Economic Uncertainty and Its Impact on Dividend Stocks in 2024

Current Economic Landscape and Dividend Investor Sentiment

In the current economic landscape, companies like Johnson & Johnson, Procter & Gamble, and Coca-Cola are prioritizing dividend growth and shareholder returns despite uncertainty. Their commitment to increasing dividends and substantial cash returns reflects strong investor sentiment and confidence in sustaining value for shareholders.

"We appreciate the value our investors place on the dividend, and we were pleased to announce this morning that our Board of Directors has authorized a 4.2% increase marking our 62nd consecutive year of dividend increases." --- (JNJ, earning call, 2024/Q1)

"We expect adjusted free cash flow productivity of 90%, and we expect to pay more than $9 billion in dividends to repurchase $5 billion to $6 billion in common stock, combined a plan to return $14 billion to $15 billion of cash to share owners for the year." --- (PG, earning call, 2024/Q3)

"Ultimately, we want to remain agile with respect to mergers and acquisitions, share repurchases and our balance sheet. But we do prioritize available cash in the following way: firstly, to reinvest in the business for sustainable growth 2nd, to grow the dividend 3rd, as available and as attractive consumer centric M and A and then share repurchases." --- (KO, event transcript, 2024/05/01)

"several categories. We expect to pay around $10 billion in dividends and to repurchase $6 billion to $7 billion of common stock, combined a plan to return $16 billion to $17 billion of cash to share owners this fiscal year." --- (PG, earning call, 2024/Q4)

"We're committed to investing to drive growth and to support our dividend, which we have raised for 62 consecutive years." --- (KO, earning call, 2024/Q1)

Historical Performance of Dividend Stocks in Downturns

Dividend stocks have historically shown resilience during downturns, as evidenced by companies like Verizon and ExxonMobil, which emphasize their commitment to maintaining and growing dividends even in challenging economic conditions. Pfizer also highlights a strategy focused on sustainable dividend growth, reinforcing the stability of dividend stocks in uncertain times.

""We are focused on putting the Board in a position to raise the dividend again later this year, which we have done for 17 consecutive years." Verizon has approximately 4.2 billion shares of common stock outstanding." --- (VZ, press release, 2024/06/05)

"Our strategy consists of maintaining and growing our dividend over time, reinvesting in our business at an appropriate level of financial return; and finally making value enhancing share repurchases after de-levering our balance sheet." --- (PFE, earning call, 2024/Q2)

"We remain committed to paying dividends through the very lows of the commodity price cycles, like we did in 2020 during the depths of the pandemic, when some of our peers cut dividends." --- (XOM, event transcript, 2024/05/29)

"Our cash flow strength allows us to deliver on our capital allocation priorities, including supporting our dividend and paying down our debt." --- (VZ, earning call, 2024/Q1)

"We've grown our annual dividend for 41 consecutive years. And now that that acquisition has closed, we increased our go forward share repurchase program to a $20,000,000,000 a year pace." --- (XOM, event transcript, 2024/05/29)

Sector-Specific Impacts on Dividend Stability

In 2024, retail companies like Target and Walmart are demonstrating strong dividend stability through consistent increases, reflecting confidence in their financial health. Conversely, Disney's potential measures to ensure liquidity highlight challenges in the entertainment sector, indicating a more cautious approach to dividends amid economic uncertainty.

"Later this quarter, we plan to recommend that our Board approve a small increase in the quarterly dividend in support of our goal to build on our decades-long record of annual dividend increases and move toward a 40% payout ratio over time." --- (TGT, earning call, 2025/Q1)

"It was comprised of $6.4 billion in quarterly cash dividends and $5.8 billion of share repurchases. We increased our dividend for the 13th consecutive year in fiscal '24, reinforcing our confidence in the strength and stability of our ongoing cash flows." --- (CSCO, earning call, 2024/Q4)

"And as you know, we recently increased our dividend 9% this last year, which is the largest dividend we've dividend increase we've had in 10 or 12 years." --- (WMT, conference, 2024/06/12)

"In addition, the Company could undertake other measures to ensure sufficient liquidity, such as raising additional financing, reducing or not declaring future dividends; reducing or stopping share repurchases; reducing capital spending; reducing film and episodic content investments; or implementing furloughs or reductions in force." --- (DIS, sec filing, 2024/Q2)

"With the increase announced today, 2024 is on track to be the 53rd consecutive year in which Target has increased its annual dividend." --- (TGT, press release, 2024/06/12)

Company Strategies for Managing Dividends

Companies are focusing on maintaining financial flexibility while committing to dividend growth. PepsiCo emphasizes returning free cash flow, Apple plans annual increases, Coca-Cola is confident in supporting dividends alongside investments, and Johnson & Johnson highlights a strong balance sheet to facilitate shareholder returns.

