Displaying items by tag: income

(New York)

May was a rough month for dividend stocks. Many companies announced the suspension of dividends or at least a cut. However, 11 companies in the S&P 500 announced dividend increases. That is an interesting group to look at because it likely means their businesses are thriving. Ten of those are: Medtronic, PepsiCo, Clorox, Cardinal Health, Chubb, Expeditors International of Washington, Baxter International, Northrop Grumman, TE Connectivity, Ameriprise Financial.

FINSUM: Pepsi and Clorox are the most interesting of the bunch for us. Both are consumer staples and because of their unique positioning, both seem likely to thrive.

(New York)

Dividend stocks do not seem like a bad bet right now, so long as they are names with reliable dividends. Interest rate risk seems very minor, and stocks with decent cash flow appear likely to do well as yields stay ultra-low. These value stocks are favored by analysts because they are priced with much less bullish outlooks, meaning they have an additional margin of safety versus growth stocks. Here are the stocks: CenturyLink, Unum (UNM), Westrock (WRK), AT&T, HP, Xerox, Principal Financial, MetLife, and Tyson Foods.

FINSUM: This is a nice mix of stocks that should naturally be un-correlated to one another.

(New York)

Dividends and buybacks have been looking very weak. Many buyback programs have been suspended and are likely to be under political pressure, while dividends are looking very at-risk because of likely poor earnings. So where to get some stable dividends? Barron’s ran a piece picking 40 of the safest dividends in the market. Here is a sampling: Nike, McDonald’s, Target, Home Depot, Coca-Cola, Caterpillar, Honeywell International.

FINSUM: This seems like a sound list. The only argument we might have is that Nike might not be able to maintain the hefty price increases consumers have stomached over the last five years.

(New York)

Dividend stocks are a scary space right now. Not only are earnings likely to be very volatile, but companies have announced major dividend cuts and the suspension of buyback programs. With that in mind, here are some stocks that offer safe and rewarding dividends. Regulated utilities are a great place to turn because they have government-allowed profit margins and are very recession-resistant. Check out American Electric Power (3.3% yield), Dominion Energy (4.6%), FirstEnergy (3.5%), NextEra Energy (2.3%).

FINSUM: These seem like great bets. They are down a little since the COVID explosion, which has boosted yields, but utilities are generally great recession stocks.

(New York)

This is a difficult time to be any kind of investor, but being one trying to get yields out of equities is particularly hard-bitten at the moment. Dividends are being cut left and right, so investors need to turn to other options, but much of fixed income looks very scary. That said “Quality yield is on sale”, according to a fund manager at Tocqueville Asset management who specializes in income investments. “Don’t ignore the rest of the capital structure”, says another fund manager at Socoro Asset Management. For instance, look for things like a JP Morgan Chase preferred security with a fixed coupon of 5% and yield-to-call of 7.72%, or Invesco’s Variable Rate Preferred ETF (VRP), yielding 4.85%.

FINSUM: These are good suggestions. For a yield that will really knock your socks off, take a look at the Virtus Private Credit Strategy ETF (VPC), which owns many BDCs and CEFs and has been beaten up in the selloff, but yields a whopping ~18% net of expenses.