2 Boring But Consistent Dividend Stocks Investors Should Consider Buying in July

When it comes to dividend stocks, I’m more interested in consistent returns than interesting companies and sporadic payouts. High yields are most often a red flag, at least for me. However, it is always worth noting that dividends are never guaranteed.

With that in mind, two consistent stocks that I think investors should take a closer look at are Bunzl (LSE: BNZL) and Howden Joinery Group (LSE: HWDN). Here’s why!

What theyre doing

Bunzl is a company with roots dating back over 100 years. Although it has evolved over the years, the company now focuses on delivering food parcels and cleaning products.

Howden is one of the UK’s largest kitchen and joinery manufacturers, with a large presence across the country. It sells its products to trade customers, as well as direct to consumers through its many warehouses.

Bunzl’s investment case

Diving straight into the topic of yields, Bunzl currently offers a dividend yield of 2.3%. This is a great example of a performance that doesn’t make my pulse race. However, what excites me is the company’s balance sheet, which has increased its annual dividends for dividends.

When it comes to passive income, safe and steady increases excite me more than sporadic payments with high returns. However, it is worth remembering that past performance is never a guide to the future.

One of Bunzl’s biggest draws for me is its size, scale and experience. With a presence in over 30 countries and close relationships with the majority of its clients, it has defensive capabilities, in my opinion. This is because the products it offers are essential. This allowed the company to generate stable profits and reward shareholders for years.

From a bearish perspective, Bunzl’s performance has been affected in the past, and recently too, according to a trading report released last week, due to economic turmoil. Higher inflation and lower consumer confidence have led to lower spending across its products. This is something I would watch closely as it could hurt potential returns in the future.

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Howden’s investment case

The company has gradually grown over the years to become one of the largest suppliers of its type. This allowed it to regularly return cash to shareholders. The shares currently offer a dividend yield of 2.3%.

Like Bunzl, Howden has a good payout history in recent years. The company has increased its dividend per share for the past four years. Plus, before the pandemic, it was on an eight-year streak.

Looking to the future, Howden has developed an excellent reputation in the industry which has allowed it to increase its profits. Due to the current housing shortage in the UK, I believe the company is poised for continued growth, which should in theory increase profits and investor returns.

The natural risk for Howden is that it will be at the mercy of inflation linked to the vital raw materials it needs to make its products. Higher costs could lead to tighter margins and lower dividends. However, given the current housing shortage mentioned, the popularity of its products and its large footprint, this is not something I worry about too much.

The article 2 Boring But Consistent Dividend Stocks Investors Should Consider Buying in July appeared first on The Motley Fool UK.

Further reading

Sumayya Mansoor holds positions in Howden Joinery Group Plc. The Motley Fool UK recommended Bunzl Plc and Howden Joinery Group Plc. The opinions expressed about companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a broad range of ideas makes us better investors.

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