3 Dividend Stocks Worth Buying More of While the Market Is Distracted
Key Points
Stanley Black & Decker is focusing on its core strengths as it works to clean up its balance sheet.
UPS is aiming for greater efficiency by reducing lower-margin businesses, cutting jobs, and modernizing.
Honeywell plans to spin off its aerospace division, potentially unlocking significant value for shareholders.
- 10 stocks we like better than Stanley Black & Decker ›
While the market fixates on the ongoing turmoil in Iran and the ensuing rise in oil prices, smart investors know that, amid uncertainty, lies opportunity. The recent selling in stocks has opened the door for you to add quality stocks to your portfolio at a discount.
Dividend stocks not only offer a solid stream of income, but also provide diversification away from high-flying growth stocks. With that in mind, here are three rock-solid dividend stocks to scoop up right now while the market is distracted.
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This Dividend King is on sale
Stanley Black & Decker (NYSE: SWK) stock has fallen 22% over the past month, and trades at a forward price-to-earnings (P/E) ratio of just 12.8. The company's dividend yield now sits around 5%, and it has a stellar track record of raising its dividend payments for 59 consecutive years, putting it in the exclusive Dividend Kings club.
In December, the company sold its Consolidated Aerospace Manufacturing (CAM) business to Howmet Aerospace for $1.8 billion in cash. This move is part of the company's broader organizational transformation to reduce its debt and clean up its balance sheet. It also gets Stanley Black & Decker out of the aerospace industry and focuses on its core strengths. The deal is expected to close in the first half of this year.
Looking ahead to 2026, Stanley Black & Decker is targeting free cash flow of $700 million to $900 million, representing a 16% increase (at the midpoint) from last year. This is cash flow the company can use to increase its dividend, repurchase shares, or reinvest back into its business. For income investors looking for a deal in this market, Stanley Black & Decker certainly fits the bill.
UPS is making a push for greater efficiency
United Parcel Service (NYSE: UPS) is undergoing a transformation as it looks to lean into its higher-margin businesses and cut costs to improve its efficiency. As part of this, the company is reducing its reliance on Amazon and cutting its daily volume with the e-commerce giant by 2 million pieces over a two-year period as part of its efforts to exit less profitable segments.
The company is also looking to cut 30,000 jobs and close 24 facilities to improve its efficiency. It is facing some legal pushback from the Teamsters union, which wants to block a driver buyout program as part of its efficiency measures.
In the longer term, UPS aims to save $3.5 billion by overhauling its network, lowering the cost per piece, and moving away from labor-intensive manual sorting. Some of its facilities are equipped with the latest automation technology and have shown a 28% greater cost efficiency than traditional hubs.
UPS stock is down 20% from its recent 52-week high and trades at about 14 times forward earnings. It has increased its dividend for 16 consecutive years, and currently yields investors 6.7%, making it another excellent dividend stock to scoop up while the market is distracted by other things.
Honeywell looks to unlock sum-of-the-parts value
Honeywell (NASDAQ: HON) recently signed a supplier framework agreement with the U.S. Department of Defense. As part of this, the company has committed to a multi-year $500 million investment to upgrade production facilities, tooling, and advanced manufacturing technologies. The goal is to quadruple production as the U.S. ramps up national defense spending.
Beyond this, Honeywell is also undergoing changes, including spinoffs, acquisitions, and a focus on its core business. As part of this, the company will spin off Honeywell Aerospace, which is expected to become a stand-alone publicly traded company in the third quarter this year.
Analysts at Wolfe Research believe this spinoff could unlock "sum-of-the-parts" value, similar to how General Electric's spinoffs of aerospace (GE Aerospace), energy (GE Vernova), and healthcare businesses (GE HealthCare) unlocked value for its shareholders. For investors interested in getting into Honeywell and its future aerospace spinoff, now looks to be an excellent time to buy.
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Courtney Carlsen has positions in GE Vernova. The Motley Fool has positions in and recommends Amazon, GE Aerospace, GE HealthCare Technologies, GE Vernova, Honeywell International, and United Parcel Service. The Motley Fool has a disclosure policy.
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