These companies have established businesses, reliable cash flows, and reward long-term shareholders with continued payouts. Let’s take a look at 3 safe dividend-payers to buy instead of meme stocks at this time.
4 min read
It’s hard to ignore some of the moves that are taking place this week in the “meme stocks”, with shares of companies like AMC Entertainment rallying upwards of 90% in a single session. However, since these moves are the product of pure speculation and are not likely to be sustainable, it’s important for investors to avoid getting FOMO and stay focused on their long-term goals. Recall that many retail traders and investors got hurt badly in the Gamestop saga from earlier this year, which is why it might be a good idea to forget meme stocks entirely and instead focus on buying strong companies that should pay off in the long run.
It’s safe to say that meme stocks offer unprecedented volatility and risk in exchange for potentially huge gains, which is why they aren’t suitable for most investors. On the opposite end of the spectrum are safe dividend stocks. These companies have established businesses, reliable cash flows, and reward long-term shareholders with continued payouts. Let’s take a look at 3 safe dividend-payers to buy instead of meme stocks at this time.
The Allstate Corporation (NYSE:ALL)
After seeing some of the market chaos related to meme stocks, the idea of investing in a safe dividend-paying company whose slogan is “You’re in Good Hands” is certainly appealing. The Allstate Corporation is a leading publicly traded U.S. personal lines property-casualty insurer and a component of the S&P 500 that is worth adding for several reasons. The company has been able to increase prices on a variety of its policies, which is leading to profitability increases and strong earnings. Allstate’s Q1 revenue increased 26% year-over-year to $12.5 billion and a favorable environment for insurers should continue rewarding shareholders with good results.
There’s also a lot to like about the acquisitions this company has made, which include specialty personal lines insurance company National General and low-cost insurance carrier SafeAuto. Allstate is also getting rid of what hasn’t been working, as the company plans to sell most of its lagging life insurance units to Blackstone for $2.8 billion. The stock has outperformed the S&P 500 index this year with a 26% return versus a 12% return, which tells us that it’s a stock that has been showing relative strength. Allstate currently offers a 2.35% dividend yield and is a fine option for investors that want to own a company they can rely on for years to come.
International Business Machines (NYSE:IBM)
Another strong dividend stock to consider buying is this iconic technology company, IBM. It’s a great way to gain exposure to some of the hottest trends in tech including cloud and AI while also earning a strong dividend yield. At this time, IBM stock offers investors a 4.5% dividend yield and the company recently marked its 26th consecutive year of paying dividends. You won’t find many other stocks that offer such a nice combination of consistent payouts and growth prospects.
Investors should applaud the recent moves IBM has made to reinvent itself, including the planned divestiture of the company’s Managed Infrastructure services business that has been a drag on earnings. It’s also worth noting that the company returned to top-line growth in Q1 after 11 down revenue quarters, confirming that CEO Arvind Krishna has IBM heading in the right direction. The bottom line here is that IBM plays a key role in IT hardware, software, and services for companies all over the world and is a great option for investors that are interested in a safer way to add exposure to cutting-edge technology.
Emerson Electric (NYSE:EMR)
Finally, we have Emerson Electric, a global leader in the design, manufacture, and sale of electrical, electromechanical, and electronic products. When you are looking for reliable dividend-paying companies to hold for the long-term, it’s a good idea to narrow your search to companies with a wide economic moat. That’s the case with Emerson Electric, as it’s typically quite expensive for the company’s existing customers to switch over to competitors.
Emerson operates under two main business units, automation solutions, and residential solutions. The process automation solutions play a key role in helping companies with process manufacturing, while the residential solutions include products like HVAC and refrigeration gear that all homeowners need. Emerson’s business model consistently generates strong cash flows to cover the dividend, which is certainly attractive for long-term investors. The company also has one of the longest dividend growth streaks in the market, with 64 consecutive years of dividend growth.
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