Dividends are an attractive feature of many stocks, and for some investors, they are a prerequisite. But not all dividends are created equal, as the pandemic has demonstrated. Coca Cola (NYSE: KO), Procter and Gamble (NYSE: PG), and American Express (NYSE: AXP) all of them have maintained their dividends thanks to COVID-19, and they will pay them for the foreseeable future.
The classic taste for staying at home
Coca-Cola has made it a priority to maintain its dividend throughout the pandemic despite declining revenues. Coke is a dividend aristocrat, which means he has increased his dividend for over 25 consecutive years.
Sales fell 28% in the second quarter ended June 26, but have continued to improve since then, dropping 5% in the fourth quarter ended December 31.
Lockdowns and closures contributed to a major slowdown in the company’s sales, and the company quickly made operational changes to better compete in the new shopping atmosphere. He restructured himself into what he calls the network organization model, which aims to standardize and simplify operations with an emphasis on technology and digitization.
Coke still has a war chest to spend in dividends and fueling new projects. It demonstrated fourth quarter cost reduction effectiveness and strong cash flow. While there has been some progress since the initial fallout from COVID-19, the market environment has not completely changed and investors cannot expect any real improvement in the near term. But in the long run, Coke still has bright prospects.
CEO James Quincy said, “While there is uncertainty associated with the timing and final resolution, we will continue to prioritize investments in the business to drive long-term growth, as well as support the growth of companies. dividends for our shareholders. Coca-Cola’s dividend returns 3.2%, and shareholders can be confident in a continued dividend, as evidenced by management behavior during the pandemic.
The biggest skincare brands in the world
Procter and Gamble is exclusive Dividend King Group, which means he has increased his dividend annually for over 50 years – in this case, 64 years.
The company operates in 10 categories of daily use with consumer brands such as Tide detergent, Crest dental and Pampers diapers. It is a market leader with $ 72 billion in annual sales in 2020, but it is committed to innovation and digitization to maintain its dominant position.
As you might have guessed, Procter & Gamble has known some of its best neighborhoods for many years, as people have stayed home and stocked up on self-care and home-care products. In the second quarter ended December 31, sales increased 8%. The highest growth was fueled by home care products, which climbed 30%. Oral and family care increased by double digits, and the other categories increased by one digit.
Growth will likely slow down as the pandemic subsides, but sales are expected to continue to rise. The company is focused on meeting new demand with digital capabilities, and e-commerce grew nearly 50% in the second quarter.
The Procter & Gamble stock accelerated during the pandemic, causing its yield to drop, which is typically around 3%; it is now around 2.4%.
An established brand with fintech capabilities
American Express has paid a dividend for the past 32 years, but it has not increased it in 2020. Sales fell 29% in the second quarter, the company’s worst performance during the pandemic, but revenue is remained positive, falling 85% to $ 0.29 per This improved to a sales decline of 20% in the third quarter and a slightly larger decline of 18% in the fourth quarter ended Dec. 31. Income improved significantly to $ 1.76, down 13% from the previous year.
Spending other than travel and leisure has already exceeded pre-pandemic levels, but American Express has a high share of travel and leisure spending, which is still weighing them down as the pandemic has yet to be defeated. . American Express has a differentiated business focused on high net worth customers, who pay up to $ 550 in annual fees (or $ 5,000 for the invitation-only black card), are very loyal, and have pocket money even in times of year. economic downturn. .
It is also its own credit card processor and bank, unlike most other credit cards, which are issued by various banks and processed by Visa Where MasterCard.
American Express is one of the oldest companies in the United States, but it harnesses financial technology to empower small businesses and create a best-in-class customer experience. It acquired the fintech company Kabbage in 2020 to offer customers a suite of digital banking options and the Resy digital restaurant reservation app in 2019 for more customer benefits.
American Express stock is the only stock on this list with gains so far in 2021, and its dividend is earning around 1.3%.
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