It’s a challenging time for yield-seeking traders and investors. The dividend yield on the S&P 500 Index dropped as little as 1.4%, the worst noted result in 150 years, except for the peak of the dot-com bubble two decades ago. Such a scenario isn’t attractive, especially in case investing makes a monthly income for you and you have to rely on it.
As we have seen, a wide range of top companies have cut or suspended their dividends during the past months in order to live through one of the harshest economic declines we have seen in our lifetime. Boeing (NYSE:BA), Royal Dutch Shell (NYSE:RDSa) and Disney (NYSE:DIS) are just some of them.
We should admit that payouts from S&P 500 companies are coming back slowly as the economy gradually rebounds, it’s still very important to be very careful when choosing your dividend stocks. Below we have given an example of three stable and reliable stocks from the income universe. Each is thought to be a relatively safe choice thanks to its sufficient cash reserves, healthy balance sheets and reasonable payout ratios.
- Yield: approximately 3%
- Payout: almost $0.38
Indeed, Cisco Systems (NASDAQ:CSCO) is not considered the best tech company that can compete with the Street’s top tech giants, however, it can double in value in just a couple of months. It is a cash-rich company with a strong positioning that pays dividends without problems. The San Jose-headquartered networking giant is the biggest producer of routers, switches and other gear that companies apply to connect computers.
The company has strongly upgraded its growth chances after a massive diversification campaign away from hardware to a software model within innovative sectors of the market that grow rapidly and consistently, such as cybersecurity and applications.
Such growth steps, as well as the company’s leading position in the U.S., where it produces the majority of its sales, have placed the company to outperform when the macroeconomic risks drop.
Goldman Sachs enhanced the stock in March, stating in a note that quitting remote working would improve IT spending in general.
Besides its growth potential, Cisco is also considered a trustworthy dividend payer. Cisco raises payouts every year, making it a fascinating option for those who are looking to gain growing income.