Even amid wage increases, a recent report from LendingClub suggests that 61% of Americans were living paycheck to paycheck last year. It’s a high number and further proof that it’s important to find ways to diversify and supplement your income. One easy way to do so is through dividend stocks.
Heading into March, three of the best dividend stocks out there are Walgreens Boots Alliance (NASDAQ: WBA), Innovative Industrial Properties (NYSE: IIPR), and Unilever (NYSE: UL). Here’s why now may be prime time to buy these stocks.
1. Walgreens Boots Alliance
Pharmacy retailer Walgreens currently pays its shareholders a dividend yield of 4.2% — that’s three times the size of the S&P 500 average of 1.3%. Investing $10,000 into Walgreens would generate $420 in annual income (vs. just $130 with the average stock).
And what’s even more promising for long-term investors is the prospect of benefiting from future rate hikes; Walgreens is a Dividend Aristocrat, and after a 2.1% rate hike last year, its streak of consecutive rate increases sits at 46 years.
The company is coming off a strong first quarter for fiscal 2022 (ended Nov. 30, 2021), when its revenue of $33.9 billion beat analysts’ expectations of $32.74 billion. Its adjusted earnings per share did the same, coming in at $1.68 compared with the $1.33 that analysts were projecting. That’s well above the quarterly dividend payment of $0.4775 that Walgreens is currently making.
The company has benefited from administering 15.6 million COVID-19 booster shots during the quarter, which has helped bring more traffic to its stores. However, the business was always profitable — even before the pandemic. Although its profit margins were never high and normally in the low-single percentages, it was enough to support the dividend.
Today, with Walgreens trading near 52-week lows, investors have an excellent opportunity to snap up a great deal and invest in a safe, trusted brand that they can buy and hold for years.
2. Innovative Industrial Properties
Another attractive stock to pick up today is that of real estate investment trust (REIT) Innovative Industrial Properties (IIPR). The cannabis-focused REIT pays 3.3%, a lower yield than Walgreens, but it’s the incredible growth path the company has been on that makes this an extremely intriguing investment to own.
The company released its fourth-quarter and year-end earnings earlier this week, and revenue of $204.6 million was up 75% year over year. Both net income and funds from operations (FFO) grew at similar percentages, as the business has been adding to its list of properties; during the year, the company made 37 new property acquisitions, bringing it to a total of 103 properties in its portfolio. Its FFO per share for the year topped $6.17 and is above the $6 in annual dividends per share that it currently pays.
And it’s not just the financials that are growing — so too is the dividend. IIPR isn’t an Aristocrat because it hasn’t been around long enough (it went public in late 2016), but it’s already becoming an impressive dividend investment to own. Today, it pays a quarterly dividend of $1.50, which is 10 times the $0.15 it was distributing back when it first started making regular payments in 2017.
With more growth still on the horizon in the emerging cannabis industry, IIPR looks like an optimal, income-generating investment to hold for the long term. And with its shares falling 33% thus far in 2022 (likely due to general bearishness in not just growth stocks but the cannabis sector as well) while the S&P 500 has only declined by 13%, now may be a good time to load up on this stock.
Rounding out this list is consumer defensive stock Unilever. At 3.9%, its dividend yield falls right in the middle, yet still way above the average. The company’s household products include top brands such as Ben & Jerry’s, Sunlight, and Dove. In total, it has more than 400 brands in its portfolio, spanning personal care, beauty, food, and home care products. Its global presence in more than 190 countries makes it an ideal stock to hold for both its long-term stability and the diversification it offers.
The company is coming off a strong 2021 that featured its strongest underlying growth rate in nine years at 4.5%, with sales topping 52.4 billion euros. Despite facing challenges from rising costs during the year, Unilever says it made pricing adjustments to counteract that; its operating profit last year grew by 4.8% to 8.7 billion euros. Based on its earnings last year, the company’s payout ratio is a manageable 74%. It has raised its payouts by more than 20 years in a row, with its dividend per share rising by 3% in 2021.
Unilever’s stock has been on a more modest decline this year than the S&P 500, falling by 10%. However, it’s still around its lows for the year and could make an attractive pickup for income-oriented investors looking to buy and hold a top stock for the long haul.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns and recommends Innovative Industrial Properties. The Motley Fool recommends Unilever. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.