The Robinhood app is one of the most appealing platforms for millennials and more-aggressive investors. While the Robinhood crowd is often tagged as undisciplined investors because of their speculative bets, the Robinhood 100 List serves as a popularity measure to many pro investors. That’s because the list typically contains stocks that are creating a buzz…
The volatility in the stock markets, declining bond yields, and the second wave of coronavirus around the corner are some of the reasons why dividend income investing is more appropriate now. However, one should ensure the future growth potential in addition to the sustainability of its dividend payments before betting on it. And picking such a stock from the Robinhood List ensures that it’s popular.
Microsoft Corporation (MSFT), Johnson & Johnson (JNJ), and Walmart, Inc. (WMT) are three stocks on the Robinhood 100 list that have resilient business models and impressive dividend-paying history.
Microsoft Corporation (MSFT)
The pandemic has been a blessing in disguise for MSFT. Its Intelligent Cloud business and Teams have been in high demand amid the remote working scenario. Its cloud platform, Azure delivered 47% growth in the fourth quarter. MSFT’s suite of cloud-based products is strategically positioned to gain from the ongoing cloud boom. Its unwavering focus on its cloud services paves way for steadiness in returning capital to shareholders through dividends. In fact, over the past 6 years, MSFT has returned more capital to shareholders through its dividend issuances than 98.4% of other dividend-paying US stocks in the StockNews.com universe.
MSFT is also a cash-rich company because of its Office 365 subscription business. The company’s operating cash flow at the end of the fourth quarter of fiscal 2020 increased by 16.3%. Meanwhile, its free cash flow stood at $45.2 million, up 18.2% year-over-year. This depicts that MSFT is in a comfortable position to sustain its dividend payments. Currently, MSFT generated more cash over the 12 months than 98% of US dividend stocks in the StockNews.com universe.
Analysts estimate MSFT’s revenue for the first quarter of fiscal 2021 to climb 8.1% to $35.7 billion. The consensus EPS estimate of $1.54 for the quarter indicates an 11.6% increase year-over-year. On a year-to-date basis, MSFT gained 36.2% to close yesterday’s session at $214.9.
MSFT has been consistently paying quarterly dividends since 2003. On September 15, the company declared a dividend of $0.56, which is a 9.8% increase. This cumulated to an annual dividend of $2.04 and yields 0.95%. The company’s 3-year and 5-year divided CAGRs stand at 8.74% and 10.45%, respectively. MSFT has been growing its dividend payout consistently. Though the current yield is on the conservative side, its stable dividend growth signifies that there is ample prospect for income growth. Its dividend payout ratio at 35% indicates sustainability, which is a critical trait for consistent income.
How does MSFT stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
B for Peer Grade
B for Industry Rank
B for Overall POWR Rating
The stock is also ranked #19 out of 96 stocks in the Software – Application industry.
Johnson & Johnson (JNJ)
JNJ is synonymous with baby care products, however, it has a strong presence in the pharmaceutical as well as the segments of the medical device. Hence, it has a diversified business which is ideal for your portfolio in volatile times. Its business model also makes it a perfect pick for investors seeking stable dividend income. Over the past 6 years, JNJ has returned more capital to shareholders through its dividend issuances than 98% of other dividend-paying US stocks in the StockNews.com universe.
Even amid the pandemic, JNJ has successfully raised its dividends. The company has hiked its dividend five times in the past five years. Notably, JNJ has shown a significant recovery in its operations and rebounded from the COVID-19 induced sluggishness in the third quarter. Its EPS for the…
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