Some investors may find it tempting to keep their entire portfolio in high-growth tech stocks so early in their development that they put all their money back into the company. But ignoring the value of dividend-paying stocks is a rookie mistake. Here are three dividend stocks worth watching.
The world may be moving towards a greener future, but fossil fuels won’t disappear tomorrow. That’s why I think ExxonMobil (NYSE:XOM) – with a yield of around 3.2% at the current share price, and shares trading at 14 times earnings – this is an attractive income investment.
While sales and earnings can be volatile with the price of oil, the company has earned tens of billions of dollars annually (excluding 2020). With more than $26 billion in cash and equivalents at the end of the second quarter, ExxonMobil has sufficient capital to continue paying its dividend. Additionally, oil prices have remained around $70 or higher in recent years, providing strong cash flow for the company.
Among the 30 analysts covering ExxonMobil and tracked by MarketWatch, the average price target at the time of writing is $130, indicating a potential upside of 8% over the next twelve months. Investors will also benefit from the dividend, which has been increased annually for decades and I expect to remain strong. To me, even with the negative rhetoric we see every day about fossil fuel-based companies, companies like ExxonMobil remain important to our lives. In that context, I view it as a solid dividend play that will continue for quite some time.
Last year, Johnson & Johnson has spun off its consumer products division as Kenvue (NYSE: KVUE).
Not much has happened with the new company since then, but it does produce a dividend that yields about 3.7% at the current share price. Kenvue’s portfolio of brands includes leading names including Listerine, Tylenol, Motrin, Neutrogena and Band-Aid.
In the company’s most recent quarter, sales stagnated, and an asset impairment left earnings per diluted share looking poor compared to 2023. Excluding this impairment, the company had adjusted earnings of $0.32 per share , compared to $0.31 in the prior year period. .
Overall, I think there is value here that is being ignored. Kenvue’s brand lineup was built by Johnson & Johnson, which knows a thing or two about building value, and if it plays its cards right, it could be a solid stock to own in the future. As the company notes on its investor relations page, it has created more than 100 new “product innovations” every year since 2020. I think this level of innovation, combined with the company’s position in everyday consumer health products, means it can break the trend of the slow sales growth we’ve seen over the past year. This is a long-term project and I think the company will need time to find itself after the Johnson & Johnson split.
