Charles B. Carlson, CFA
Charles B. Carlson, CFA, CEO of Horizon Investment Services, a financial advisory firm in Hammond, Indiana, and Chicago. He is author of nine books, including The Little Book of Big Dividends. HorizonInvestment.com
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.