Regardless of the economic situation, investing in the stock market can help you achieve your long-term financial goals. Recent stock market volatility has some investors feeling uneasy, but there are some simple ways to do so: Dollar Cost Averaging It has proven to be highly effective across a wide range of market environments. Another great way to weather uncertain times is to invest in dividend stocks.
Dividend stocks are a great way to boost your portfolio income by generating additional income beyond share price appreciation. But the beauty of dividends is their flexibility: you can spend your dividend income however you like: save it, use it to cover your monthly expenses, or simply reinvest it however you like.
So if you're looking for a great dividend stock to buy for under $200 per share, consider these two:
1. Medtronic
Medtronic (NYSE: MDT) is a world-renowned medical device manufacturer. The company's products include pacemakers, insulin pumps, insulin pens, and continuous glucose monitoring devices, among many other medical devices that it is known for manufacturing.
The company has a history of paying out dividends consistently, having increased its payout every year for the past 46 years. Currently, Medtronic pays out approximately 93% of its profits as dividends. The company's stock boasts an annualized dividend rate of $2.80 per share, which translates to a dividend yield of approximately 3% at current stock prices.
Over the past 12 months, the company generated approximately $4 billion in profits on sales of approximately $33 billion and operating cash flow of approximately $7 billion, leaving it with nearly $8 billion in cash on hand at the end of its most recent quarter.
Looking at Medtronic's most recent quarter (which is also the first quarter of fiscal year 2025), revenue growth was a modest 3% year over year. However, net income grew an impressive 32% year over year to just over $1 billion. This growth was driven by a 6% increase in revenue from its cardiovascular portfolio and a 12% increase in its diabetes portfolio.
While medical device businesses may not be the most attractive addition to a portfolio, companies like Medtronic are mainstays in an industry that tends to be much more resistant to economic fluctuations than cyclical companies. Medtronic has struggled to grow in recent years, and its stock price has remained middling, although its dividend has been stable. This could be an opportunity to buy shares in a potentially undervalued business at a lower yield. Price to sales ratio With a (P/S) ratio of less than 4, it is able to provide a strong value proposition to a broad customer base as well as generate stable income for the portfolio over the long term.
2. Target
target (NYSE: TGT) The company's dividend track record is even more impressive than the first pick on today's list. The retail giant's third-quarter dividend will not only be its 228th consecutive dividend since it entered the stock market in 1967, but it is also on track to mark its 53rd consecutive year of dividend increases. Based on the current stock price, Target offers investors a dividend yield of about 3%, which translates into an annualized dividend of $4.48 per share. The company currently pays out just 46% of its profits as dividends to investors.
Target has faced its fair share of challenges in recent years. During peak pandemic shopping times, the well-known brick-and-mortar retailer thrived with its continued expansion into e-commerce, easy pickup and delivery options, and a diverse range of products targeting every consumer need. The wide variety of products Target offers remains a sound value proposition for consumers.
However, slower growth compared to pandemic levels, changing consumer shopping patterns, supply chain issues, and increased theft at retail stores have all negatively impacted growth.Also, inflation has slowed consumer spending rates, leaving the company with excess inventory and forcing it to make deep markdowns, which has also reduced margins and profitability.
The good news is that Target appears to be slowly but surely getting back on track. In its recent second-quarter financial report, the company reported total revenue of about $26 billion, up 2.7% year over year, and same-store sales up 2% year over year. Digital sales have been a strong growth area for the company, with the business growing 8.7% year over year during the quarter.
Target is still profitable, with earnings growth well outpacing sales growth. The company reported operating income of $1.6 billion for the three months, up 36.6% from the same period last year. Net income also grew significantly, up 43% year over year to $1.2 billion. In the short term, Target will have to deal with fluctuations in consumer spending patterns and normalizing its growth rate after the sharp ups and downs during the pandemic. Either way, the company still looks like a solid choice for income investors with a long-term buy-and-hold investment.
Should I invest $1,000 in Medtronic right now?
Before buying Medtronic shares, consider the following:
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Rachel Warren The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a position in Target and recommends the company. The Motley Fool recommends Medtronic and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic … following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. Disclosure Policy.
2 Unstoppable Dividend Stocks You Can Buy Right Now for Under $200 Originally published on The Motley Fool
