Dividend stocks provide a reliable income stream essential for retirees seeking steady cash flow. Taxed at lower rates than ordinary income, they help reduce overall tax liability. With regular payments and the potential for growing dividends, companies with a consistent dividend history often demonstrate greater stability and resilience during economic downturns.

Therefore, retirees seeking consistent income might consider quality dividend stocks such as The Coca-Cola Company (KO), Consolidated Edison, Inc. (ED), and T. Rowe Price Group, Inc. (TROW).

Rising Middle East tensions and uncertainty over rate cuts are increasing demand for safe-haven assets like the U.S. dollar, highlighting geopolitical risks. In this environment, dividend stocks stand out for their resilience during market fluctuations, offering a reliable cushion against potential losses and a strong potential for long-term portfolio growth.

On the other hand, strong U.S. jobs data reveals the largest jump in nonfarm payrolls in six months, along with a lower unemployment rate and robust wage growth. The U.S. 10-year Treasury yield surpassed 4%, boosting market sentiment. Meanwhile, the Federal Reserve is anticipated to cut interest rates by 25 basis points, potentially providing further economic support.

Hence, dividend stocks across sectors like beverages, utilities, and asset management offer portfolio diversification while reinvesting dividends can compound returns, providing retirees with enhanced long-term financial security. Considering these conducive trends, let’s analyze the fundamental aspects of the three dividend picks.

The Coca-Cola Company (KO)

KO manufactures, markets, and sells various non-alcoholic beverages worldwide. The company provides sparkling soft drinks, sparkling flavors, water, sports, coffee, tea, juice, value-added dairy, plant-based beverages, and other beverages.

On September 17, 2024, KO and Bacardi Limited announced plans to launch a BACARDÍ rum and Coca-Cola ready-to-drink pre-mixed cocktail in 2025. The initial rollout will be in select European markets and Mexico.

On August 8, 2024, KO’s Fanta and Warner Bros. Pictures announced a global partnership, launching a limited-edition Beetlejuice-inspired Fanta flavor ahead of the movie "Beetlejuice Beetlejuice," releasing in September. The special edition flavor will be available in over 50 markets with exclusive access to themed experiences.

In terms of the trailing-12-month Return on Total Assets, KO’s 10.52% is 151.6% higher than the 4.18% industry average. Its 32.08% trailing-12-month EBITDA margin is 144.7% higher than the 13.11% industry average. Also, its 4.37% trailing-12-month Capex/Sales is 35.2% higher than the 3.23% industry average.

KO has paid dividends for 61 consecutive years.  Its annual dividend is $1.94, which translates to a yield of 2.76% at the current share price. Its four-year average dividend yield is 2.97%. Moreover, the company’s dividend payouts have increased at a CAGR of 4.7% over the past three years.

KO’s net operating revenues for the second quarter ended June 28, 2024, increased 3.3% year-over-year to $12.36 billion. Similarly, its operating income was $2.63 billion, up 9.6% year-over-year. The company’s non-GAAP net income amounted to $3.62 billion, a 6.8% increase from the previous year. Additionally, the company’s non-GAAP EPS grew 7.7% year-over-year to $0.84.

Street expects KO’s EPS for the quarter ended September 30, 2024, to increase marginally year-over-year to $0.75.  Its revenue for the quarter ending March 31, 2025, is expected to rise 3.2% year-over-year to $11.59 billion. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 29.9% to close the last trading session at $69.01.

KO’s POWR Ratings reflect strong prospects. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It is ranked #20 out of 35 stocks in the B-rated Beverages industry. It has a B grade for Stability and Quality. Click here to see KO’s ratings for Growth, Value, Momentum, and Sentiment.

Consolidated Edison, Inc. (ED)

ED and its subsidiaries engage in regulated electric, gas, and steam delivery businesses. It provides electric services to approximately 3.70 million customers in New York City and Westchester County; gas services to about 1.10 million customers in Manhattan, the Bronx, parts of Queens, and Westchester County; and steam services to around 1,530 customers in parts of Manhattan.

