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11 Best Low-Risk Dividend Stocks To Invest In

In this article, we discuss 11 best low-risk dividend stocks to invest in. You can skip our detailed analysis of dividend stocks and their performance, and go directly to read 5 Best Low-Risk Dividend Stocks To Invest In

American investors are feeling the pain as the fourth quarter begins, following a tough September that dimmed the bright performance of the stock market this year. The S&P 500 dropped by 5% in September, making it the worst month for the index in the entire year. Meanwhile, the Nasdaq Composite and Dow Jones Industrial Average also experienced declines of 6% and 4%, respectively. In such a situation, investors opt for risk-free investments to preserve their money and ensure financial stability. During economic downturns, dividend stocks are a valuable method to generate consistent income. According to analysts, this decline might ultimately lead to a market rebound and can favor dividend stocks.

Morgan Stanley’s chief investment officer, Mike Wilson, recently released research showing that dividend-paying stocks offer investors a combination of stability and solid long-term returns. Here are some comments from the analyst:

“Dividend-paying stocks have outperformed non-dividend paying stocks across all large-cap sectors since 2000 with the exception of consumer discretionary.”

He further mentioned that dividend stocks not only perform better than stocks that don’t pay dividends on a regular basis, but they also do well when the market experiences downturns. Wilson highlighted their impressive performance during market declines in 2000, 2008, 2015, and 2020, thanks to the steady income from dividends and the generally strong quality of the companies that offer them.

Also read: Retirement Stock Portfolio: 10 Low Risk Investments

Wilson’s statement aligns with research from BlackRock, as discussed in our article, 25 Things Every Dividend Investor Should Know. The report highlighted that dividend growth in the S&P 500 outpaced inflation over the years. Between 1971 and 2022, U.S. companies raised their dividends by 3.7% each year, while inflation only went up by 2% annually. Additionally, from 1957 to 2022, S&P 500 dividends increased by 5.73%, while inflation only saw a 3.68% rise during the same period. This shows that dividends have consistently outpaced inflation.

Dividend stocks are dependable and low-risk investments because they not only perform well compared to inflation but also have strong fundamentals, stable financial positions, consistent profits, and a history of generating cash flow. McDonald’s Corporation (NYSE:MCD), Chevron Corporation (NYSE:CVX), and Johnson & Johnson (NYSE:JNJ) are some of the best dividend stocks with strong dividend growth track records. In this article, we will further discuss the best low-risk dividend stocks.

Image by Steve Buissinne from Pixabay

Our Methodology:

For this list, we first looked for dividend stocks with a beta value under 1, which means they are less volatile compared to the overall market. From this group, we selected dividend stocks that have consistently increased their dividends for 10 years or more. We then sorted these stocks in ascending order of the hedge fund investors owning stakes in them, according to Insider Monkey’s database of Q2 2023.

Best Low-Risk Dividend Stocks To Invest In

11. The Coca-Cola Company (NYSE:KO)

Number of Hedge Fund Holders: 61

Beta Value: 0.61

The Coca-Cola Company (NYSE:KO) is an American multinational beverage company. It is one of the best dividend stocks on our list as the company has been raising its dividends consistently for the past 61 years. The company offers a quarterly dividend of $0.46 per share and has a dividend yield of 3.37%, as of October 21.

In the first half of 2023, The Coca-Cola Company’s (NYSE:KO) cash position remained strong as it generated $4.6 billion in operating cash flow and its free cash flow amounted to $4 billion. In addition to KO, McDonald’s Corporation (NYSE:MCD), Chevron Corporation (NYSE:CVX), and Johnson & Johnson (NYSE:JNJ) are some other dividend stocks grabbing investors’ attention.

At the end of Q2 2023, 61 hedge funds in Insider Monkey’s database reported having stakes in The Coca-Cola Company (NYSE:KO), which remained unchanged from its previous quarter. The collective value of these stakes is over $27.2 billion. Among these hedge funds, Berkshire Hathaway was the company’s leading stakeholder in Q2.

10. Costco Wholesale Corporation (NYSE:COST)

Number of Hedge Fund Holders: 67

Beta Value: 0.77

Costco Wholesale Corporation (NYSE:COST) is a large American multinational retail corporation that operates a chain of membership-based warehouse clubs. On October 18, the company announced a quarterly dividend of $1.02 per share, which was consistent with its previous dividend. It has been raising its dividends for 19 years straight, which makes COST one of the best dividend stocks on our list. As of October 21, the stock has a dividend yield of 0.74%.

The number of hedge funds tracked by Insider Monkey with stakes in Costco Wholesale Corporation (NYSE:COST) grew to 67 in Q2 2023, from 63 in the previous quarter. The overall value of these stakes is over $2.24 billion.

