3 Stocks That Deliver Big Dividends and Hold Up in a Crash

You can find stocks with big dividends, and you can find stocks that hold up reasonably well during bear markets, but finding companies that do both is usually much harder. That's the combination many income investors are looking for because a generous dividend doesn't mean much if you're still watching half your portfolio disappear whenever the next market crash happens. So, I ran a screen looking for stocks yielding between 3% and 5% with at least 20 years of dividend growth, a strong investment-grade credit rating of A- or higher, and a history of outperforming the S&P 500 during major downturns. A few familiar names passed this screen, including Realty Income and Enterprise Products Partners, but they're discussed in just about every income investing video out there. So, instead of covering those familiar names, I want to focus on three businesses that don't get nearly as much attention. All three declined less than 20% during the 2008 financial crisis when the S&P 500 lost roughly 55%, and two have raised their dividends for more than 60 consecutive years. First up is Northwest Natural, a utility that has been delivering gas to homes and businesses in the Pacific Northwest since 1859. And it's raised its dividend every single year for 70 consecutive years, making it one of only three companies on the entire New York Stock Exchange with that distinction. But, this isn't really a story about the past. NWN is going through one of the more interesting transformations in the utility space right now. Today, the company makes most of its money in Oregon, where it pipes gas into about 800,000 homes and businesses. And Oregon is unfortunately a tough place to be a gas utility right now because the state has decided that natural gas is part of the climate problem, and it's using every tool available to slow the gas business down. The state eliminated the subsidies that used to make connecting new homes to the gas grid cheap and easy. It launched a climate program that charges NWN for every ton of emissions that its customers produce. Oregon's new building codes now require heat pumps in all new construction for heating and cooling, meaning that new homes are being built electric first from day one, which reduces the role gas plays even in brand new buildings. And NWN's own internal planning documents project that the amount of gas that its customers use in the state will decline over the long term. The result is a regulatory environment that has become increasingly skeptical of gas. So, let's take a closer look at NWN's numbers and talk about why the stock's narrative could change for the better in the years ahead. I'll be using our website Simply Safe Dividends to review each of these three stocks. Our site is free to try, no credit card required. I'll leave a link in the description below. So, taking a look here at Northwest Natural, we can see the dividend yield is about 4%. It has a safe dividend safety score from us. It earns an A- credit rating from S&P. It's a mid-cap stock, but the really big disappointment with this company historically has been a very weak rate of dividend growth averaging just half a percentage point per year over the last decade. So, nowhere close to keeping up with inflation and not interesting for a stock that only yields about 4%. But, change is starting to happen here. We can see the payout ratio was 86%, which is definitely on the high side even for a utility, but that's been coming down. It's expected to reach 61% in the year ahead. So, that's much more in line with some of the company's peers and also management's target payout ratio of 55 to 65%. So, if earnings can start to grow at a faster pace, they didn't really go far for most of the past decade, I think the dividend is going to start growing at a faster pace as well. And there's reason to believe that earnings will start to pick up a little bit. So, historically this business has been very focused on gas distribution in Oregon and Washington, but it's made some moves to diversify. In early 2025, it closed the deal to buy a gas utility in Texas that's growing quickly. And it has also over the last decade been slowly but surely expanding its water utility business. These are both much more attractive businesses than its legacy operations in Oregon. And we can see that showing up here. So, the company is targeting 4 to 6% annualized earnings growth going forward as moved from being really a single state utility to a multi-state utility as it's diversified through those uh two businesses. And it's also considering a gas distribution expansion called MX3, which would hopefully be allowed to move forward next year and be in place by 2030, which could further move up that earnings growth rate to 5 to 7% annually. Um so, right now today about 25% of earnings are coming from this Texas gas utility and the water utility business, but those are growing much faster than the core gas business in Oregon. So, through 2030, I think it's possible that these two businesses here go from accounting for 25% of earnings to maybe close to 40% if management can execute. That's the big question. But if that does play out, this could be a pretty interesting stock because you'll see that dividend growth pick up from, you know, 1/2% a year to maybe 4 or 5% annually. You'll also see uh the business mix improve as well. The stock right now trades at a discount to the utility sector with a 15.5 P ratio versus 18.5. If investors start to get more confident that management is executing and this business is going to be positioned for better growth and less regulatory risk going forward, I think we could see that gap start to narrow. So, uh that's Northwest Natural. It's a kind of an interesting transformation story, but there is plenty of execution risk. Uh management is juggling a lot of balls right now, but if it all works out the next few years, this stock is one that could deliver faster dividend growth and potentially some upside if investors gain more confidence in the story. The next stock is Hormel Foods, ticker HRL with a 4.7% yield, a safe dividend safety score of 80, and an A- minus credit rating from S&P. This is a large-cap company in the packaged food space. If you're unfamiliar with Hormel, they have around 40 different brands that typically hold number one