If you’re considering dividend stocks to invest in for the long haul, you might want to look at UPS, General Mills, and Medtronic.
Investing isn’t a one-size-fits-all scenario. It really depends on individual style and preferences. That said, United Parcel Service, General Mills, and Medtronic may resonate with different investors for various reasons. All three offer appealing dividends and potential for business growth.
Let’s break them down a bit more.
1. United Parcel Service represents a transformation.
UPS stands out as the riskiest option on this list. Currently, their dividend payout ratio exceeds 100%, which raises some concerns that they might cut dividends. Still, with a yield around 6.6%, even a significant cut may leave an attractive yield compared to the mere 1.2% offered by the S&P 500.
Commonly referred to as UPS, the company is undergoing substantial changes to improve future positioning. This includes boosting efficiency through capital investments, cutting back on operations—like reducing workforce and physical locations—and honing in on the most profitable customer segments. The overall trend shows that while expenses are rising, revenue isn’t matching up quite yet. This has led to noticeable declines in stock prices.
That said, there are signs of recovery. Specifically, revenue per unit has risen in the second and third quarters. So, even if revenues shrink and costs rise, profitability is expected to improve. If spending pressures ease, investors might start feeling optimistic about the stock again. For those who are a bit more daring, UPS might represent an enticing contrarian investment opportunity, despite the risks involved.
2. General Mills is adjusting for challenges.
As a key player in the food industry, General Mills faces some backlash as consumer preferences shift away from heavily processed foods. This trend has contributed to a generally negative sentiment around food stocks. Sales have been lackluster, and expectations for organic growth are trending downward into negative territory for fiscal 2025.
Despite these hurdles, General Mills has a storied history of overcoming challenges. Consumer habits do shift, but the company knows the importance of innovation and strong brand management. It’s working on both fronts.
Interestingly, the negative outlook has led to General Mills entering what some might call value territory. With price-to-sales, price-to-earnings, and price-to-book ratios all dipping below their five-year averages, the dividend yield has reached a record high of 5.3%. This could be a good time for dividend-minded investors to explore this stock.
3. Medtronic is on the brink of growth.
Medtronic, a significant name in medical devices, has the lowest yield among the three at 2.8%. Still, it boasts its best dividend performance yet and is just two years away from achieving the status of Dividend King, which requires consistent annual increases for 50 years. If you lean toward conservative investing, this stock is definitely worth monitoring.
There’s significant movement at Medtronic, too, as it nears the completion of a business review. The management is honing in on its most lucrative and rapidly growing sectors. A significant turning point is expected in 2026, when the company will spin off its diabetes division, which has a high potential for profitability right from the get-go.
Moreover, the introduction of new products like surgical robots could contribute to the growth trajectory. Historical patterns suggest that this could eventually lead to more substantial dividend increases, which may intrigue dividend growth investors.
Hold onto these dividend stocks for the long term.
While UPS, General Mills, and Medtronic cater to various investor types, they share a common thread: these companies are well-managed and could be worth holding onto over the long term. A 10-year timeframe is a decent starting point—but perhaps the longer, the better. This way, you can truly benefit from the growth of these corporations over time.
