The Dividend Dynasty: 3 Stocks for Income Hungry Investors

Stocks to buy

Dividend stocks are optimal for investors who want cash flow and don’t want to deal with real estate. These stocks pay dividends frequently, raise them each year, and can also generate long-term capital gains for investors.

Corporations that distribute cash to their investors are also known for having more stability. These companies have fewer issues with generating profits and maintaining some growth. Dividend stocks don’t outperform the stock market in most cases, especially if you narrow your focus to high-yield stocks. However, these same investments accomplish their job well and can help retirees who want to take fewer risks. These are some of the top dividend stocks to consider if you are looking for income.

Main Street Capital (MAIN)

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Main Street Capital (NYSE:MAIN) is a private debt and equity firm that offers a generous 6.24% dividend yield. The corporation distributes cash to its investors each month. The high yield makes it more difficult for the stock to gain value, but it’s still up by a respectable 20% over the past five years.

The firm prioritizes debt investments in the lower middle market. That focus reduces Main Street Capital’s correlation with the broader market. If the stock market endures a correction, MAIN stock is less likely to go down with other equities. The Main Street Capital team has been working together for over 20 years and has more than 100 years of cumulative experience.

Main Street Capital’s portfolio consists of 190 companies and has its capital spread across dozens of industries. The firm’s three largest industries are Machinery (8%), Internet Software & Services (5%), and Professional Services (6%). Its capital is spread across the United States with a big emphasis on the Western and Northeastern regions.

IBM (IBM)

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IBM (NYSE:IBM) has experienced a resurgence as the company continues to modernize with cloud computing and artificial intelligence. Shares are up by 56% over the past year and currently have a 24 P/E ratio. The stock also offers a 3.40% dividend yield.

IBM hasn’t raised its dividend by much. The firm hiked its quarterly dividend from $1.65 per share to $1.66 per share in 2023. The company is due for a dividend hike in the next quarter, which can set for a higher growth rate. IBM’s financials support the possibility of a dividend hike that’s greater than $0.01 per share.

The tech giant closed out the fourth quarter of 2023 with 4% year-over-year (YoY) revenue growth and 21% YoY net income growth. That’s an acceleration from full-year revenue growth of 2% YoY. 

IBM isn’t the type of stock to outperform the stock market. However, it can deliver consistent dividend payouts with a lower margin of risk than high-flying growth stocks.

Oracle (ORCL)

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Oracle (NYSE:ORCL) has a lower yield than the other two stocks on this list. The tech conglomerate has a 1.30% dividend yield and trades at a 33 P/E ratio. Oracle hikes its dividend every two years. It’s less frequent than the other picks, but the dividend hikes are massive. Oracle last hiked its quarterly dividend in 2023 from $0.32 per share to $0.40 per share. That’s a 25% increase over two years. 

Oracle has also outperformed the other two stocks on this list thanks to strong demand for its cloud computing segment and rising profit margins. Shares are up by 46% over the past year and 137% over the past five years. 

The firm reported solid earnings for the second quarter of fiscal 2024. Revenue was up by 5% YoY, with significant growth in the company’s cloud segments. Overall, cloud revenue increased by 25% YoY and is becoming a larger percentage of total revenue. Oracle’s cloud growth will translate into higher revenue and earnings growth rates in future quarters.

On the date of publication, Marc Guberti did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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