Dividends are a form of passive income that can get overlooked as a component of returns in the stock market. There are certainly growth stocks that don’t pay dividends that can deliver great returns over decades, but when the markets get volatile, it pays — literally — to own growing companies that dish out some cash to their shareholders.
Three Motley Fool contributors recently picked Home Depot ( HD -3.30% ), eBay ( EBAY -2.92% ), and Levi Strauss ( LEVI -3.49% ) as great dividend stocks to consider right now. If you invested $5,000 in each stock, it would yield total income of $300 over the next year based on each company’s current quarterly dividend payment. Here’s why these companies are good investments.
Super reliable plus high-yield equals great dividend stock
Jennifer Saibil (Home Depot): Even the best stocks have their worst moments. Home improvement giant Home Depot experienced this in 2019 when sales and profitability suffered as it invested in growth through its digital channels. But efforts to please shareholders in the short term shouldn’t come at the expense of long-term growth, and top companies know this. To drive long-term value, there’s sometimes near-term pressure. The market is fickle in the near term, with daily upticks and downticks. To succeed in the stock market, investors need to filter out the noise and focus on long-term goals.
That leads to Home Depot’s performance so far in 2022, which as you might have guessed, hasn’t been its best. Its stock is down 25% this year. At the current price, shares trade at less than 20 times trailing-12-month earnings. That would be meaningless if there weren’t much of a future. But Home Depot didn’t become the largest home improvement retailer in the world with a mediocre strategy and team. It’s a top company with robust growth catalysts, which means shares are a great deal when you can buy them on the dip. Not to mention that at this price, its dividend yields…
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