Dividend stocks can be an excellent way to supplement your portfolio growth with price gains and inject more money into your overall returns. Whether you use that money to reinvest or set aside for a rainy day, dividend stocks can be an excellent addition to any portfolio and for investors with different investing styles.
If you’re currently looking for two top dividend stocks to add to your portfolio, here are a few names to consider the next time you shop for shares.
1. Amgen
Amgen (NASDAQ: AMGN) is a healthcare giant with an impressive history of paying and increasing dividends.
The stock yields about 2.8% based on current share prices, which is about double that of the average stock trading on the S&P500 index. Dividend yields combined with moderate share price appreciation – often associated with value-oriented healthcare stocks – have enabled the company to deliver a 70% total return for loyal shareholders over the past five years.
The company has also increased its dividend by about 55% over that same period. Currently, Amgen has an annual dividend yield of $9 per share, which equates to $2.25 quarterly. Amgen has increased its dividend for eleven years in a row.
Amgen develops and markets a wide range of medications that target a variety of conditions and often undertreated conditions for which limited treatment options exist. The drugs treat everything from osteoporosis, hyperlipidemia, anemia and Crohn’s disease to rheumatoid arthritis, melanoma, plaque psoriasis, hyperparathyroidism and various genetic disorders.
Looking at Amgen’s recent financial results, which covered the second quarter of 2024, total revenue rose 20% year over year to $8.4 billion. This was driven by a 20% increase in product sales and twelve of Amgen’s core medicines delivered at least double-digit revenue growth in the quarter.
An example is the successful drug Prolia, which generated $1.2 billion this quarter, an increase of 13% compared to a year ago. Prolia is approved for numerous indications, including individuals with osteoporosis who are at high risk for fractures. The company generated $2.2 billion in free cash flow in the quarter, with net income of $746 million.
Amgen’s operating profit was down double digits from the year-earlier quarter, but was largely related to costs resulting from its acquisition of rare disease drugmaker Horizon Therapeutics last year, rather than any operating deficit. Amgen paid approximately $28 billion for the acquisition.
The acquisition of Horizon brought numerous medicines into Amgen’s fold, including Tepezza and Uplizna. The former is the first and only treatment approved by the U.S. Food and Drug Administration for thyroid eye diseases, while the latter is for neuromyelitis optica spectrum disorders. The acquisition also included the gout treatment Krystexxa in the company’s portfolio. Amgen’s rare disease portfolio alone generated $1.1 billion in revenue in the second quarter.
Amgen is also targeting the lucrative weight management market, and one of the assets investors should keep an eye on is MariTide. The drug is currently in Phase 2 development as management plans its Phase 3 program. MariTide is an injectable medication designed to help improve insulin release and suppress appetite by activating the GLP-1 receptor and inhibiting the GIP receptor.
Management plans for the Phase 3 trial include an extensive study of MariTide’s ability to help with several weight-related diseases, including liver disease, which could expand the number of indications the drug could stick around if approved. This is just one example from Amgen’s extensive pipeline. For investors looking for income stocks with an extensive product line, profitable operations and significant growth margin, Amgen seems like a worthy candidate for a well-diversified portfolio.
2. Hormel food
Hormel food (NYSE: HRL) is among a relatively short list of stocks that have maintained and increased their dividends not for ten years, but many decades. In fact, the multinational food processing company has increased its dividend every year for 58 years. Over the past five years, Hormel Foods has increased its dividend by about 35%.
Hormel has been in business since 1891, so this isn’t a lightning-fast growth stock, but a mature company with a steady history of loan portfolio returns. The stock has a notable payout ratio of approximately 79% of earnings and offers investors a current yield of approximately 3.6%. Those yields have risen as investor sentiment has dragged stocks lower. When stock prices fall, returns often rise. Hormel’s yield is currently at an all-time high, while its annual forward dividend is $1.13.
Hormel Foods is known for brands such as Applegate, the Hormel namesake brands such as Natural Choice and Hormel Pepperoni, Planters, SPAM, Skippy, Jennie-O and Valley Fresh. More than three dozen of its brands hold first or second market shares in their respective categories. Factors ranging from inflation to the pandemic and ongoing economic difficulties driving fluctuating consumer spending patterns have all impacted the company in recent years and have trickled down to investor sentiment toward the stock.
Price drops and even production issues at certain points in the supply chain have also had an impact, and the company recently had to lower its annual expectations by single digits. Hormel reported that retail segment volume fell 9% last quarter, but 2% year-over-year volume growth and 7% net sales growth in the foodservice segment helped offset this figure.
International segment sales and volumes fell, but profits in that division rose 78% compared to the same period last year thanks to growth in core markets in Asia and improved export margins. Total net sales across all segments were $2.9 billion, down slightly (2.2%) from a year ago. Although the company saw its operating results decline by single digits, total segment profit was still approximately $292.2 million. Hormel also generated operating cash flow totaling $218 million in the three-month period.
The past few years have been tough for Hormel’s business, and the stock has delivered about 55% total returns to investors over the past decade. Still, Hormel’s overall strong balance sheet, loyal dividend history and significant presence in the food industry could make it an attractive choice for income-seeking investors looking for a multi-year buy-and-hold position.
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Rachel Warren has no positions in any of the stocks mentioned. The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.
2 Top Dividend Stocks to Buy Now by Hand was originally published by The Motley Fool
