The best stocks deliver life-changing returns that accumulate over many years or even decades. Yet some investors prefer to own dividend-paying stocks because they provide a balance between long-term capital appreciation and immediate income.
With that goal in mind, let's look at why you might want to put Procter & Gamble (PG 0.68%), Constellation Brands (STZ -0.04%), and Target (TGT -0.70%) on your watch list for February.
Each of these companies has a dividend payout slated to hit investors' accounts over the next few weeks. But that's just one reason to like the stocks today.
Image source: Getty Images.
1. Procter & Gamble
Procter & Gamble will issue its typical $0.79 per share quarterly dividend in February, making 2021 its 131st consecutive year of paying dividends. The consumer staples giant has boosted that payment in each of the last 64 years, giving it one of the longest such streaks on the market. It turns out that dominating global demand for staple products like paper towels, detergent, and shampoo produces an usually stable business.
But P&G is no slouch in the growth department, either. Sales gains were running ahead of rivals like Kimberly Clark (KMB 1.28%) even before COVID-19, and the gap only widened during the pandemic. P&G last announced an 8% organic growth spike compared to Kimberly Clark's 5%. It also leads the industry in profitability, even as it generates tons of cash each quarter.
Some of that cash is being directed toward shareholder-friendly moves like dividends and increased stock buyback spending. But as is the case with all stocks on this list, investors will likely want to have those dividend payments automatically reinvest in more shares to amplify long-term returns for holding P&G's stock.
2. Target
If you thought that retailing was a boring industry with limited earnings potential, then Target's 2020 experience should change your mind. Through the first three quarters of the year, the chain boosted sales by 19%, which translated into an additional $10 billion of revenue.
Earnings gains were even stronger, as consumers cheered Target's diverse offerings spanning premium and value-based merchandise. Target's ultra-fast fulfillment was another competitive asset that lifted profitability in 2020.
TGT Operating Margin (TTM) data by YCharts
CEO Brian Cornell and his team will discuss Target's full holiday season results in early March, but we already know sales jumped 17% during the holiday shopping peak. While you wait for the full update, you can collect the retailer's February dividend issuance that's just a small part of a long line of payments for this Dividend Aristocrat.
3. Constellation Brands
Constellation Brands is relatively new to the dividend party but its core product, beer, has been popular for centuries. Its $0.75 per share payment is set to hit investors' accounts in February, adding about a 1.4% annual yield to this stock that has plenty of room to grow over the long term.
Image source: Getty Images.
The owner of import franchises like Corona, Modelo, and Pacifico recently announced robust sales growth despite the historic stress on bars and restaurants during the pandemic. Sales rose 12% in fiscal Q3, with help from a successful push into hard seltzer.
Investors holding the stock in 2021 can look forward to more innovative wins for this company, which focuses on the higher-priced beers, wines, and spirits that consumers seem to love.
Its bold bets on upgrading brewing capacity and partnering with recreational marijuana producers, meanwhile, are likely to pay off for shareholders well beyond 2021. Pair that type of growth with steady dividends, and you've got a powerful formula that's proven to create riches for patient, long-term investors.