"We expect to continue to return free cash flow to our shareholders primarily through dividends while maintaining Tier 1 commercial paper access, which we believe will facilitate appropriate financial flexibility and ready access to global capital and credit markets at favorable interest rates." --- (PEP, sec filing, 2024/Q2)

"The Company intends to increase its dividend on an annual basis, subject to declaration by the Board of Directors." --- (AAPL, sec filing, 2024/Q2)

"But we still feel, given the work already done, we're very well prepared to continue to invest as the business needs it and to support our dividend going forward." --- (KO, conference, 2024/09/05)

"We maintain a strong balance sheet, which continues to enable us to strategically invest in and grow our business, while returning capital to our shareholders. Innovation" --- (JNJ, earning call, 2024/Q2)

"We are also raising our dividend by 4% to $0.25 per share of common stock, and we continued to plan for annual increases in the dividend going forward as we've done for the last 12 years." --- (AAPL, earning call, 2024/Q2)

Future Outlook for Dividends in 2024

In 2024, companies like Procter & Gamble and Amgen are committed to increasing dividends, with P&G expecting over $9 billion in payouts and Amgen declaring a 6% increase. This reflects a strong outlook for dividends despite economic uncertainty, showcasing resilience in shareholder returns.

"With the dividend increase in April 2024, this marks the 68th consecutive year that P&G has increased its dividend and the 134th consecutive year that P&G has paid a dividend since its incorporation in 1890." --- (PG, press release, 2024/07/30)

"In March 2024 and December 2023, our Board of Directors declared quarterly cash dividends of $2.25 per share of common stock, which were paid in June 2024 and March 2024, respectively, and was an increase of 6% over the quarterly cash dividends paid each quarter in 2023." --- (AMGN, sec filing, 2024/Q2)

"Our updated 2024 guidance reflects the momentum of our business in the first half of the year, and our confidence in our ability to execute on our plans during the second half of this year." --- (KO, earning call, 2024/Q2)

"P&G continues to expect adjusted free cash flow productivity of 90% and expects to pay more than $9 billion in dividends and to repurchase $5 to $6 billion of common shares in fiscal 2024." --- (PG, press release, 2024/04/19)

"The dividend will be paid on September 6, 2024, to all stockholders of record as of the close of business on August 16, 2024." --- (AMGN, press release, 2024/08/02)

Strategies for Selecting Resilient Dividend Stocks

To select resilient dividend stocks, focus on companies that emphasize sustainable growth, consistent performance, and strategic execution. Key strategies include leveraging sustainability, enhancing supply chain capabilities, and maintaining a commitment to value creation, as highlighted by Procter & Gamble and Coca-Cola.

"We continue to believe that the best path forward to deliver sustainable, balanced growth is to double down on the strategy, excellent execution of an integrated set of market constructive strategies delivered with a focus on balanced top and bottom line growth and value creation, starting with a commitment to deliver irresistibly superior propositions to consumers and retail partners. With that, we will be happy to take your questions." --- (PG, earning call, 2024/Q4)

"So from that perspective, resilience in delivering consistent performance and just overall strength and be on the front for us to deal with whatever's next." --- (KO, conference, 2024/09/05)

"These are 1) leveraging environmental sustainability as an additional driver of superior performing products and packaging innovations, 2) increasing digital acumen to drive consumer and customer preference, reduce cost and enable rapid and efficient decision making, 3) developing next-level supply chain capabilities to enable flexibility, agility, resilience and a new level of productivity and 4) delivering a superior employee value equation for all employees inclusive of all genders, races, ethnicities, sexual orientations, ages and abilities - for all roles - to ensure we continue to attract, retain and develop the best talent to better serve our diverse consumer base." --- (PG, sec filing, 2024/Q4)

"We continue to believe that the best path forward to deliver sustainable top and bottom-line growth is to double down on this integrated strategy, starting with a commitment to deliver irresistibly superior propositions to consumers and retail partners, fueled by productivity. Moving on to" --- (PG, earning call, 2024/Q1)

"We’ll double down on enabling our organization to execute our integrated strategy with excellence, to delight consumers and win in the marketplace, to deliver the level of balanced growth and value creation results you and we expect." --- (PG, earning call, 2024/Q4)