Putting your money in the stock market, no matter the economic backdrop, can help you deliver your long-term financial goals. While the recent volatility in stocks is making some investors antsy, simple methods like dollar-cost averaging can prove incredibly effective in a wide range of market environments. Another great way to navigate through uncertain times is by investing in dividend stocks.
Dividend stocks can be a great way to boost your portfolio’s returns by generating extra income apart from just stock price appreciation. However, the beauty with dividends lies in their flexibility: you can use your dividend income however you see fit — you may to save it, use it to fund your monthly expenditure, or simply reinvest as you please.
So if you’re looking for great dividend stocks to buy for less than $200 a share, here are two names to consider.
1. Medtronic
Medtronic (NYSE: MDT) is a leading manufacturer of medical devices globally. Its products include pacemakers, insulin pumps, insulin pens, and continuous glucose monitoring devices, to name several of the medical devices it’s known for producing.
The company has a storied history of honoring its dividend payout, and has increased its dividend every single year for 46 years — and counting. Currently, Medtronic disburses approximately 93% of its earnings as dividends. The stock boasts a forward annual dividend rate of $2.80 per share, thus yielding approximately 3% at current share price levels.
Over the last 12 months, the company has pulled in profits of around $4 billion on revenue of approximately $33 billion, with an operating cash flow of nearly 7 billion. As a result, cash at hand remains close to $8 billion at the end of the most recent quarter.
Looking at Medtronic’s most recent quarter, which also happens to be its first quarter for fiscal 2025, top-line growth was a modest 3% year-over-year. Yet, its net profit rose by an eye-popping 32% from one year ago, to just over $1 billion. A 6% revenue increase in its cardiovascular products portfolio and a 12% increase in its diabetes products portfolio drove these growth figures.
While medical device businesses may not be the most exciting portfolio additions, companies like Medtronic are mainstays in industries that tend to be far more resilient to economic shifts than companies in more cyclical spaces. Medtronic has struggled with growth in recent years, which is reflected in its moderately performing stock price, although its dividend has been consistent. This could present an opportunity to buy shares of a potentially undervalued business with a price-to-sales (P/S) ratio of less than 4 that not only provides a strong value proposition to its broad customer base but can lend consistent income to your portfolio over the long term.
2. Target
Target (NYSE: TGT) has an even more impressive dividend history than the first pick on today’s list. Not only will the retail giant’s Q3 dividend represent its 228th consecutive dividend paid since 1967, when it entered the public markets, but is also on track to achieve its 53rd year in a row of dividend increases. Target yields approximately 3% for investors based on current share prices, with a forward annual dividend of $4.48 per share. The company currently pays out just 46% of its earnings in dividends to investors.
Target has had its fair share of challenges in recent years. During the height of pandemic shopping, the well-known brick-and-mortar retailer thrived with its successive expansion into e-commerce, easy pick-up and delivery options, and a diverse range of products that targeted the full scope of consumer needs. The considerable variety of products that Target offers is still a healthy value proposition to consumers.
However, a slowdown in growth compared to pandemic levels, changing consumer shopping patterns, supply chain problems, and the rise in retail theft have all had a negative impact on growth. The company was also left with excess inventory levels after inflation cooled down the rate of consumer spending, which forced it to enact serious markdowns, another move that cut into margins and profitability.
The good news is that Target appears to be slowly but surely getting back on track. In its recent financial report for the second quarter, the company reported that total revenue of around $26 billion was up 2.7% from one year ago, while comparable sales rose 2% year over year. Digital sales represent a robust growth segment for the company, with the year-over-year increase in this business coming in at 8.7% for the quarter.
Target is still profitable, and its bottom-line growth is notably outpacing its top-line gains. It reported operating income of $1.6 billion in the three-month period, up 36.6% from one year ago. Net earnings jumped by a generous 43% on a year-over-year basis to $1.2 billion. In the near term, Target will likely have to contend with volatile consumer spending patterns and normalizing growth rates from its steep uptick and downtick during the pandemic. Regardless, the company still looks like a solid pick for income investors making a long-term buy-and-hold investment.
Should you invest $1,000 in Medtronic right now?
Before you buy stock in Medtronic, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Medtronic wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $729,857!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of September 9, 2024
Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool recommends Medtronic and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.
2 Unstoppable Dividend Stocks to Buy Right Now for Less Than $200 was originally published by The Motley Fool
