3 Must-Own Dividend Growth Stocks to Buy and Hold for 2021

Investing in dividend stocks might be the best option for those who want to ensure a steady stream of income when market movements are uncertain. Current times are unprecedented and it is even harder to predict how the markets will perform going into 2021. This makes it an ideal time for dividend investing…

The ongoing spread of the coronavirus may last well into 2021, as there is no vaccine or treatment available yet to contain the spread. There is also a significant change in consumer and business behavior due to the rapid digital transformation that will shape the fortunes of the markets in 2021.

Hence, it may be best to invest in stocks that not only have a time-proven business model, but also have a strong record for dividend payouts. These stocks will provide steady income into 2021, while also holding the potential for capital appreciation.

In fact, dividend stocks have delivered decent returns this year as well. This is evident from the Vanguard High Dividend Yield ETF’s (VYM) 34.7% gains since March.

In addition to possessing strong underlying strength, Microsoft Corporation (MSFT), The Home Depot, Inc. (HD), Costco Wholesale Corporation (COST), and United Parcel Service, Inc. (UPS) have been increasing their dividend payouts and have a long history of paying dividends. So, investing in these stocks could be a safe move until there are some certainties in the market’s movements.

Microsoft Corporation (MSFT)

MSFT develops and markets software products and services globally. The company also provides cloud computing services through Microsoft Azure. MSFT’s stock has gained 37.2% so far this year.

The company announced a $0.56 dividend per share for the fourth quarter, which is an increase of 9.8% from the earlier dividend amount. The company’s dividend payout has a five-year CAGR of 10.5%. The current dividend yield is 1.04%, while the four-year average dividend yield is 1.65%.

The company has been working on improvements to its Teams platform, which helps people work and collaborate remotely. The new Teams app will display live captions so that users can easily tell who is speaking and what is being said. Further, the company is gearing up for the launch of the latest installment in its Xbox gaming console line called Xbox Series X/S.

MSFT is expected to witness revenue growth of 8.9% for the quarter ending December 2020, and 10.7% in 2021. The company’s EPS is estimated to grow 17.5% in 2021, and at a rate of 14.5% per annum over the next five years.

How does MSFT stack up for the POWR Ratings?

B 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 #8 out of 96 stocks in the Software – Application industry.

The Home Depot, Inc. (HD)                                                                

HD is a retailer of home improvement products. The company’s offerings include building materials, lawn and garden products, home maintenance, and more. The company also provides professional service programs. HD’s stock has gained 29.5% so far this year.

The company has distributed $1.5 dividend per share over the last three quarters, which is an increase of…

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