August has been a rough month, with major indices like the S&P 500, Dow Jones Industrial, and Nasdaq Composite seeing their biggest drops in nearly two years. Many agree that the epicenter of this “financial meltdown” was due to the unwinding of a Japanese carry trade that crashed the Nikkei 225 Index - the worst single-day drop in its history. The sell-off was so bad that it triggered circuit breakers and cut the trading day early.
Two weeks later, investors are still nervous. Some, are buying, while others are staying and waiting for signs of recovery, bringing prices to a standstill. Others, like myself, are taking profits from our biggest gainers and using that capital to open new positions that are now “cheap.” For bargain hunters like me, the current market dip presents an excellent opportunity to bolster dividend incomes at reasonably lower prices.
That’s why I think it might be a perfect time to snag some quality companies, like those on the Dividend Kings list—mature businesses that have paid 50 or more consecutive years of dividends—while their trading prices are still low.
Here are three Dividend Kings that have taken the brunt of the drop and why they might deserve a spot in your income portfolio.
How I Screened For The Following Stocks
Using Barchart’s Stock Screener Tool, I used the following filters to get my list of Dividend Kings:
- Price change: 0% or less based on the one-month price percentage change,
- Analyst coverage: 8 or more,
- Current analyst rating: 3.5 (moderate buy) to 5 (strong buy),
- Annual dividend yields: Left blank so that the value populates in the results.
After running the screen with these criteria, I got five results.
I arranged them based on the lowest to highest one-month price change and took the top three. Aside from these filters from Barchart Screener, I also reviewed the results and added a couple more criteria based on chart analysis:
- Trend direction: Must be on a downward trend,
- Support level proximity: Must be trading near and above an established support level.
Due to these criteria, Target Corporation (TGT) and Dover Corp (DOV) are excluded from the list.
So, here are the results:
Nucor Corporation (NUE)
One-month Price Performance: -11.75%
Nucor Corp, one of America’s largest steel and iron manufacturing companies, took quite a tumble during the drop, carving a new 52-week low at $139.41. The support range at $139 - $140 held, though, and NUE stock is now trading a few dollars above its latest low.
Investors who want to buy shares can either do so now or wait for prices to move closer to $140. As a further incentive, the company pays 54 cents per share quarterly, which equals $2.16 annually. That’s a 1.51% yield based on current prices.
One primary reason for the drop is a significant decline in earnings before taxes and non-controlling interests in Q2 2024, which dropped from $2.05 billion to $898.2 million year over year. However, analysts remain cautiously optimistic on NUE stock, rating it a 4.0 average score or a moderate buy recommendation.
Emerson Electric Company (EMR)
One-month Price Performance: -10.86%
Emerson Electric is a well-known engineering company and Dividend King. It has a strong foothold in automation and offers both software and hardware products in the field.
EMR stock has fallen more than 10% from its recent 52-week high, and while it’s nowhere near close to its 52-week low, its stock price bounced from an established support/gap-up near $100. This presents an excellent opportunity for interested investors to buy or add to their EMR shares.
Dividend-wise, the company offers 52.5 cents per quarter, or $2.10 annually, which translates to a 2.04% yield. Meanwhile, its latest quarterly report had mixed results, with net sales increasing by 17% but GAAP EPS decreasing by 5% year over year. The company also tightened its full-year net sales guidance from 14.5% - 17.0% to 15% - 16%.
On the bright side, operating and free cash flow increased by 32%. Analysts also rate EMR stock as a strong buy, with an average score of 4.65.
PPG Industries (PPG)
One-month Price Performance: -3.94%
PPG Industries is a global company that produces and distributes paints, coatings, and specialty materials. It serves industries such as aerospace, architecture, automotive, marine, product packaging, and general and specialized industrial manufacturing.
PPG was on a downtrend before the recent market drop and traded below its $120 support area for a few sessions. However, it has since bounced back, gapping up from $120, and is now trading near $123.
In terms of dividends, PPG recently increased its quarterly payout to 68 cents. Based on PPGs stock's current trading prices, this translates to a $2.72 annual rate or a 2.21% yield.
Its Q2 2024 report also had some good news for investors. Net income increased by 8% year over year, marking its sixth consecutive quarter of growth. However, net sales were down 2%, and the company has since decreased its 2024 adjusted EPS guidance from $8.34 - $8.59 to $8.15 - $8.30.
Still, analysts give PPG stock a 4.09 average score or a moderate buy recommendation, indicating confidence in the company’s eventual recovery.
Final Thoughts
In over two decades of investing, I’ve had my fair share of market meltdowns, and here’s one thing I know from all of them: the market always recovers and soars even higher.
That’s why I think market downturns are golden opportunities to buy quality stocks, and Dividend Kings are the very definition of quality. But just because an expert told you something’s good doesn’t mean you should buy it immediately. You must always do your due diligence and ensure these stock picks fit your investment strategy and risk tolerance.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
