2 rock-solid dividend stocks to buy right now

Thanks to skyrocketing inflation, the Federal Reserve’s plan to raise interest rates and the threat of war in Ukraine, all major US stock indexes have lost ground since the start of the new year. The tech-heavy Nasdaq Compound, in fact, is approaching a full-fledged correction zone, with its shares down more than 14.6% just four weeks into 2022.

To combat this austere market, investors have turned to so-called safe-haven stocks. Safe-haven stocks, in the classic sense, are companies with strong balance sheets, economically insensitive income streams, and well-funded dividend programs.

Which stocks are the best safe havens for investors right now? American Express (NYSE:AXP) and Lockheed Martin Company (NYSE: LMT) are two rock-solid dividend stocks that should shine in this bear market. Here’s why.

Image source: Getty Images.

American Express: an extremely safe passive income stock

American Express is a world renowned global payment company. Founded in 1850, American Express has become an integral part of the global business community. And because of its entrenched position in the global payer space, the credit card giant has attracted a slew of blue-chip investors such as Warren Buffett. American Express, in fact, was one of Warren Buffett’s main holding companies Berkshire Hathaway for more than 20 years at this point.

More importantly, however, American Express’ extremely strong financial performance should satisfy shareholders like Berkshire Hathaway for the foreseeable future. During the fourth quarter of 2021, for example, the company crushed Wall Street consensus estimates for its bottom line and top earnings.

Thanks in large part to an increase in the average cardholder loan balance, American Express generated healthy revenue of $12.1 billion for the three-month period, a figure that topped 5.2 % analyst consensus forecasts. Additionally, American Express’ net income beat Wall Street’s fourth-quarter average estimate by 14.9% due to a combination of tailwinds.

During its quarterly update, American Express also rolled out a truly impressive growth plan for the remainder of the decade. Specifically, the company said it plans to grow annual revenue by more than 10% a year and grow annual earnings per share into double digits as early as 2024. This is an unusually high growth forecast. high for a large-cap financial services company. .

On the dividend front, American Express shares come with a modest 1% annualized return. However, its exceptionally low payout ratio of 17.2% means investors won’t have to worry about a reduced payout any time soon.

All in all, American Express’ business is booming right now and the future looks bright. The company’s shares, in turn, should be able to sweep through this bear market to deliver exceptional returns for shareholders in 2022 and beyond.

Lockheed Martin: A Leading Defense Contractor

Lockheed Martin is a global security and aerospace company whose primary customer is the US government. In 2021, for example, Lockheed generated 71% of its sales through contracts with the US government. That’s a reassuring fact for nervous investors, given that the US government has a long track record of paying its bills in a timely manner. The bad news, however, is that the US pullout in Afghanistan, combined with a few other tailwinds, is expected to cause the defense giant’s annual sales to decline 1.2% in 2022. Lockheed, however, is expected to return to a record high. modest. -line growth by 2023.

Why is Lockheed stock poised to outperform in this bear market? Lockheed shares have already jumped 10% in the first month of 2022 for two main reasons. First and foremost, the company’s sizable revenue stream – while headed in the wrong direction – is essentially a safe bet. Few companies in the world can guarantee year-over-year annual revenue forecasts like this leading defense and aerospace contractor. Second, Lockheed’s annualized dividend yield of 2.86%, along with its fairly low payout ratio of 46.5%, implies that investors can rely on these stocks as a healthy and stable source of income in this uncertain economic environment. .

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

Comments are closed.