There's no way around it: Weddings are generally quite expensive. Yes, you can pay far less if you invite relatively few people, hold your ceremony on a weekday, and/or make it a potluck, but many couples still want a classy, traditional affair. As of last year, the average cost of a wedding in America was about $30,000, per The Knot.
That means it would be smart to start socking away money regularly now if you want to be able to pay -- or help pay -- for a wedding in the years ahead. Dividend-paying stocks can help you get there. Ideally, they'll grow in value over time, and while they do so, they'll kick out income every quarter or so -- money that can be reinvested in additional shares of stock.
Just remember that money you expect to need within about five years is best not kept in stock as the stock market can be volatile. Dividend Kings are companies that have increased their payouts for at least 50 consecutive years. Below are three worth considering as you save for a wedding or anything else, such as a down payment on a home or your retirement.
1. 3M
3M (MMM -2.47%), once known as the Minnesota Mining and Manufacturing Company, has long been a master of innovation, introducing products such as water-resistant sandpaper, masking tape, and Post-its. Today, with a recent market value topping $50 billion, it's a diversified manufacturer focused on the consumer, healthcare, safety, transportation, electronics, and industrial realms. It's also working to become a leaner, more streamlined version of itself, cutting costs and restructuring.
The company has faced challenges lately, including some lawsuits and an impaired but recovering supply chain. Legal losses could cost the company significantly down the line, but the risk seems already baked into the stock price, to some degree. Its price-to-earnings (P/E) ratio was recently just 10, well below its five-year average of 19 and suggesting undervaluation.
The stock's decline has pushed its dividend yield up recently to a hefty 5.9%. Even if that were halved, it would remain a solid yield. But with its payout ratio recently a healthy 62% (meaning it's paying out 62% of earnings in dividends), the dividend doesn't seem endangered.
2. Target
Target (TGT 2.46%) has grown into a retailing powerhouse, with roughly 440,000 employees, close to 2,000 stores, and a busy online store as well. It performed well through the recent pandemic-challenged years, with CEO Brian Cornell noting in the company's fourth-quarter 2022 earnings call that, "Since 2019, our store base has only grown slightly, but total sales grew nearly 40% in that time frame. Our digital business nearly tripled in size, and our sales per square foot increased by 37%." That's darn impressive, considering it was achieved without adding many stores.
Target's first quarter of 2023 didn't look so impressive, with revenue and traffic close to flat, but remember we're in a tough economic environment, with inflation pinching many pockets and causing consumers to pull back on discretionary spending. The depressed stock (down some 24% from its 52-week high) made stock buybacks attractive, and Target has spent more than $5 billion in 2022 buying back and retiring stock. It has also been reducing and remixing its inventory and positioning itself for long-term growth.
Target's stock seems appealingly priced at recent levels, with its price-to-sales and forward-looking P/E ratios below their five-year averages. Better still, it offers a dividend recently yielding 2.9% -- and it has upped that payout by some 12% annually, on average, over the past five years.
3. Coca-Cola
Coca-Cola (KO -1.04%) needs little introduction, as it has been around for over 100 years and has one of the 10 most valuable brands on the planet, recently valued at around $57 billion by Interbrand. It's also a longtime dividend payer, announcing its 61st consecutive annual dividend increase in 2023. The payout recently yielded 3.1%.
With a recent market value topping $260 billion, Coca-Cola is a behemoth -- employing more than 700,000 people worldwide and quenching 2.2 billion thirsts each day. It's growing, too, reporting a 5% year-over-year revenue jump in its first quarter, with earnings per share advancing by 12%.
Inflation and currency exchange rates are currently challenging the company, but its long-term potential remains solid thanks to its valuable brand, investments, and innovations. It's moved beyond sodas, for example, with its smartwater business seeing volume sold grow by 8% in the first quarter.
Coca-Cola may not be a fast grower from this point forward, but it will likely be a dependable one over the long haul. It seems roughly fairly valued at recent levels, so you might want to wait for a better entry point or average in incrementally.
As a reminder, only consider these stocks if you're aiming to invest in them for the long term -- at least five or so years -- and if you'll be keeping up with their progress. If not, consider a simple and powerful index fund for your long-term money. Dividend payers can help you save effectively for a future wedding, retirement, or any other long-term goal.
