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Tags: bob ciura | dividend stocks | low stock volatility

Bob Ciura: 3 Dividend Kings With Low Stock Volatility


Bob Ciura By Tuesday, 08 February 2022 01:42 PM EST Current | Bio | Archive

Volatility has returned to the stock market in recent weeks. As a result, it may be a good time for investors to consider high-quality dividend stocks, particularly for those looking to reduce portfolio volatility.

One way to gauge a stock’s volatility is its Beta value, which measures how much a stock moves in relation to the broader index. Low Beta stocks have reduced volatility compared with the S&P 500, which helps investors during bear markets.

Therefore, investors looking for safe dividends and lower stock volatility can focus on quality dividend stocks with low Beta values.

These 3 Dividend Kings have raised their dividends for over 50 years, and have Betas less than 0.50.

Dividend King #1: Northwest Natural Gas (NWN)

  • Beta: 0.16

NW Natural is a natural gas utility. It was founded in 1859 and now serves more than 760,000 customers. It delivers natural gas to its customers in the Pacific Northwest. As a utility, the company benefits from a highly recession-resistant business model. As a result, it has increased its dividend for 66 years.

In the most recent quarter, the company grew revenue by 9% year-over-year, as it grew customer accounts by 1.5% while also benefited from rate increases. Earnings-per-share increased 55% year-over-year.

Shares also yield 4% currently, a very attractive yield considering the S&P 500 has an average yield below 1.5% right now.

With a Beta value of 0.16, NWN stock moves 0.16% for every 1% move in the S&P 500 Index. If the broader index declines 10%, investors can reasonably expect NWN stock to decline just 1.6%. Therefore, NWN stock could be an attractive stock for investors looking to reduce volatility.

Dividend King #2: Colgate-Palmolive

  • Beta: 0.28

Colgate-Palmolive is a consumer staples giant that has been in business for over two centuries. It has multiple operating segments including Oral Care, Personal Care, Home Care, and Pet Nutrition. A few of its leading brands include Colgate, Palmolive, and Hill’s. In total, the company generates more than $17 billion in annual revenue.

Colgate has a strong business model, as consumers still need personal care products and pet food even during recessions. The company reported better-than-expected results in the most recent quarter. Revenue of $4.4 billion increased 6% from the same quarter last year. Organic growth of 4.5% was the primary driver. North American sales fell -4%, but the international markets led the way with significantly higher growth.

Inflation is a current headwind for Colgate. Gross margins were 180 basis points lower in the most recent quarter, compared with the same quarter a year ago. The company is experiencing higher raw materials and packaging costs, as well as higher overhead expenses. Fortunately, it has utilized cost reductions elsewhere in its business, helping the company to remain profitable.

Colgate has increased its dividend for 58 consecutive years, while the stock has a current yield of 2.1%.

Dividend King #3: Lancaster Colony (LANC)

  • Beta value: 0.47

Lancaster Colony is a lesser-known Dividend King that might fly under the radar of many dividend growth investors. But the company has a strong business model and an impressive dividend history. Lancaster Colony is a food company with over $1.5 billion in annual revenue. Its core brands include Marzetti, Sister Schubert’s, and New York Bakery.

In the 2021 third quarter, total sales were up 12.3% year-over-year to a record of $392 million. On an organic basis, total sales rose 13.2%. Retail segment sales were up 15.6% to $224 million, which was driven by strong sales of Chick-fil-A and Buffalo Wild Wings licensed sauces. The Foodservice segment saw sales gain 8.1% year-over-year, which was driven by inflationary pricing and volume gains.

Gross profit was essentially flat at $92.4 million, as the company saw sales growth, favorable sales mix, and cost savings, but those were offset by higher commodity and packaging costs, as well as increased freight and warehousing costs.

Still, earnings-per-share of $1.11 per share were a solid result for the highly profitable company. Lancaster has increased its dividend for 59 years in a row, while the stock currently yields 2%.

Final Thoughts

Volatility has reared its ugly head once again. The S&P 500 Index has sputtered out of the gate in 2022. In a deeper downturn, low-volatility stocks like these 3 should provide less downside than the overall market index. And, their steady dividends and annual dividend growth provide shareholders an added buffer in the form of regular income.

Bob Ciura has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.

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Volatility has returned to the stock market in recent weeks. As a result, it may be a good time for investors to consider high quality dividend stocks, particularly for those looking to reduce portfolio volatility.
bob ciura, dividend stocks, low stock volatility
Tuesday, 08 February 2022 01:42 PM
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