Sometimes companies that had been considered too reliable to suspend or cut back dividends end up doing just that. And that’s what began happening in March when a triple-monster problem shook the financial ground under many industries—the coronavirus pandemic…plunging oil prices…and growing fears of a severe recession. Boeing, Delta Air Lines, Ford, Marriott International and Macy’s were among those suspending dividends as cash flow began drying up. Occidental Petroleum slashed its dividend by 86%.
Which companies can investors continue to rely on as safe havens? They must have products and/or services in great demand in today’s environment…rock-solid balance sheets…and strong, reliable cash flows.
Comcast (CMCSA) is the largest provider of Internet and cable-TV, which are in demand as consumers stay home. It owns NBC, cable networks and the upcoming streaming service Peacock. The Summer Olympics postponement is a temporary setback. Recent yield: 2.42%. 10-year performance: 16.6%.*
Microsoft (MSFT), one of the rare companies with an AAA credit rating, provides Microsoft Office and other software on a subscription basis, which means highly predictable revenues. It also is a leader in cloud computing and offers a popular online collaboration tool. Recent yield: 1.24%. 10-year performance: 19.3%.
PepsiCo (PEP) has 22 beverage and snack brands that generate more than $1 billion each in annual sales, including Doritos and Cheetos. Recent yield: 2.86%. 10-year performance: 9.3%.
Procter & Gamble (PG) sells recession-proof brands including Bounty, Charmin, Pampers and Tide. It has paid dividends every year since 1890. Recent yield: 2.6%. 10-year performance: 8.4%.
*All stock performance figures are annualized returns through April 10, 2020.