• Dividend stocks are one way to enhance your portfolio in June.
• Companies with a proven history of paying steady dividends are candidates to buy and hold.
• Don’t miss out on our latest report, “Two Dividend Legends to Hold Forever.”

 

As the final month in the second quarter gets underway, it’s a good time to reassess one’s investment portfolio to see where tweaks are needed. One strategy is to add reliable dividend-paying stocks to generate passive returns and bolster the performance of the portfolio. So far this year, all three major indices are in the green, including the Dow Jones Industrial Average (+3%), Nasdaq (+14%) and the S&P 500 (12%). The time is now for investors who want to bring it home with dividend income too.

We have selected three no-brainer dividend stocks to buy in June, especially in this high-inflation, high interest rate economy. All three of these companies – Home Depot (NYSE: HD), IBM (NYSE: IBM) and UnitedHealth Group (NYSE: UNH) have been paying investors consecutive quarterly cash dividends for decades, giving investors a reliable source of income in addition to capital appreciation. Two of the three stocks have experienced pullbacks in their share price year-to-date but have not skipped a beat on paying cash dividends, perhaps presenting buying opportunities for investors.

Home Depot Is Poised to Benefit From Home Renovation Trend

• Quarterly Dividend Amount: $2.25
• Dividend Yield: 2.7%
• Stock Price YTD: -5%

With mortgage rates in the stratosphere, more people are choosing to fix up their homes rather than sell. As a result, home-improvement leader Home Depot is likely to benefit, making this a must-buy stock in June.

According to John Burns Research and Consulting, Baby Boomers comprise more than 33% of all homeowners, most of whom have zero mortgages. As a result, they’ve got little interest in saddling themselves with a 7% mortgage rate to move. Their solution is to simply invest in home renovations, and they are doling out anywhere between tens of thousands to hundreds of thousands of dollars to do so. This strategy requires multiple trips to home-improvement retailers like Home Depot. Buying Home Depot stock is one way to capitalize on this trend.

Besides, Home Depot has been steadily increasing its quarterly cash distribution for years, including a 7% jump in Q1 2024 to $2.25 per share.

Home Depot can be a seasonal business, and this year a late start to spring affected its quarterly sales, resulting in a 2.3% decline to $36.4 billion in fiscal Q1. However, the retailer feels confident in its positioning for the rebound in large home improvement projects. The timing couldn’t be better to add Home Depot stock to your portfolio.

IBM for AI Layup

Quarterly Dividend Amount: $1.62
Dividend Yield: 3.97%
Stock Price YTD: +5%

If your portfolio could use some technology, you might want to consider PC and IT giant IBM, which has been paying investors dividends for multiple decades. As one of the original tech bellwethers, IBM is a stock with a proven history investors can depend on for steady gains. While it might not be a high-flying name like Alphabet (Nasdaq: GOOGL) or Facebook (Nasdaq: META), IBM has stood the test of time and continues to prioritize shareholder value.

IBM may be a blue chip company with a century of history since operating under its current name (even longer as Computing-Tabulating-Recording Co). But don’t let its old age fool you. IBM is investing heavily in artificial intelligence (AI), not to be outdone by its younger and more nimble peers. Earlier this year, the company made a statement with its acquisition of HashiCorp, a cloud-based AI and software-as-a-service (SaaS) platform, for $35 per share, or $6.4 billion in cash. This business compliments IBM’s Red Hat division, which is one of its biggest growth engines.

In its most recent quarter, IBM reported revenue of $14.5 billion, a 1% increase year-over-year, as well as free cash flow of $11.8 billion. IBM is targeting $12 billion in free cash flow for the year.

UnitedHealth Group Takes a Licking and Keeps on Ticking

• Quarterly Dividend Amount: $2.10
• Dividend Yield: 1.67%
• Stock Price YTD: -6.8%

Last but not least is UnitedHealth Group, which pays a quarterly dividend of $2.10 per share. UnitedHealth has a good track record of raising its dividend and already increased the amount from $1.88 earlier in the year.

In Q1, UnitedHealth reported revenue of $99.8 billion, an increase of almost $8 billion year-over-year. Earlier this year, UnitedHealth suffered a cyberattack that affected its first-quarter results and will also impact the full-year performance. After the cyberattack response, UnitedHealth ended Q1 with $1.1 billion in cash flow from operations. Also weighing on results was the sale of its Brazil operations, which resulted in a quarterly charge of $7 billion.

However, these setbacks appear to be short term in nature and have not affected the company’s ability to pay a cash dividend. In Q1, UnitedHealth Group returned a total of $4.8 billion to shareholders in the form of dividend distributions and stock buybacks.

Most Wall Street analysts who cover UNH have a “buy” rating on the stock with an average price target of $565, reflecting 15% upside potential. Combined with the dividend, UnitedHealth is a sure bet for investors to add to their portfolios in June.

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