A Spot of Income: Three Stocks in the Sale

A happy couple looking at a computer

Now, a fellow can’t go wrong with a bit of income, what? Especially when the market, in its infinite wisdom, has decided to offer a spot of sale on perfectly respectable companies. It’s a dashed good thing, really. I’ve been having a look, and three blue-chip stocks seem to be having a temporary wobble, presenting a rather attractive opportunity for the discerning investor – that’s you, naturally. They’re not just solid as a rock, but have been diligently increasing their payouts, a practice I heartily approve of.

Costco Wholesale, Home Depot, and McDonald’s – a trio of establishments one encounters in everyday life, and now, potentially, in one’s portfolio. They’re all currently trading a bit below their recent peaks, which, as any sensible chap knows, is the time to be having a look. Let’s delve in, shall we?

Costco Wholesale

Costco, that emporium of bulk buying, has been exhibiting a touch of the jitters lately, but remains, shall we say, fundamentally sound. As of Monday’s close, it was trading around $945, a mere 12% shy of its recent high. Returns have been, if we’re being candid, a bit flat of late, but one mustn’t let a temporary lull dampen one’s spirits. The price-to-earnings multiple is a bit on the lofty side, at 50, but the sheer reliability of the business is, frankly, rather reassuring.

The company has been generating a jolly good income over the years, as its warehouses are a magnet for shoppers of all descriptions. Even the most thrifty customer can’t resist the lure of bulk bargains. Add to that a remarkably generous return policy, and you have a recipe for success. It can get a bit crowded, admittedly, but a little hustle and bustle is a small price to pay for such savings.

Sales have been steadily climbing, and with membership renewal rates hovering around the 90% mark, Costco’s numbers speak for themselves. In the last twelve months, the company has amassed a net income of $8.3 billion on revenue totaling $280.4 billion. Not bad, what?

The dividend yield is a modest 0.6%, but the company has increased its quarterly payout by a remarkable 86% over the past five years. And occasionally, they throw in a special dividend, which is always a cheerful surprise. I wouldn’t expect a sudden surge in the share price, but for a long-term income stream, Costco is a perfectly respectable addition to one’s portfolio.

Home Depot

Now, Home Depot, that purveyor of all things home improvement, is another fine specimen. The stock is down 4% over the past year and about 14% from its recent high of $326.31. A temporary dip, one hopes.

At 2.5%, you’re collecting a rather more substantial dividend yield – more than double the S&P 500 average of a paltry 1.1%. They’ve been remarkably generous with dividend hikes, too. The current quarterly payout of $2.30 is a good 53% higher than it was at the end of 2020. A most commendable effort, wouldn’t you agree?

Home Depot comes at a far more reasonable valuation, with a price-to-earnings multiple of 26 – right in line with the S&P 500 average. Even if consumers are tightening their belts, the business remains profitable, with margins that are better than Costco’s. Over the last twelve months, Home Depot’s net income totaled $14.6 billion, which is around 9% of the $166.2 billion in sales. A jolly good showing, I say!

McDonald’s

Rounding out our little selection is McDonald’s, that global purveyor of quick and convenient sustenance. On Monday, the stock closed at just under $307, within 11% of its 52-week low of $276.53. Admittedly, it hasn’t fluctuated much. Its high over the past year isn’t much higher, at $326.32. And like Home Depot, its price-to-earnings multiple is around 26.

The stock pays a dividend of 2.4%, and 2026 is likely to be the year it joins the exclusive club of Dividend Kings. Barring any unforeseen calamities, the company is highly probable to boost its dividend for a 50th consecutive year. Its current quarterly per-share dividend is $1.86, a good 44% higher than it was five years earlier. A most impressive record, wouldn’t you say?

McDonald’s is a safe long-term investment, a veritable rock in a stormy sea. Its ability to adapt to changing tastes over the years, while still offering relatively affordable meals, has allowed it to consistently generate strong results. Over the past four quarters, the company has reported $8.4 billion in profit on sales of $26.3 billion, for an excellent profit margin of 32%. A most satisfactory state of affairs, what?

2026-01-16 01:32

Costco Wholesale

Home Depot

McDonald’s

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