Cruise through market volatility with these high-yielding stocks.
Dividend investing allows you to have the best businesses in the world automatically send cash to your account on a regular basis. Investors looking to boost their passive income can find attractive dividend yields right now in the consumer goods sector.
To give you some ideas, read why three Motley Fool contributors recently selected Home Depot (HD 3.84%), JD.com (JD 2.17%), and Target (TGT 1.98%) as strong buys right now.
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A clear industry leader
Jeremy Bowman (Home Depot): Long a leader in dividend growth, Home Depot could also regain its reputation for steady price appreciation soon.
The home improvement retailer has struggled over the last few years due to a sluggish housing market, but the business could reaccelerate soon. First, the company is delivering steady growth with comparable-store sales up 1.4% in the second quarter, and revenue up 4.9% to $45.3 billion. Earnings growth was flat.
Adjusting for one fewer week in the fiscal year, it sees full-year revenue up about 5%.
On the macro front, bets are increasing that interest rates could come down soon. As the labor market cools, investors have gotten more confident that the Federal Reserve will cut rates at its meeting in September, and mortgage rates have hit a nine-month low.
While Home Depot is showing that it can grow without help from the housing market, it would certainly benefit from a recovery in home demand.
Over the long term, the company has shown it can be consistently profitable as the leader in the huge home-improvement retail segment, with little direct competition aside from Lowe’s, and that duopoly seems to benefit both companies.
Home Depot should also benefit from pent-up demand related to the national housing shortage, which is now estimated at about 4 million homes.
It now offers a dividend yield of 2.3%, and its competition between growth and income is a great feature for any long-term investor.
A dividend stock with tremendous upside potential
John Ballard (JD.com): JD.com is China’s second-largest e-commerce company, behind Alibaba. Macroeconomic headwinds over the past few years have weighed on consumer spending and sent JD.com shares down 71% from their previous highs. But this has driven its dividend yield up to an attractive 3.21% based on its last annual payout in April.
JD.com distinguishes itself from its larger competitor by using a direct-sales model. Unlike Alibaba, it invests in its own inventory that it can deliver through its extensive warehouse network to nearly anyone in China within one day.
It is investing in artificial intelligence to improve its supply chain efficiency, which could lead to margin expansion and benefit the stock. Management credited improving supply chain capabilities for increasing its operating margin from 3.9% in the second quarter of 2024 to 4.5% a year later.
Revenue is growing at healthy rates. The company reported a top-line increase of 22% year over year in the second quarter, with quarterly active customers growing 40%.
The improving financials of the retail business only make the stock’s yield more attractive. It pays a dividend only once per year, but the recent $1 payment could increase over the next few years if margins and revenue continue to rise, which is likely in a growing economy.
With JD.com trading at a low forward price-to-earnings multiple of 12, investors could see exceptional returns just from the stock climbing to a higher earnings multiple. The 3% yield is a nice bonus while you wait for the market to re-rate the shares with a higher valuation.
Low price, high yield
Jennifer Saibil (Target): Target stock continues to slide, and it fell further after results for the 2025 fiscal second quarter (ended Aug. 2) were reported last week. Revenue dropped less than 1% from last year, but comparable-store sales fell 1.9%. Earnings per share (EPS) of $2.05 were down from $2.57 last year, but they beat Wall Street expectations by $0.01.
The main disappointment for the market, though, wasn’t the quarterly report. CEO Brian Cornell had announced a few months ago that he was ready to step down, and along with the second-quarter report, the company announced the incoming CEO as current chief operating officer Michael Fiddelke. He’s a Target lifer, having started as an intern when he was in business school. The market was looking for an outsider to breathe new life into the company, not more of the same.
Fiddelke says that Target has fallen behind in leading with style, leaning into core categories without the extra touch that has always made it stand out. In addition to his goal of bringing back that magic, he noted that operations have become a bit messy, with stores often out of merchandise due to acting as delivery hubs. While that’s been great for its digital program, which continues to thrive, it’s been less so for the store experience.
Can Fiddelke bring Target back to growth? That remains to be seen. But it has nearly 2,000 stores, a successful digital business, and many loyal fans. So its turnaround chances are strong, especially once the economy becomes more hospitable. Over the long term, it offers excellent potential for the patient investor.
In the meantime, shareholders can enjoy an amazing dividend. Target is a Dividend King, having raised its dividend annually for the past 54 years, an impressive track record that means it’s super reliable. At the shares’ current low price, Target’s dividend yields a high 4.5%, making this an excellent entry point for years of passive income and wealth generation.