2022's Slumping Stock Market Fails to Phases Out Top Dividend Stalwarts
In the midst of economic uncertainty, two Dividend Kings - Genuine Parts and Procter & Gamble - have shown remarkable resilience.
Genuine Parts, a provider of replacement automotive parts, has maintained its coveted status as a Dividend King by increasing its dividend for an impressive 66 consecutive years. The company's stock has risen 8% over the past three months, while the S&P 500 has plunged about 8%. Moreover, Genuine Parts reported adjusted earnings per share (EPS) of $1.86 for Q1 2022, beating the consensus estimate among analysts of $1.67. The company has also revised its 2022 forecast upward, expecting sales growth of 10% to 12%, up from the original guidance of 9% to 11%.
On the other hand, Procter & Gamble, another Dividend King, has a 50-year history of paying and raising its dividend. Despite a recent fall in its stock price, the company's product mix is defensive in nature, making it better positioned than most retailers even if margins come down. Procter & Gamble's stock dropped due to a sympathy drop, not due to its own performance or control issues. The company reported a higher operating margin than its competitors, allowing it to withstand margin decreases.
Genuine Parts and Procter & Gamble are not alone in their resilience. Northwest Natural Holding Company, a utility provider, has a 66-year history of increasing dividends, making it a reliable source of income for investors. The company provides gas and water services to 2.5 million people in the Pacific Northwest, Oregon and Washington, and owns small water and wastewater utilities in the Pacific Northwest, Arizona, and Texas.
The consistency, dividend reliability, and resilience of Dividend Kings make them attractive investments during economic downturns. These companies tend to have strong free cash flow and reliable earnings, enabling them to maintain and grow dividends even during downturns. Their financial durability and operational consistency proven over decades help them withstand economic volatility. Furthermore, the potential for total returns through dividend income plus capital appreciation is another reason investors favour Dividend Kings.
Investing in Dividend Kings during a bear market can offer lower volatility and higher risk-adjusted returns compared with the broader market. For example, if Northwest Natural Holding Company's dividend grows in line with its earnings, its current dividend per share of $1.93 will increase to $2.46 in five years, resulting in a 4.5% dividend yield at the current price of about $55.
In conclusion, Genuine Parts and Procter & Gamble, as Dividend Kings, continue to demonstrate their resilience in the face of economic volatility. Their consistent operations, reliable cash generation, and enduring dividend growth make them valuable investments for income stability, capital preservation, and steady returns during bear markets.
- In times of economic uncertainty, investors might find respite in Dividend Kings like Genuine Parts and Procter & Gamble, given their notable resilience and consistent operations.
- The financial durability and operational consistency of Dividend Kings, as displayed by companies like Northwest Natural Holding Company, enable them to maintain and grow dividends even during economic downturns.
- By investing in Dividend Kings such as Genuine Parts and Procter & Gamble, individuals can potentially achieve lower volatility and higher risk-adjusted returns during a bear market, with the added benefit of dividend income and potential capital appreciation.