On July 18, 2024, ED declared a quarterly dividend of 83 cents per share on its common stock, payable on September 16, 2024, to shareholders of record as of August 14, 2024.

In terms of the trailing-12-month gross profit margin, ED’s 52.50% is 17% higher than the 44.89% industry average. Its 4.43% trailing-12-month Return on Total Capital is 10% higher than the 4.03% industry average. Also, its 0.22x trailing-12-month asset turnover ratio is 3.7% higher than the 0.22x industry average.

ED pays an annual dividend of $3.32, which translates to a yield of 3.22% at the current share price. Its four-year average dividend yield is 3.67%. In addition, the company’s dividend payouts have increased at a CAGR of 2.2% over the past three years. ED has paid dividends for the past 49 years.

In the second quarter ended June 30, 2024, ED’s total operating revenues increased by 10.5% year-over-year to $3.22 billion. During the same period, the company’s adjusted earnings were $203 million, or $0.59 per share.

For the quarter ended September 30, 2024, ED’s EPS and revenue are expected to increase 1.1% and 5% year-over-year to $1.64 and $4.06 billion, respectively. ED surpassed the Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 17.1% to close the last trading session at $101.14.

ED’s robust outlook is reflected in its POWR Ratings. ED has a B grade for Momentum. Within the Utilities - Domestic industry, it is ranked #11 out of 59 stocks. To see ED’s ratings for Growth, Value, Stability, Sentiment, and Quality ratings, click here.

Rowe Price Group, Inc. (TROW)

TROW is a publicly owned investment manager. The firm provides services to individuals, institutional investors, retirement plans, financial intermediaries, and other institutions. It launches and manages equity and fixed-income mutual funds and invests in public equity and fixed-income markets globally. The firm employs both fundamental and quantitative analysis, using a bottom-up approach.

On September 10, 2024, TROW launched Personalized Retirement Manager (PRM), an industry-first service combining target date strategies with full personalization. PRM uses personal data to create tailored asset allocations, helping participants achieve better retirement outcomes, and can be selected as a Qualified Default Investment Alternative (QDIA) by plan sponsors.

In terms of the trailing-12-month Return on Common Equity, TROW’s 19.77% is 90.8% higher than the 10.36% industry average. Its 26.35% trailing-12-month levered FCF margin is 45.8% higher than the 18.07% industry average. In addition, its 0.53x trailing-12-month asset turnover ratio is 145.5% higher than the industry average of 0.22x.

TROW’s annualized dividend of $4.96 per share translates to a dividend yield of 4.57% on the current share price. Its four-year average yield is 3.97%. Its dividend payouts have increased at a CAGR of 6.1% over the past three years. Also, TROW has paid dividends for 37 consecutive years.

During the second quarter that ended on June 30, 2024, TROW’s net revenues increased 7.6% year-over-year to $1.73 billion. Its adjusted net operating income grew 9.8% from the prior year to $654.90 million. Similarly, the company’s adjusted net income attributable to TROW and adjusted EPS were $519.70 million and $2.26, up 11.4% and 11.9%, respectively, from the prior year’s quarter.

Analysts expect TROW’s EPS for the quarter ended September 30, 2024, to increase 6% year-over-year to $2.30. Its revenue for the same quarter is expected to grow 9.9% year-over-year to $1.84 billion. It surpassed the consensus EPS estimates in three of the trailing four quarters. TROW’s stock has gained 4.7% over the past year to close the last trading session at $106.63.

TROW’s strong fundamentals are reflected in its POWR Ratings. It has a B grade for Quality. Within the Asset Management industry, it is ranked #15 out of 47 stocks. To access TROW’s grades for Growth, Value, Momentum, Stability, and Sentiment, click here.

What To Do Next?

43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.

2024 Stock Market Outlook >

KO shares were trading at $69.07 per share on Tuesday afternoon, up $0.06 (+0.09%). Year-to-date, KO has gained 19.88%, versus a 21.47% 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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