9. McDonald’s Corporation (NYSE:MCD)

Number of Hedge Fund Holders: 68

Beta Value: 0.70

McDonald’s Corporation (NYSE:MCD) is a global fast-food restaurant chain. The company operates a vast network of restaurants across the world, serving millions of customers every day. On October 5, it announced a 10% hike in its quarterly dividend to $1.67 per share. Through this increase, the company achieved a 67-year streak of dividend growth. The stock’s dividend yield on October 21 came in at 2.59%.

As of the end of Q2 2023, 68 hedge funds in Insider Monkey’s database reported having stakes in McDonald’s Corporation (NYSE:MCD), compared with 64 a quarter earlier. The consolidated value of these stakes is over $4.25 billion. With over 2.6 million shares, Citadel Investment Group was the company’s leading stakeholder in Q2.

8. PepsiCo, Inc. (NASDAQ:PEP)

Number of Hedge Fund Holders: 68

Beta Value: 0.58

PepsiCo, Inc. (NASDAQ:PEP) is an American multinational food and beverage that is mainly famous for its carbonated soft drinks. The company is also a major player in the snack food industry. It currently pays a quarterly dividend of $1.265 per share and has a dividend yield of 3.16%, as of October 21. The company has raised its dividends every year for the past 51 years, which makes it one of the best dividend stocks on our list.

In its recently-announced third-quarter earnings of 2023, PepsiCo, Inc. (NASDAQ:PEP) reported an operating cash flow of $7.6 billion, up from $6.3 billion from the same period last year. In FY23, the company expects to pay $6.7 billion to shareholders through dividends.

At the end of June 2023, 68 hedge funds tracked by Insider Monkey owned stakes in PepsiCo, Inc. (NASDAQ:PEP), compared with 70 in the previous quarter. The collective value of these stakes is over $3.5 billion.

7. Pfizer Inc. (NYSE:PFE)

Number of Hedge Fund Holders: 73

Beta Value: 0.57

Pfizer Inc. (NYSE:PFE) is a multinational pharmaceutical and biotechnology corporation based in the US. The company develops, manufactures, and markets a wide range of prescription pharmaceuticals. The company declared a quarterly dividend of $0.41 on October 4, which was in line with its previous dividend. With a dividend growth streak of 13 years, PFE is one of the best dividend stocks on our list. The stock has a dividend yield of 5.35%, as of October 21.

Pfizer Inc. (NYSE:PFE) was a part of 73 hedge fund portfolios at the end of Q2 2023, the same as in the previous quarter, as per Insider Monkey’s database. The collective value of stakes owned by these hedge funds is over $1.5 billion. With roughly 7 million shares, Diamond Hill Capital was the company’s leading stakeholder in Q2.

Diamond Hill Capital mentioned Pfizer Inc. (NYSE:PFE) in its Q2 2023 investor letter. Here is what the firm has to say:

“Our bottom contributors in Q2 included health insurance company Humana, biopharmaceutical company Pfizer Inc. (NYSE:PFE) and global entertainment company Disney. Pharmaceutical giant Pfizer has been dealing with a decline in sales due to lower COVID vaccination levels. Additionally, in 2023, management is increasing spend as the company invests in new product launches. That said, we remain positive about the long-term company fundamentals.”

6. AbbVie Inc. (NYSE:ABBV)

Number of Hedge Fund Holders: 74

Beta Value: 0.47

AbbVie Inc. (NYSE:ABBV) is a multinational pharmaceutical company with a primary focus on research, development, and the commercialization of pharmaceuticals and biopharmaceuticals. The company pays a quarterly dividend of $1.48 per share and has a dividend yield of 4.05%, as of October 21. It maintains a 50-year streak of consistent dividend growth. ABBV is one of the best dividend stocks on our list.

McDonald’s Corporation (NYSE:MCD), Chevron Corporation (NYSE:CVX), and Johnson & Johnson (NYSE:JNJ) are some other dividend stocks that have grabbed investors’ attention.

Insider Monkey’s database of 910 hedge funds showed that 74 funds owned stakes in AbbVie Inc. (NYSE:ABBV), compared with 75 in the previous quarter. The consolidated value of these stakes is more than $2.7 billion. Ken Griffin’s Citadel Investment Group was the company’s leading stakeholder in Q2.

Diamond Hill Capital mentioned AbbVie Inc. (NYSE:ABBV) in its Q2 2023 investor letter. Here is what the firm has to say:

“Also among our bottom contributors were AbbVie and Truist Financial Corp. Pharmaceutical company AbbVie Inc. (NYSE:ABBV)’s stock declined in the quarter due to biosimilar competition against its largest drug, Humira. We believe management is successfully navigating biosimilars, as this has been a known generic entry for years. We still believe the company has attractive long-term prospects despite this near-term headwind.”

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Disclosure. None. 11 Best Low-Risk Dividend Stocks To Invest In is originally published on Insider Monkey.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

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Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

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