.
Procter & Gamble
Procter & Gamble continues to perform well due to the steady demand for its products. In the most recent quarter, the company posted an impressive set of numbers on all fronts. Moreover, the company raised its dividends for the 64th consecutive year.
Procter & Gamble’s revenues rose 5% YoY (year-over-year) in the most recent quarter. The organic sales marked an impressive 6% growth. The company’s gross and operating profit margins also expanded, which led to a 10% growth in its bottom line.
I think that Procter & Gamble’s focus on premium innovation, consistent demand for its products, and productivity and cost-saving initiatives position it well for future growth. Also, the company’s strong cash flows should enable it to boost shareholders’ returns through dividend hikes and share buybacks.
Walmart, being the largest retailer, continues to witness stable growth. The company has been relatively immune to economic cycles. Notably, the company’s effort to significantly ramp-up its e-commerce offerings bode well for future growth.
Walmart posted strong growth in the first quarter of fiscal 2021 and beat analysts’ expectations on the sales and earnings front. The spike in demand and stockpiling activities drove most of the growth. Walmart’s expanded e-commerce offerings also supported its growth.
The retailer expanded its online grocery pickup services to about 3,300 stores. Walmart offers same-day grocery delivery through 1,850 stores. Notably, the company’s e-commerce sales rose 74% YoY in the most recent quarter. The e-commerce sales contributed about 390 basis points to the comparable sales growth rate.
Similar to Procter & Gamble, Walmart is also a dividend aristocrat. The company has consistently raised its dividends for more than 25 years. Walmart generates a significant amount of cash flows that backs its payouts.