It’s no secret that finding stocks that pay dividends can be a great way to generate passive income. However, not all dividend stocks are created equal.
There are two particular stocks that I believe stand out from the others and are a great addition to any portfolio.
Johnson & Johnson (JNJ) and Target (TGT) are two stocks that not only have great numbers with strong balance sheets but have been around for a long time and have continued paying good dividends, despite the current pandemic.
JNJ has a 2.73% dividend yield that pays $1.01 per share dividend quarterly, which comes out to $4.04 per share annually.
That means if you owned 100 shares of JNJ then you would get paid $101 dollars every quarter for a total of $404 annually.
Now, for some people, this may not seem like a lot of extra cash, but being able to add over $400 dollars to your portfolio just by simply owning a great stock…well, that is a great deal any day of the week.
For Target, its dividend yield is 2.20% and pays $0.68 per share quarterly, which comes out to $2.72 per share annually.
If we use the same number of shares of 100, then TGT would yield you an extra $68 a quarter and $272 per year.
Now, just imagine you own 200 shares or 300 or even 1,000 of either one of these. You could be making great money just by having these stocks sitting in your portfolio.
You don’t have to do anything except watch the cash pour in.
Either one of these stocks is a great buy just for their dividends alone, even if they aren’t currently at the best price.
With everything going on in the world right now with Covid-19, we can never be sure what the market is going to do from one day to the next.
But, both JNJ and TGT have been able to stick to their guns and keep pumping out their dividends, where so many others are slashing or even stopping them all together.
Beyond dividends
What about price? First, let’s take a look and Johnson & Johnson. Its earnings per share (EPS) is $5.69 and free cash flow (FCF) per share is $8.97.
This means management is sitting on a good amount of cash, a fact which has helped them get through the current uncertain times and will allow them to do so in the future.
Having a lot of cash on hand is one reason JNJ has been able to continue paying a dividend. Companies that don’t have enough cash on hand are having to cut dividends and in some cases stop paying them altogether. Johnson & Johnson does not have this problem.
Target’s earnings per share (EPS) sits at $5.39 with free cash flow per share (FCF) of $6.55.
Much as I mentioned with JNJ, Target has been able to weather the current Covid-19 storm with strong numbers, which has allowed it to continue paying a dividend as well.
It is also important to note that both companies have continued beating earnings estimates, despite the pandemic. This is just another testament to the strong balance sheet for both JNJ and TGT.
Steady dividends are great news for investors because it shows that both of these companies are standing firm and moving forward while trying to minimize adding any additional risk or consequences to their investors.
