The stock market’s trajectory has been closely following the latest economic indicators over the past few weeks. The S&P 500 rallied in reaction to the Federal Reserve’s announcement that it would cut benchmark interest rates in 2024, but the index fell last week after the Fed qualified that by saying it might not make those cuts as rapidly as investors expect.
The mood on Wall Street is uncertain, and that makes this a good time to shore up your portfolio with some secure dividend stocks that are less susceptible to mood swings in the market. Nike (NKE 0.83%) and Home Depot (HD 1.26%) are two incredible dividend stocks to buy now and hold for the long term.
Nike: The most popular clothes and footwear
One thing that well-respected investors like Warren Buffett frequently point out is that companies that own brands customers like are typically good investments. A business is only as good as the products it produces, and a company that can churn out popular products year after year is likely to be around for a long time and create solid returns for its shareholders.
Nike is the largest apparel and footwear company in the U.S. overall, and the largest athletic wear company in the world. It has the highest brand value of literally any apparel and footwear brand in the world, according to Statista.
It’s a blue chip winner with a lead so large it’s virtually unchallengeable, at least in the near term. It’s also reliably profitable. It continues to resonate with its global fans, taking the top place in the Piper Sandler Taking Stock With Teens survey yet again for most popular apparel brand and most popular footwear brand. Although Nike is popular among all age groups, its young customers will drive its continuing growth.
Nike felt the pressure of inflation, and sales growth has been slow. Its margins have also been impacted by rising costs and markdowns. But Nike is well-positioned to bounce back. It has relationships with a slew of top celebrity athlete endorsers who continue to dominate in sports and amplify the Nike brand.
Nike Direct sales increased 6% year over year in its fiscal 2024 second quarter (which ended Nov. 30), illustrating the power of its loyalty-building efforts. Several of its capsule collections increased sales by double-digit percentages in the quarter, and its strong pipeline of innovation will be key to future growth.
Nike pays a dividend that yields 1.47% at the current share price, which is close to the S&P 500‘s average yield. It’s a top stock to anchor your portfolio and provide security and passive income.
Home Depot: The leader in home improvement
Home Depot is to home improvement what Nike is to activewear, at least in the U.S. It’s the largest home improvement chain in the world, with more than 2,300 stores, most of them in the U.S., but some also in Canada and Mexico. It opened seven new stores in its fiscal 2023 third quarter (which ended Oct. 29), and despite its size, management still sees opportunities for expansion.
However, home improvement and most home-related industries have been highly impacted by the interest rate environment, and Home Depot is feeling the pain. Sales and comparable sales both declined 3% year over year, and earnings per share dipped to $3.81 from $4.24 in the prior-year period.
Home Depot is always working to provide an upgraded, interconnected experience for customers, and that has led to long-term loyalty and sales generation. Two things that management pointed out in the third-quarter report were that almost half of its digital orders were fulfilled by stores, which results in faster and cheaper delivery, and that digital orders increased by 5% year over year despite the overall decline in sales. Home Depot completely overhauled its omnichannel systems before the pandemic, and at the time, it took a hit on profits.
Investors had soured on the stock, but Home Depot was well-positioned to benefit when the pandemic hit, and those investments helped it capture market share and generate soaring sales. It’s in a similar bind right now; the pressure is on. But forward-looking investors should focus on its leading position and robust shopping options that will feed into higher sales when the economic outlook improves.
Home Depot’s dividend yields 2.35% at the current share price, and it’s a fantastic forever stock to keep in a diversified portfolio.
Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot and Nike. The Motley Fool recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy.