FAT Yields And Stable Prices, No Headaches!
We invest in dividend stocks for one main reason. We want cash in our bank account!
But there’s something else dividend stocks provide, and it’s peace of mind.
Knowing I’m getting a steady stream of money helps me sleep at night.
But sometimes, a dividend stock isn’t worth the hassle.
Even if it pays a stable dividend!
A few years ago, I owned Ryman Hospitality Group (ticker: RHP) and the price was all over the place.
I was still getting payments every quarter, but the price movement was too stressful.
I know, I know. We aren’t supposed to care too much about the price.
But if I’m sweating before looking at my portfolio, then changes need to be made.
So, I dumped Ryman and haven’t looked back.
It served as a valuable lesson. I don’t want my dividend stocks jumping around so much.
The best way to avoid volatile stocks is to find companies with a low beta.
Beta measures how volatile a stock is compared to the overall stock market.
Values higher than 1 mean the stock is more volatile than the stock market.
Betas less than 1 mean the stock is more stable.
Here’s a link to a YouTube video going into more detail about beta.
Ryman had a beta of 1.6, which means the price moved more than the stock market.
No thanks!
If you can’t stomach massive price changes, then the following stocks are for you.
You can’t get much more stable than Bristol-Myers Squibb (ticker: BMY), a $100 billion pharmaceutical company with a 5% dividend yield.
Bristol-Myers Squibb also has a beta of just 0.39, so its price is a lot more stable than the overall market.
Its dividend is also stable. Bristol-Myers Squibb has increased its dividend for 17 straight years with an average dividend growth of 5% each year over the last decade.
And Bristol-Myers Squibb’s payout ratio sits around 40%, so there’s plenty of room for those dividends to continue to grow.
If you like special dividends, then you’ll love CME Group (ticker: CME), a financial services company running exchanges ranging from stocks and options to energy, currency, and agricultural products.
Every December, CME pays out an annual special dividend. In 2024, CME paid out $5.80 per share in special dividends.
CME also has a beta of just 0.49 with a 4% dividend yield.
And CME isn’t afraid of raising those dividends. CME has increased its regular, quarterly payment every year since 2011 on average by over 30% annually.
Last up is First Energy (ticker: FE), a utility company in Ohio paying dividends all the way back to 1999.
Don’t come here for dividend growth because First Energy only raises its payments by about 2% per year.
But First Energy’s stock price is incredibly stable with a beta of only 0.38 and a dividend yield around 4.3%.
First Energy has one of the lowest betas in the entire S&P 500!
Are you like me? Do you sometimes worry about stock price fluctuations in your dividend investments?
Michael Jennings, Editor
Dividend Stocks Research
Category: Dividend Yield
