3 Dividend-Paying Stocks Poised for Strong Bear Market Performance

  • The toxic mix of stubbornly high inflation and geopolitical uncertainty provides reason enough to bolster your retirement portfolio with low-risk stocks.
  • UnitedHealth is a reliable dividend stock at a time when growth stocks are taking a hit
  • General Mills is a defensive name that will perform better in a bear market

It’s no secret that 2022 has been brutal for stock investors. Several macroeconomic headwinds have gathered to push stubbornly high levels, making stock selection even more critical for those who want to succeed in current conditions.

In addition to the Fed tightening cycle and the 40-year high, recent developments in the geopolitical conflict in Eastern Europe indicate that there seems to be no end in sight.

This toxic mix provides good enough reasons to bolster your retirement portfolio with low-risk investments. stocks that pay dividends.

Companies that offer regular payouts are considered a good buffer during market volatility. They are also considered a hedge against inflation, considering that dividend growth has outpaced inflation since 2000.

Below, I’ve compiled a list of three dividend stocks that can be relied upon to provide ever-growing income. Their dividend yields are admittedly low at this point, as their share prices have risen over the past year, but each is a high-quality, low-risk name suitable for a conservative retirement portfolio.

1. UnitedHealth Group

The world’s largest health insurer, UnitedHealth Group Incorporated (NYSE:) offers a strong avenue to build retirement income.

Backed by the company’s strong cash generation, investors have reaped massive dividend increases over the last five years. The company pays a quarterly dividend of $1.65. Annually, that payment has increased by more than 18% over the past five years.

UNH Payment History

Source: InvestingPro

UNH stock has also provided impressive capital growth over the past five years. Trading at $519, the stock has gained more than 165%.

UNH Monthly Chart

UnitedHealth, which operates a health insurance business and health care services unit Optum, offers income investors an option to maintain a trusted health care name when growth stocks are taking a hit from winds in against macroeconomics.

According to the insurer’s latest guidance, the company expects double-digit revenue growth in the Optum Health business “for many years,” with margins in the 8%-10% range. Optum Health had operating profit of $1.4 billion in the quarter, and the company said revenue per consumer served was up 30% from a year earlier.

2. General mills

Consumer staples offer another attractive avenue for buy-and-hold investors. They are considered safe since these companies are less tied to the economic cycle and tend to sell products that consumers need regardless of economic circumstances. For these reasons, I like General Mills (NYSE:), the maker of Cheerios cereal, Yoplait yogurt, and Nature Valley granola.

Priced at $80.64, the stock is up 20% this year, far outperforming benchmark indices. Also, GIS has bounced back today after reporting better than expected for its latest quarter.

GIS Weekly Chart

The company also gave an upbeat forecast for the current fiscal year, indicating that demand for its foods remains strong even in this challenging economic environment.

General Mills has tried to diversify its revenue base to spur growth in recent years. In 2018, the company acquired pet food maker Blue Buffalo, its biggest deal in 18 years. According to their earnings statement released today:

“Given the strength of our first quarter results and confidence in our ability to adapt to continued volatility, we are raising our full-year outlook for net sales, operating profit and EPS growth.”

The company prioritizes its core markets, global platforms and local gem brands with the best prospects for profitable growth. It has committed to reshaping its portfolio with strategic acquisitions and divestitures to further enhance its growth profile.

With over 100 years of dividend-paying history, GIS is a stock that will likely underperform in a bull market, but it’s also a defensive name that will perform well in a bear market.

GIS payment history

Source: InvestingPro

3. Bank of Montreal

Canadian banks listed on the New York Stock Exchange offer another great source of income for retirees in North America. The US’s northern neighbor’s strong regulatory environment, less competition, and revenue diversification make its banks reliable revenue generators.

Canada’s major lenders have consistently rewarded investors through ever-increasing dividends, which they spend 40-50% of their income on.

I especially like the Bank of Montreal (NYSE:), the fourth largest lender in Canada. The company currently offers an annual dividend yield of more than 4.5%, a very attractive rate when compared to the average return paid by S&P 500 companies.

BMO payment history

Source: InvestingPro

BMO (TSX:) is considered one of Canada’s safest dividend stocks due to its unbeatable track record. The company has sent dividend checks to investors every year since 1829, one of the longest consecutive dividend streaks in North America.

The other benefit of investing in BMO is its diversified franchise with a strong presence in commercial banking, retail, wealth management and capital markets. The company also maintains a strong presence in the US, primarily in the Midwest. That presence was further strengthened after the lender’s recent purchase of the operations of BNP Paribas (OTC:) for US$16.3 billion.

BMO weekly chart

Divulgation: The author does not own the shares mentioned in this report.

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