Buying reliable dividend stocks is one of the best ways investors can protect themselves from stock market volatility. They tend to be businesses that have gone through numerous business cycles and remain profitable nonetheless. Income-generating stocks also outperform over the long haul compared to non-dividend paying ones.
The asset managers at Hartford Financial Services (NYSE:HIG) found dividend stocks in the S&P 500 have never had a losing decade. Going as far back as 1930, income-generating stocks gained even when the broad market index itself sold off.
Several companies fit the bill, but here are three dividend stocks to buy in June that investors ought to consider for their portfolios.
AT&T (T)
As we enter a new period of market uncertainty, investors can find stability in AT&T (NYSE:T). The telecom giant isn’t the growth stock it once was, but it offers consistent cash flows on a much-improved financial situation. There are also a few targeted catalysts that make AT&T one of the top dividend stocks to own for years to come.
The 5G network infrastructure rollout over the next few years is one of the strongest reasons to buy the stock. It will be one of the most critical upgrades to the industry. Consumers and businesses eagerly await the first significant increase in download speeds since 4G’s introduction in 2009. That’s key for AT&T as it generates some of its highest profit margins from data usage. It’s why AT&T has been spending billions of dollars to upgrade its network. It seems to be working, too.
The telecom added 1.2 million net broadband customers last year, making it five years running that it has added at least 1 million customers. Domestic wireless revenue jumped 5.2% in the first quarter, giving the telecom its best-ever first quarter for mobility operating income.
AT&T’s dividend yields an enticing 7.3% annually. Because it received $40 billion from the spinoff of WarnerMedia, which then merged with Discovery to form Warner Bros Discovery (NYSE:WBD), it has paid down a large portion of its debt. That makes AT&T’s payout much more secure and minimizes the risk of it being reduced.
Enterprise Product Partners (EPD)
With over 50,000 miles of pipelines, 14 billion cubic feet of natural gas storage, and over 260 million barrels of storage capacity for natural gas liquids, crude oil, refined products, and petrochemicals, Enterprise Product Partners (NYSE:EPD) is one of the largest publicly traded partnerships in the U.S.
The company sits in the sweet spot of the energy industry. As the middle-man between upstream and downstream players, it makes money no matter which way the market for oil and gas goes. Most of Enterprise Product’s revenue comes from long-term, fixed-fee, or take-or-pay contracts. That means it still gets paid even if customers don’t accept delivery.
Like AT&T, Enterprise Product Partners’ dividend is yielding a generous 7.8% at current prices. It also has an enviable track record of raising the payout for 24 consecutive years.
There is no lack of demand for fossil fuels. That means the pipeline and storage specialist should have many more decades of growth ahead of it.
Altria (MO)
Altria (NYSE:MO) is another top dividend stock to buy in June, similar to AT&T. Its high-growth days are behind it as cigarette smoking remains in a secular decline. Adult smokers have declined from 20.9% of the U.S. population in 2005 to just 11.5% in 2021. Yet Altria is still strongly profitable.
Tobacco has what economists call “inelastic demand.” Smokers continue to buy cigarettes even though prices keep climbing. When the federal, state, or local government raises taxes on tobacco prices, cigarette companies like Altria can pass along the cost to consumers without losing many customers.
Although first-quarter revenue fell 2.9% to $5.7 billion, Altria’s adjusted earnings per share rose 5.4% to $1.18 per share. Yet Altria is also looking forward to what comes next.
Industry peer Philip Morris International (NYSE:PM) declared the future to be “smoke-free.” Electronic cigarettes and vaping products are a way to extend the industry’s life beyond combustible cigarettes. In March, Altria announced it was acquiring NJOY, the third-largest e-cig maker. It has Food & Drug Administration approval for six products, giving Altria instant access to the $15.5 billion e-cig and vape market. It’s forecast the industry will grow about 30% annually through 2030, meaning it’s an opportunity that could reach $72 billion.
With a dividend yielding 8.3% annually, Altria continues to richly reward investors who stay with the high-yield dividend stock through its ups and downs.
On the date of publication, Rich Duprey held a LONG position in T, MO, and WBD stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.
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