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In this post, we review safe dividend stocks to invest in now. Dividend stocks are often considered safer for investors because the stock price is hedged by the yield. Not all common stocks pay dividends.

Dividend Stocks for Capital Preservation and Income

For many years, risk-averse investors chose dividend-paying stocks to preserve capital and generate income. Utility stocks, blue-chips, and other dividend stocks paid investors a certain liable amount of income each quarter.

Dividend-paying shares are often issued by companies with a larger than average total number of shares outstanding. High capitalization, dividend-paying shares offer excellent liquidity to the investor.

Today’s investor realizes that dividend stocks aren’t always safe. A higher than market dividend yield may predict a credit quality downgrade and lower future dividends. Failure to consider the dividend stock’s business prospects can be a costly mistake.

High Capitalization (High Cap), Big Names

Some dividend-paying stocks are considered growth-with-income investments. For example, The Coca-Cola Company (KO) has paid dividends to shareholders for more than 50 years. Coca-Cola’s ubiquitous beverages and bottled waters are stable consumer products.

Before investing in a dividend-bearing stock, review the company’s track record. Look for dividend cuts or consecutive years of increasing dividends. If the company is financially stable and in “strong” investor hands, owning shares of the long-term may be profitable.

Dividend Investing for Stable Passive Income

Dividend stocks are considered safer and less volatile investments in a market downturn. However, the investor should never buy the highest-yielding dividend stock.

Look for reliable and non-volatile dividend stocks with steadily increasing dividend yields over time, such as:

  • Hormel Foods Corporation (HRL) also has a 50-year track record of rising dividends and share appreciation.
  • Procter & Gamble (PG) offers conservative investors a 60-year track record of growing dividend yields.
  • Colgate-Palmolive (CL) continues its 50-year record of paying consistently higher dividend returns to investors.

In periods of economic and market uncertainty, investors seek quality like well-managed, seasoned dividend-paying stocks.

Dividend-Yielding Stocks as a Profitable Long-term Strategy

Most investors appreciate dividends. If the company offers dividend reinvestment, it’s possible to buy partial new shares to increase the return-on-investment (ROI).

In the 1970s decade, the total return on the S&P 500 index (+84 percent) was primarily due to reinvested dividends.

Between the Great Depression years of the 1930s and 20202, dividend income comprised just 41 percent of the S&P 500 index total returns.