Investing in dividend stocks is vital to many long-term investors. Dividends are a discretionary distribution of profits paid to investors, usually by publicly-traded companies. One reason to buy dividend stocks in April is that many firms will pay dividends during the month. That is true of the shares listed below.
Dividends are, as mentioned above, discretionary. But realistically, once a company initiates a dividend policy, it will likely continue to do so. Further, those dividend-bearing companies seek to increase these distributions over time. Those that do so tend to be among the most stable long-term holdings, seeing steady results and long-term price appreciation.
Let’s look at a few of the best dividend stocks to buy in April.
|ADP||Automatic Data Processing||$216.11|
Altria (NYSE:MO) is a well-known tobacco giant facing a pivotal period in its business history. It’s no secret that the prevalence of cigarette smoking has declined dramatically in the last few decades. In 2005, nearly 21% of adults smoked, but by 2020, that percentage had dropped to 13%. The steep decline in cigarette smoking has affected big tobacco dramatically. Relying on cigarettes is no longer a viable business strategy.
That means that Altria, like all big tobacco companies, is in flux. The company is pivoting to smoke-free tobacco and other smoke-free products. The Marlboro cigarette maker is primarily expanding into vapes, nicotine pouches, and smoke-free tobacco. Indeed, the company is working diligently toward that goal, having recently purchased NJOY and its e-cigarette brand for $2.75 billion. Altria anticipates doubling its smoke-free revenues by 2028 to $5 billion.
For dividend investors, this is good news. The company’s stock price has fallen since 2017, but Altria’s dividend policy has remained unchanged. It hasn’t reduced its payment since 1970. That means current investors get the opportunity to buy cheaper stock, with a sky-high dividend yielding 8.4%. That is generally a very high-risk indicator, but Altria is not going anywhere. In other words, ride that high-yield dividend, and hope the company can fulfill its promise to deliver nicotine in novel ways.
Kimberly-Clark (NYSE:KMB) is a healthy dividend stock from just about any perspective. It yields 3.5% currently, which is below the 4% threshold some characterize as denoting risk. Additionally, KMB stock remains well below the higher 6% risky threshold others use to define acceptability.
Kimberly-Clark is a company with a stable dividend, having last been reduced in 1973. The maker of Huggies, Kleenex, and Depends is neither the most exciting company, nor the fastest-growing. In 2022, revenues increased by 4% to $20.2 billion. Additionally, Kimberly-Clark’s management anticipates 2023 will see those sales increase by 0% to 2%. Again, not precisely strong growth.
But Kimberly-Clark is trading at a price-earnings ratio in line with average levels, relative to the last decade. It isn’t overpriced right now. Growth can be expected when the current business cycle is nearer to its end. When that happens, no one can say for sure. But KMB stock will pay a nice dividend to those who invest in April, which will continue afterward.
Automatic Data Processing (ADP)
Automatic Data Processing (NASDAQ:ADP) primarily offers payroll and attendance software solutions, along with other HR services. Like Kimberly-Clark, it’s arguably a very dull company. But boring can often be very good in the world of dividend investing.
In any case, ADP is in a solid position, providing investors with 5-6% expected market growth and 8-9% overall growth in 2022. Automatic Data Processing anticipates 12-15% total shareholder return over the medium-term at a 2% dividend yield. Its current yield is 2.3%, so that return may be higher.
From the average target stock price alone, investors might expect a 13% return over the next year. That return is based on a current share price of approximately $216 and a target price of $245.88 plus four $1.25 quarterly dividends. Again, not a particularly interesting company, but who cares? This is a company providing attractive returns, making ADP stock an easy choice for investors looking for companies with strong total return potential.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.