Stocks have rallied lately, but the economy is facing several challenges that are impacting its health and weighing on investors’ sentiment. Uncertainty over an end to the Iran conflict, sky-high inflation and the impact of tariffs are weakening the economy.
Given the uncertainty, cautious investors looking for steady income and ways to protect their capital may consider holding or investing in dividend-paying stocks.
Such stocks provide steady earnings through regular dividend payouts and can help mitigate the effects of market volatility. Four such stocks are: Penske Automotive Group, Inc. PAG, Packaging Corporation of America PKG, Marriott International, Inc. MAR and The Timken Company TKR. Each of these stocks currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Uncertainty Continues
Stocks rallied on Thursday after a key meeting between President Donald Trump and Chinese Premier Xi Jinping. The two world leaders discussed several issues, including ways to end the Iran war and allowing a smooth passage to vessels sailing through the Strait of Hormuz.
However, no concrete solution was found. A ceasefire has been in place for more than two weeks now, but neither the United States nor Iran has agreed to a second round of peace talks.
Energy costs have climbed rapidly since the Iran conflict began. Gasoline prices jumped 21.2% in March before increasing another 5.4% in April. Meanwhile, food prices rose 0.5% in April, with grocery prices advancing 0.7% during the month — the sharpest increase since August 2022.
Inflation rose for the second straight month in April. The consumer price index (CPI) rose 0.6% sequentially in April after rising 0.9% in March, the Bureau of Labor Statistics reported earlier this week. On a yearly basis, CPI climbed 3.8% in April, marking its highest level since May 2023.
Core CPI, which strips out volatile food and energy costs, advanced 0.4% month over month and was up 2.8% compared with a year earlier. The rise in inflation during April was largely driven by a 3.8% surge in energy prices, which contributed nearly 40% of the overall increase.
Also, higher tariffs are hurting consumer spending. These uncertainties could keep markets volatile for a longer period.
4 Stocks That Recently Announced Dividend Hikes
Penske Automotive Group
Penske Automotive Group, Inc. engages in the operation of automotive and commercial truck dealerships in the United States, the United Kingdom, Canada, Germany, Italy and Japan. PAG also distributes and retails commercial vehicles, diesel engines, gas engines, power systems and related parts and services, principally in Australia and New Zealand.
On May 13, Penske Automotive Group announced that its shareholders would receive a dividend of $1.42 a share on June 6. PAG has a dividend yield of 3.36%. Over the past five years, Penske Automotive Group has increased its dividend 21 times, and its payout ratio presently sits at 43% of earnings. Check Penske Automotive Group’s dividend history here.
Packaging Corporation of America
Packaging Corporation of America is the third-largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America. PKG operates 10 mills and 91 corrugated products manufacturing plants.
On May 12, Packaging Corporation of America declared that its shareholders would receive a dividend of $1.50 a share on July 15. PKG has a dividend yield of 2.29%. Over the past five years, Packaging Corporation of America has increased its dividend twice, and its payout ratio presently sits at 50% of earnings. Check Packaging Corporation of America’s dividend history here.
Marriott International
Marriott International, Inc. is a leading worldwide hospitality company focused on lodging management and franchising after the spin-off of its timeshare business into a publicly traded company in November 2011.
On May 8, Marriott International announced that its shareholders would receive a dividend of $0.73 a share on June 30. MAR has a dividend yield of 0.77%. Over the past five years, Marriott International has increased its dividend six times, and its payout ratio presently sits at 26% of earnings. Check Marriott International’s dividend history here.
The Timken Company
The Timken Company is a global manufacturer of engineered bearings and industrial motion products and related services. TKR serves a wide variety of end markets, including aerospace, automotive, construction, consumer, defense, energy, industrial equipment, health, heavy industry, machine tool, positioning control, power generation and rail markets.
On May 8, The Timken Company declared that its shareholders would receive a dividend of $0.36 a share on May 29. TKR has a dividend yield of 1.21%. Over the past five years, The Timken Company has increased its dividend six times, and its payout ratio presently sits at 25% of earnings. Check The Timken Company’s dividend history here.
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Marriott International, Inc. (MAR): Free Stock Analysis Report
Penske Automotive Group, Inc. (PAG): Free Stock Analysis Report
Packaging Corporation of America (PKG): Free Stock Analysis Report
Timken Company (The) (TKR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).