or two market share in their categories. Some of the bigger ones are Applegate natural and organic meats. You have Hormel Black Label bacon, Hormel chili, Dinty Moore, Jennie-O ground turkey, Hormel pepperoni, Skippy peanut butter, Planters nuts, Spam. Those are the biggest brands, but most of these products that Hormel sells, you've probably seen them on the grocery shelves. They're probably in your pantry as well. But, they tend to be low-carb, high-protein. Yes, a lot of them are, you know, highly processed meats. Yes, there are certainly preservatives, but overall, Hormel's portfolio could be worse, right? I think when you look at eating trends, whether it's from these weight loss drugs, GLP-1s, to just a preference for higher protein eating, a lot of Hormel's products and brands, I think, do remain relevant despite the otherwise difficult environment that has caused Hormel's stock price to basically be cut in half since early 2022. Now, a lot of that is common in this space because consumers have been hit by inflation, they've become a lot more price sensitive, and they're just pulling back on demand. But, Hormel also faced challenges from higher input costs and some supply chain challenges, too, which really hurt its margins. We can see they came down the last few years, and that has put a pretty big squeeze in the company's earnings. They've dropped since 2022 and pushed the company's P/E ratio up from kind of the mid-50s here to as high as 85% last fiscal year. But, the good news is Hormel could be close to bottoming out. The P/E ratio is expected to improve below 80% next year, and earnings are expected to start growing again for the first time since 2022. Now, part of that reflects new leadership in place. Hormel brought back their former CEO last summer. They're hoping to name a permanent CEO in October of this year, but he's been focused on restoring margins and working through some of these challenges. So, in the second quarter, which Hormel reported on a few weeks ago, it was the sixth straight quarter of organic sales growth. The company put up double-digit adjusted earnings growth as well. So, there are some signs of stabilization here despite the tough backdrop for Hormel. Now, from a dividend perspective, the company has paid safe dividends for nearly 100 years. Even though Hormel is working through a period of tighter dividend coverage, we think the payout remains safe, probably only seeing token increases like the 0.9% raise last November until that payout ratio improves. But, Hormel has lots of reasons to take its dividend commitment seriously, including its foundation, which was started by the company's founder way back in 1941. The Hormel Foundation owns over 40% of the company's common stock, and it relies on those dividends to carry out its work. So, the dividend is very important to the company's culture and the foundation that was set up by the founder of Hormel. So, overall, I think Hormel is a beaten-down stock that has pretty low expectations. If we take a look here, the company's trading at 16 times forward earnings on operating margins that are hopefully troughing. And the yield at 4.7% is well above the 3.3% 5-year average, but Hormel has to show that it can keep getting back to profitable growth to see its stock price begin to improve. It's kind of picked up a little bit over the last month or so, had a nice earnings report that the market liked, which helped, but it still has a long ways to go to try and claw back to where it was even before the pandemic. This last stock is one that I've owned for over 8 years. It's WEC Energy with a 3.4% yield, a very safe dividend safety score, A- minus credit rating. It's a large cap utility stock, also low beta. It was only down 18% during the financial crisis. And as a utility stock, it does exactly what you would hope it would do. It's very predictable. It has 22 consecutive years of exceeding or meeting the top end of earnings guidance. So, management has run this business very conservatively. It operates primarily in Wisconsin, which has a healthy regulatory environment. It also has a footprint in Minnesota, part of Illinois, and Michigan as well. In total, it serves nearly 5 million retail customers. Now, one of the things I've always liked about WEC Energy is growth. Usually utilities, you don't think about much growth, but WEC has delivered roughly 7% annualized dividend growth over the past decade. Every 10 years of that type of growth rate, that payout is going to be doubling. So, it's a pretty nice boost to a portfolio's income stream to own a a company that's this predictable with that type of dividend growth. Uh over 20 consecutive years of payout increases as well. Uh I expect that to continue. If you look at the company's payout ratio, it sits right where it always has, around 65 to 70%. Earnings have increased like clockwork and should keep rising, probably by around a 7% type of annualized pace, which is one of the stronger growth rates you'll find in this industry. And part of that's just because of WEC's focus in Wisconsin, which treats the utility well. But, we're also seeing growth coming in now from data centers, even up in Wisconsin. So, Microsoft has a big data center that's just opening up there. Oracle and OpenAI are investing as well. And that's really increasing demand for electricity pretty significantly here. And driving a lot of investment as those data centers need to plug in to WEC's grid. That drives a lot of demand for generation transmission and distribution of power. So, uh WEC is pretty well positioned to benefit from some of that trend there and I think it's going to continue to fuel pretty healthy dividend growth. The stock does trade at a premium to the utility space, but I think based on its track record of execution, the overall regulatory environment it operates in primarily in Wisconsin and some of that boost from data centers, the company is really well positioned for the future and I think will continue to treat income investors well. I hope these ideas were helpful if you're looking to build out a conservative dividend growth portfolio. If you want to find more income ideas like this or analyze your own portfolio's dividend safety, I do encourage you to give Simply Safe Dividends a try using the link below. Thanks again for watching and I hope to catch you next time.