Two Outstanding S&P 500 Stocks Offering Dividends, Perfect for Long-Term Investors to Acquire
Home Depot, the world's largest home improvement retailer, is eyeing a $1 trillion addressable market in the sector. With over 2,350 stores across multiple locations, the company is solidly positioned in an important segment of the economy.
In a move to reward its shareholders, Home Depot raised its quarterly dividend earlier this year by 2%. The company pays out close to a third of its adjusted earnings in dividends, with a quarterly payment of $1.02. This quarterly dividend increased this year by $0.01, offering a forward yield of 2.48%.
Home Depot's solid competitive position and strong financial performance should lead to many more years of growing dividend payments. In fact, the company has paid 38 consecutive years of dividend payments, which are well covered by earnings. A $10,000 investment in Home Depot 20 years ago would be worth $107,000 today, or $176,000 including dividend reinvestment.
On the other hand, Constellation Brands, the top seller and importer of three of the top imported beers in the U.S. (Modelo, Pacifico, and Corona), has been affected by recent macroeconomic issues. Despite this, the company has been paying a growing dividend since 2015, with beer making up the far majority of its business.
The recent dip in Constellation Brands' share price may present a good buying opportunity. The company generates earnings to support growing dividends, with the stock's forward dividend yield at 2.37%. Management aims to save more than $200 million annually in costs by fiscal 2028, which could help improve the company's financial performance and dividend growth.
The Federal Reserve's potential lowering of interest rates could benefit Home Depot, making financing home projects more affordable. However, tariffs on imported goods have raised concerns about potential higher inflation, but inflation has been relatively muted so far.
In the first quarter, Constellation Brands' beer business remained the top market share gainer, with six of the top 15 dollar share-gaining beer brands in the U.S. Beer makes up the far majority of Constellation Brands' business, but it also generates a small amount of sales from wine and spirits.
In conclusion, both Home Depot and Constellation Brands offer attractive dividend yields and strong market positions. While Home Depot is a dominant player in the home improvement sector, Constellation Brands' focus on imported beer has made it a significant player in the U.S. market. Investors looking for stable dividend growth and potential capital appreciation may find both companies worth considering.
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