If you are building a solid income-focused portfolio, you will need stocks that not only offer dividends but also can be relied on. Then you can simply ‘buy and forget’ them and invest for the long term.
Sadly, such stable stocks can be quite rare finds due to the constantly changing market and the unpredictability of trade. Moreover, the still-not-concluded threat of Brexit has damaged the value of some of the UK’s most stable stocks.
But I’ve been on the hunt and have managed to find two stocks that I feel confident in expecting regular, steady dividends from.
A hidden gem
Halma (LSE: HLMA) makes products for hazard detection and life protection. This company isn’t exactly a common household name and can often be overlooked. However, it’s actually a very reliable stock, providing a modest dividend of 0.9%. This yield might not be anything to write home about but it’s covered 3.3x by earnings per share, meaning that this is passive income you can probably rely on.
Halma announced, earlier this year, a 13% increase in group revenue for 2018. The company reported a 17% increase in earnings per share also during 2018 and that came with total returns for investors having sky-rocketed by 96% in the past three years. As a result, the stock has a high P/E ratio of 33.4 with earnings per share up to 57.2p this year.
I believe Halma is a very safe and reliable investment to make. The company has been investing in new products and services which seem to be growing the business further. We have seen some huge returns for investors already and this is a company worth investing in for the long haul, I feel.
Delivering the goods
Unilever (LSE: ULVR) is a huge consumer goods company that has brought investors reliable returns for many years. It benefits from operating major brands all around the world from consumer staples to discretionary items and they have made it one of the most valuable companies out there.
The stock price is up a considerable 25% this year despite sales growth of ‘only’ 3.5% in the second quarter. In total, the stock has risen 88% in the past five years, demonstrating consistent growth in that period. On top of these reassuring figures, Unilever offers a dividend yield of 3%. Again, this might not be huge compared to some yields available today, but it is consistent enough to provide fairly reliable side income. Furthermore, the dividend is covered a reassuring 2.3x, which means the company can easily sustain it.
The future continues to look bright with analysts predicting an8% earnings per share growth this year and 10% growth next year. This certainly makes Unilever a buy for me. Consistent growth and reliable dividends, plus global brand coverage all reassure me, with the company clearly covering all bases, even if one country isn’t performing.
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fional has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Halma. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.