3 Reliable Dividend Stocks to Buy and Hold

Dividend stocks are beneficial now as they provide regular income through payouts, offering stability amid market fluctuations. Therefore, income investors might consider buying dividend stocks such as Northrop Grumman Corporation (NOC) and Unum Group (UNM) for their reliable dividend growth and yield while waiting for a more favorable entry point for RTX Corporation (RTX).

Inflation is still a concern, with consumer expectations at 5.4% in July, down from 7.9% in 2022. Despite growing consumer confidence, high inflation and interest rates are impacting buying power and economic stability. Dividend stocks can help protect against inflation because they often increase payouts and grow earnings over time.

The U.S. economy is expected to grow by 2.3% in 2024. The job market is steady, with an unemployment rate of 4.1%. Wage growth has slowed, but dividend stocks usually do well in uncertain conditions, providing reliable income and less risk. This makes them a good choice for retirement or long-term investments.

Furthermore, dividend stocks allow for reinvestment into additional shares, potentially boosting overall returns. Dividends can efficiently generate income and grow investments. Considering these trends, let’s analyze the fundamental aspects of three reliable dividend picks.

Stocks to Buy:

Northrop Grumman Corporation (NOC)

NOC operates as an aerospace and defense company worldwide. It operates through the Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems segments.

On May 14, 2024, NOC’s board declared a 10% increase in its quarterly dividend to $2.06 per share. The dividend is payable on June 12, 2024, to shareholders of record as of May 28, 2024.

In terms of the trailing-12-month Return on Common Equity, NOC’s 15.35% is 20.9% higher than the 12.70% industry average. Likewise, its 4.30% trailing-12-month Capex / Sales is 48.1% higher than the 2.90% industry average. Furthermore, its 0.87x trailing-12-month asset turnover ratio is 11.9% higher than the 0.78x industry average.

NOC pays an annual dividend of $8.24, which translates to a yield of 1.69% at the current share price. Its four-year average dividend yield is 1.59%. In addition, the company’s dividend payouts have increased at a CAGR of 9% over the past three years. NOC has paid dividends for the past 34 years.

NOC’s total sales for the fiscal second quarter that ended June 30, 2024, amounted to $10.22 billion, up 6.7% year-over-year. Likewise, its total operating income rose 12.7% from the year-ago quarter to $1.09 billion. In addition, the company’s net earnings and EPS were $940 million and $6.36, up 15.8% and 19.1% over the prior-year quarter, respectively.

For the quarter ending September 30, 2024, NOC’s revenue is expected to increase 4% year-over-year to $10.17 billion. Its EPS for the quarter ending December 31, 2024, is expected to rise 3.3% year-over-year to 6.48. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the month, the stock has gained 11.9% to close the last trading session at $486.53.

NOC’s robust outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

NOC has a B grade for Momentum, Stability, and Sentiment. Within the Air/Defense Services industry, it is ranked #16 out of 70 stocks. To see NOC’s ratings for Growth, Value, and Quality, click here.

Unum Group (UNM)

UNM and its subsidiaries provide financial protection benefit solutions primarily internationally. It operates through Unum US, Unum International, Colonial Life, and the Closed Block segment.

On July 12, 2024, UNM declared a quarterly dividend of $0.420 per share on its common stock. The dividend will be paid on August 16, 2024, to stockholders of record as of July 26, 2024.

On June 18, 2024, UNM announced the launch of Unum Broker Connect for Employee Navigator, enhancing integration and efficiency for brokers. This new service streamlines case setup automates plan builds, and facilitates seamless data exchange.

In terms of the trailing-12-month Return on Total Capital, UNM’s 8.74% is 25.8% higher than the 6.95% industry average. Its 2.12% trailing-12-month Return on Total Assets is 100.9% higher than the 1.06% industry average. Also, its 13.37% trailing-12-month Return on Common Equity is 26.8% higher than the 10.54% industry average.

UNM has paid dividends for 24 consecutive years.  Its annualized dividend of $1.68 per share translates to a dividend yield of 3.18% on the current share price. Its four-year average yield is 3.73%. Also, UNM’s dividend payouts have increased at a CAGR of 9.5% over the past three years.

UNM’s total net revenue for the second quarter ending June 30, 2024, increased 3.9% year-over-year to $3.23 billion. The company’s after-tax operating income was $411.40 million, or $2.16 per share, up 1% and 4.9% from the year-ago values, respectively. During the same period, the company’s net income stood at $389.50 million, with net income per share at $2.05, up 3.5% year-over-year.

Analysts expect UNM’s EPS for the quarter ending September 30, 2024, to increase 4.3% year-over-year to $2.02. Its revenue for the same quarter is expected to increase 4.5% year-over-year to $3.26 billion. It surpassed the consensus EPS estimates in three of the four trailing quarters. UNM’s stock has gained 20.9% over the past nine months to close the last trading session at $52.83.

UNM’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.

It is ranked first out of 8 stocks in the B-rated Insurance - Accident & Supplemental industry. It has an A grade for Momentum and a B for Stability. To access UNM’s grades for Growth, Value, Sentiment, and Quality, click here.

Stock to Hold:

RTX Corporation (RTX)

RTX is an aerospace and defense company that provides systems and services for commercial, military, and government customers internationally. It operates through three segments: Collins Aerospace, Pratt & Whitney, and Raytheon.

On June 3, 2024, RTX’s Board of Directors declared a quarterly cash dividend of $0.63 per share, payable on September 5, 2024. The dividend will be issued to shareholders of record as of August 16, 2024.

In terms of the trailing-12-month levered FCF margin, RTX’s 12.99% is 96.2% higher than the 6.62% industry average. Likewise, its 3.28% trailing-12-month Capex / Sales is 12.9% higher than the 2.90% industry average. On the other hand, its 16.38% trailing-12-month gross profit margin is 47.9% lower than the 31.4% industry average.

RTX has paid dividends for 34 consecutive years.  Its annual dividend is $2.52, which translates to a yield of 2.20% at the current share price. Its four-year average dividend yield is 2.44%. Moreover, the company’s dividend payouts have increased at a CAGR of 7.4% over the past three years.

RTX’s sales for the second quarter ending June 30, 2024, increased 7.7% from the year to $19.72 billion. Its adjusted net income attributable to common shareholders remained flat year-over-year at $1.90 billion, while its EPS rose 9.3% year-over-year to $1.41. Additionally, the company’s free cash flow increased significantly from the previous year to $2.20 billion.

Street expects RTX’s EPS and revenue for the quarter ending September 30, 2024, to increase 6.7% and 47.2% year-over-year to $1.33 and $19.82 billion, respectively. It surpassed the Street EPS estimates in each of the trailing four quarters. The stock has gained 12.3% over the past three months to close the last trading session at $114.40.

RTX’s POWR Ratings reflect its mixed fundamentals. It has an overall rating of C, which translates to a Neutral in our proprietary system.

It is ranked #25 in the Air/Defense Services industry. It has a B grade for Growth, Momentum, and Sentiment. Click here to see RTX ratings for Value, Stability, and Quality.

What To Do Next?

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RTX shares were trading at $114.68 per share on Wednesday afternoon, up $0.28 (+0.24%). Year-to-date, RTX has gained 38.02%, versus a 10.53% rise in the benchmark S&P 500 index during the same period.

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.

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