Dividend stocks can be a great way to supplement your portfolio growth from share price gains and inject more cash into your overall returns. Whether you use that cash to reinvest or put it aside for a rainy day, dividend stocks can be an excellent addition to any portfolio and for investors with a variety of investment styles.
If you're hunting for two top dividend stocks to add to your portfolio right now, here are a couple of names to consider the next time you go stock shopping.
1. Amgen
Amgen (NASDAQ: AMGN) is a healthcare giant with an impressive history of paying and raising its dividend.
The stock yields around 2.8% based on current share prices, which is about double that of the average stock trading on the S&P 500 index. Dividend returns combined with moderate share price increases -- which are often associated with value-oriented healthcare stocks -- have enabled the company to deliver a total return of 70% to faithful shareholders over the trailing-five-year period.
The company has also increased its dividend by around 55% in that same time frame. Currently, Amgen boasts a forward annual dividend yield of $9 per share, which comes down to $2.25 on a quarterly basis. Amgen has raised its dividend for 11 consecutive years.
Amgen develops and sells a wide range of drugs targeting various ailments and often underserved conditions for which there are limited treatment options. Its medicines treat everything from osteoporosis, hyperlipidemia, anemia, and Crohn's disease to rheumatoid arthritis, melanoma, plaque psoriasis, hyperparathyroidism, and various genetic disorders.
Looking at Amgen's recent financial results, which were for the second quarter of 2024, overall revenue rose 20% year over year to $8.4 billion. This was driven by a 20% increase in product sales, and 12 core Amgen medicines delivering at least double-digit sales growth in the quarter.
One example is its blockbuster drug Prolia, which brought in $1.2 billion in the quarter, a 13% increase from one year ago. Prolia is approved for numerous indications, including individuals with osteoporosis who are at high risk for fracture. The company generated $2.2 billion in free cash flow in the quarter, with net income coming in at $746 million.
Amgen's bottom-line figure was down double digits from the prior year's quarter, but largely related to expenses stemming from its acquisition of rare disease drugmaker Horizon Therapeutics last year rather than any operational deficiency. Amgen paid about $28 billion for the acquisition.
The Horizon acquisition brought numerous drugs into the Amgen fold, including Tepezza and Uplizna. The former is the first and only treatment approved by the U.S. Food and Drug Administration for thyroid eye disease, while the latter treats neuromyelitis optica spectrum disorders. The acquisition also brought gout treatment Krystexxa to the company's portfolio. Amgen's rare disease drug portfolio alone generated $1.1 billion in sales in Q2.
Amgen is also focusing on the lucrative weight management market, and one asset investors should be watching is called MariTide. The drug is currently in phase 2 development, while management is planning its phase 3 program. MariTide is an injectable drug designed to help improve insulin release and enable appetite suppression by activating the GLP-1 receptor and inhibiting the GIP receptor.
Management plans for the phase 3 trial to include a wide-ranging study of MariTide's ability to help with various weight-related illnesses, including liver disease, which could expand the range of indications the drug may snag if approved. This is just one example from Amgen's expansive pipeline. For investors searching for an income stock with an extensive product lineup, profitable business, and considerable growth runway ahead, Amgen looks like a worthy contender for a well-diversified portfolio.
2. Hormel Foods
Hormel Foods (NYSE: HRL) belongs to a relatively short list of stocks that have maintained and raised their dividends not for a decade, but many decades. In fact, the multinational food processing company has increased its dividend every single year for 58 years and counting. Over the trailing-five-year period, Hormel Foods has increased its dividend by approximately 35%.
Hormel has been in business since 1891, so this isn't a lightning growth stock but a mature business with a steady history of lending portfolio returns. The stock maintains a notable payout ratio of around 79% of earnings and offers a current yield of approximately 3.6% for investors. That yield has increased as investor sentiment has pulled shares downward. Often, when share prices are declining, the yield will increase. Hormel's yield is currently at historically high levels while its annual dividend is $1.13 on a forward basis.
Hormel Foods is known for brands like Applegate, its namesake Hormel brands like Natural Choice and Hormel Pepperoni, Planters, SPAM, Skippy, Jennie-O, and Valley Fresh. Over three dozen of its brands hold the first or second market share spot in their respective categories. Factors ranging from inflation, to the pandemic, to ongoing economic difficulties driving fluctuating consumer spending patterns have all affected the business the last few years and trickled down to investor sentiment toward the stock.
Pricing declines and even production issues at certain points in its supply chain have also had an impact, and the company recently had to adjust its annual guidance downward by single digits. Hormel reported that retail segment volume was down 9% in the recent quarter, but year-over-year volume growth of 2% and net sales growth of 7% in its food service segment helped offset this figure.
International segment sales and volume were down, but profits in that division rose 78% from the year-ago period thanks to growth in core markets in Asia and improved export margins. Overall net sales across all segments totaled $2.9 billion, a smidgen (2.2%) down from one year ago. While the company saw its bottom line fall by single digits, total segment profits still came to around $292.2 million. Hormel also brought in operating cash flow totaling $218 million in the three-month period.
The last few years have been tough on Hormel's business, and the stock has delivered a total return of about 55% to investors over the last 10 years. Still, Hormel's overall strong balance sheet, faithful dividend history, and mainstay presence in the food industry could make it a compelling choice for income-seeking investors looking for a multiyear buy-and-hold position.
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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.
2 Top Dividend Stocks to Buy Hand Over Fist Right Now was originally published by The Motley Fool