Dividends are an attractive feature of many stocks and, for some investors, are a prerequisite. But not all dividends are created equal, as demonstrated by the pandemic. Coke (NYSE: KO), Procter and Gamble (NYSE: PG), and American Express (NYSE: AXP) all maintained their dividends through COVID-19 and will pay them in the near future.
The classic taste of staying at home
Coca-Cola made it a priority to maintain its dividends during the pandemic, despite declining revenue. Coca is a Dividend Aristocrat, which means it has increased its dividends for more than 25 consecutive years.
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Sales fell 28% in the second quarter ended June 26, but have continued to improve ever since, reaching a 5% drop in the fourth quarter ended December 31.
The locks and closings contributed to a major slowdown in the company’s sales, and it quickly made changes in operations to better compete in the new purchasing environment. It has been restructured in what it calls a network organization model, which aims to standardize and simplify operations with a focus on technology and digitalization.
Coca still has a war chest to spend on dividends and boost new projects. Demonstrated cost reduction efficiency in the fourth quarter and strong cash flow. Although progress has been made since the initial fall of COVID-19, the market environment has not changed completely and investors cannot expect real improvement in the short term. But in the long run, Coca still has great prospects.
CEO James Quincy said, “While there is uncertainty associated with the timing and final resolution, we will continue to prioritize investment in the business to drive long-term growth, as well as support dividend growth for our shareholders.” Coca-Cola’s dividends yield 3.2% and shareholders can feel confident of a continuous dividend, as evidenced by management’s behavior during the pandemic.
The world’s leading care brands
Procter and Gamble is part of the exclusive Dividend King group, which means it has increased its dividends annually for more than 50 years – in this case, 64 years.
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The company operates in 10 daily use categories with consumer brands, such as Tide detergent, Crest toothpaste and Pampers diapers. It is a market leader with $ 72 billion in annual sales in 2020, but is committed to innovation and digitization to maintain its dominant position.
As you can probably guess, Procter & Gamble has had some of its best accommodations in many years, as people stayed at home and supplied themselves with personal and household care products. In the second quarter ended December 31, sales increased by 8%. The biggest growth was driven by personal care products, which shot up 30%. Oral care and family care increased by two digits, and other categories increased by one digit.
Growth is likely to slow as the pandemic subsides, but sales are expected to continue to rise. The company is focused on meeting the new demand with digital capacity, and e-commerce grew by almost 50% in the second quarter.
Procter & Gamble’s shares increased during the pandemic, which reduced its yield, which is usually around 3%; it is now about 2.4%.
An established brand with fintech resources
American Express has paid dividends over the past 32 years, but did not increase it in 2020. Sales fell 29% in the second quarter, the company’s worst performance during the pandemic, but revenue remained positive, falling 85% to $ 0.29 por This improved to a decline in sales of 20% in the third quarter and a slightly better decline of 18% in the fourth quarter ended on December 31. Revenue improved dramatically by $ 1.76, a 13% decrease from the previous year.
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Spending on travel and leisure has already surpassed pre-pandemic levels, but American Express has a high share of spending on travel and leisure, which is still weighing, as the pandemic has not yet been defeated. American Express has a differentiated business focused on the wealthy clientele, which pays up to $ 550 in annual fee (or $ 5,000 for the invite-only black card), is very loyal and has extra money to spend, even during an economic crisis.
It is also your own bank and credit card processor – in contrast to most other credit cards, which are issued by several banks and processed by Visa or MasterCard.
American Express is one of the oldest companies in the United States, but it is leveraging financial technology to empower small businesses and create the best-in-class experience for customers. It acquired fintech company Kabbage in 2020 to give customers a set of digital banking options and the digital restaurant reservation app Resy in 2019 for more customer benefits.
American Express shares are the only ones on this list with gains so far in 2021, and their dividends yield about 1.3%.