Following a sharp pullback in stocks in the fourth quarter of 2018 and another dip in May, some investors may be getting weary of the market's volatility. While there's no way to totally avoid these ups and downs, investors can smooth things out a bit by buying and holding quality dividend stocks. While their share prices may not be exempt from the market's swings, good dividend stocks importantly provide investors with regular and predictable income in any market.
Two great examples of companies whose dividends are likely to persist (and potentially even grow) through all market conditions in the coming years are Apple (AAPL -1.32%) and Southwest Airlines (LUV -0.44%). Here's why these two dividend stocks look like attractive bets today for investors who want to boost their portfolios' income.
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Apple
Since reinitiating its dividend in 2012, Apple has arguably morphed into one of the market's best dividend stocks. Sure, investors buying Apple aren't going to get the meaty 3% yield you might find from many Dividend Aristocrats, but a healthy underlying business, strong dividend growth, and promising potential for more dividend growth combine to make Apple a compelling income investment.
Today, Apple has a dividend yield of 1.6%. When compared to other large and established companies, this is modest -- the average dividend yield of stocks in the S&P 500 is 1.9%. But investors should note that Apple's dividend has been growing rapidly, more than doubling since 2012.
Looking ahead, Apple will likely continue increasing its dividend every year as it has done since reinitiating its dividend in 2012. The iPhone maker is currently paying out only 27% of its earnings, leaving plenty of room for further increases.
Southwest Airlines
It's no secret that Southwest is facing headwinds from Boeing's grounded 737 MAX. But investors should note that the MAX aircraft accounted for under 5% of all daily flights. Given how profitable Southwest is, the company can easily handle this temporary setback.
In addition, Southwest looks poised to be able to keep growing its dividend. Southwest generated $3.3 billion in trailing-12-month free cash flow on just $22.2 billion of revenue. Of this free cash flow, Southwest only paid out $362 million in dividends, highlighting how much breathing room the company's dividend has.
Today, Southwest has a dividend yield of 1.4%. But this dividend is growing rapidly, increasing by an average of 22% annually over the last three years. In the coming years, Southwest will likely keep serving investors more 10%-plus annual dividend increases.
