The Top 3 Dividend Stocks I’d Put My Next $5,000 To Work In

If you’re sitting on $5k and itching to deploy this capital into reliable dividend payers amid this market rotation, I’ve got three blue-chips which look like screaming buys right now to consider.

These dividend aristocrats blend juicy yields, growth, and dirt-cheap valuations. In my view, that makes these stocks perfect vehicles for compounding your wealth.

Kimberly-Clark (KMB)

Kimberly-Clark (NASDAQ:KMB) is a leader in the consumer staples and personal care giant, best known for its defensive positioning (can’t stop buying those baby wipes, it’s not possible). With a 4.6% dividend yield and strong top- and bottom-line growth driven by key divestitures and operational streamlining efforts, Kimberly-Clark is one of my top defensive picks in this market for those looking to generate yield. 

With a mid-single-digit dividend growth rate over the long-term, and years of dividend growth backing up its current distribution, I think Kimberly-Clark is well-positioned to deliver more earnings and dividend growth over time. That’s due mostly to the company’s defensive cash flow structure, but also its balance sheet strength. 

This past quarter, the company beat estimates by a significant margin on the bottom line, with revenue coming in line. Notably, organic sales grew more than 2% on solid 3% volume/mix gains, despite investments in price in some of its key product categories. This is a stock that’s proven thus far to be relatively inflation-resistant, and that’s a great thing for those looking for long-term dividend stalwarts in the portfolio. 

General Mills (GIS)

General Mills (NYSE:GIS) is another consumer staples giant, with its portfolio of cereal brands and other staples we simply can’t go without continuing to drive solid results.

This past quarter, the company beat estimates with adjusted EPS coming in at $1.10 versus $1.03 expected (7.1% surprise). On the top line, revenues of $4.86 billion topped $4.77 billion forecasted (handily), though this did represent a year-over-year drop. And while organic sales are on the decline, the decline this past quarter was less than expected, assauging some investor concerns around how inflation may impact the company’s core portfolio. 

That’s not to say operating margin and volume challenges won’t persist. I think that’s likely. However, the Cheerios maker has taken on some significant cost discipline to bolster its balance sheet, which should provide stability to General Mills’ 5.4% dividend yield. 

Paychex (PAYX)

Paychex (NASDAQ:PAYX) is about as sensitive to the U.S. workforce as any stock in the market. A company that generates its revenue and earnings from processing paycheck payments for millions of Americans (hence its name), Paychex has seen relatively strong numbers despite concerns about the jobs market deteriorating. I think that’s a solid backdrop, considering the pace of private industry hiring versus the public sector. 

In fact, this past quarter was a very solid one for Paychex and its investors. Revenue surged 18% year-over-year, beating estimates by more than 10%. Bottom line earnings also beat by a similar marking, with adjusted operating income increasing more than 20% year-over-year.

So, if there is a slowdown in the jobs market, don’t tell Paychex’s management team. The company’s ability to benefit from rising interest income (as the yield curve steepens) and provide investors with a 4.6% dividend, means this is a beaten-down software stock I think is worth considering on any further declines moving forward.