Cash Cows: 3 Dividend Stocks for a Steady Income Stream

Stocks to buy

Dividend investing is a common strategy for investors planning for retirement. Corporations that distribute dividends can help you cover living expenses without having to sell shares. Some stocks do a better job of raising their dividends than others. On the other hand, some corporations offer higher yields but lower dividend growth rates.

Investors can choose from many dividend stocks. It’s a good idea to assess the fundamentals first and then look into a stock’s yield and dividend growth rate. Investors looking for steady cash flow may want to consider these three dividend stocks for income.

American Express (AXP)

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American Express (NYSE:AXP) offers a higher dividend yield than the other credit card giants. The company’s yield stands at 1.10% and has a 20 P/E ratio. Shares are up 23% over the past year and have more than doubled over the past five years. 

American Express has outperformed the market while raising its dividend at an exceptional rate. The company hiked its quarterly dividend from $0.52 to $0.60 per share. That’s a 15.4% year-over-year increase, and the company followed up with a 17% dividend hike for 2024. The quarterly dividend payment is now $0.70 per share.

The fintech company’s strong financials can power the stock to more gains. Revenue increased by 11% year-over-year in the fourth quarter of 2023. Net income increased by 23%, while diluted EPS increased by 27% year-over-year. Those growth rates are roughly the same as the stock’s 1-year gain. 

American Express hasn’t seen an extended valuation that put the valuation out of reach. A solid valuation and great financial growth bode well for a healthy yield.

Walmart (WMT)

Walmart’s (NYSE:WMT) dividend yield is a little higher than AXP’s yield. Walmart currently yields 1.40% and has a 31 P/E ratio. Shares are up by 25% over the past year and have gained 80% over the past five years. 

Walmart is a relatively safe long-term pick due to its status as the leading discount retailer. People flock to the store to save money on various products. Recent financial results indicate the corporation is still growing.

Walmart reported 5.7% year-over-year revenue growth in the fourth quarter of fiscal 2024. E-commerce sales were a bright spot as this segment was up by 23% globally. Walmart’s global advertising business was another highlight. That segment was up by 33% year-over-year and includes Walmart Connect in the United States. Walmart’s recent move to acquire Vizio Holdings (NYSE:VZIO) should accelerate its advertising growth in upcoming quarters.

Walmart normally raises its quarterly dividend by $0.01 per year. However, the company took a positive change of course and hiked the dividend by 9% year-over-year. The pre-split quarterly dividend per share is $0.6225 per share. The split-adjusted quarterly dividend is $0.2075 per share.

Qualcomm (QCOM)

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Qualcomm (NASDAQ:QCOM) is the final cash cow on this list. After a slow start during the AI boom, shares are up by 32% over the past year. The semiconductor stock has more than tripled over the past five years and still offers an impressive 2.00% dividend yield. Shares trade at a 24 P/E ratio.

The tech firm has navigated several headwinds but has made it out of the other side. Soft benchmarks should help the company grow its revenue and earnings as it did in the first quarter of fiscal 2024. Revenue increased by 5% year-over-year while net income jumped by 24% year-over-year. 

Qualcomm’s good financials complement the company’s dividend growth rate. The company hiked its quarterly dividend from $0.75 per share to $0.80 per share in 2023. That’s a 6.7% year-over-year increase, and the firm is due to raise the dividend again in the next quarter. Qualcomm offers a good margin of safety as smartphone shipments rebound.

On the date of publication, Marc Guberti did not hold (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.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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