Keep an eye on these dividend stocks.
Dividend stock investing is often seen as a boring affair, where you put companies in your portfolio and hold them for decades without looking back. However, as the financial crisis and Great Recession taught, it is dangerous for investors to presume any stock is low risk. Simply paying a dividend is not enough to protect an investor from trouble, and it’s important to know what every stock in your portfolio is up to. Here are seven dividend stocks to watch. While some of the headlines are good and some are bad, every item here is noteworthy to income-focused investors looking at quarterly payouts as well as share prices.
Qualcomm (QCOM)
This year has been a doozy for microchip giant Qualcomm, with shares down about 20 percent since Jan. 1 thanks to a $1 billion lawsuit brought by tech rival Apple (AAPL). The big price tag is just the beginning of the pain, too, since Apple is alleging QCOM trumps up licensing charges. If the lawsuit prevails, it could quite literally undo the business model of Qualcomm. Sure, the dividend is nice, particularly after an increase in payouts a few months ago. But note that this legal action puts the very cash flow of QCOM in doubt, as well as its ability to pay dividends.
Dividend yield: 4.4 percent
YTD performance: -20 percent
Kroger Co. (KR)
Grocery chain Kroger has taken it on the chin ever since Amazon.com (AMZN) announced a plan to purchase organics king Whole Foods Market for $13.7 billion. But shares have now dropped so darn much that the dividend is on par with 10-year Treasurys and KR stock is now trading for a very affordable 11 times forward earnings. So is it a bargain? Well, the million-dollar question is whether the “Amazon effect” will indeed undercut prices across the fresh foods space the way it has in everything else. This is a trend to watch for Kroger investors, and anyone interested in the grocery sale industry.
Dividend yield: 2.2 percent
YTD performance: -35 percent
Ford Motor Co. (F)
Ford has fallen on hard times lately, with shares down about 40 percent from their 2014 high on fears that U.S. auto sales in general are slowing and that this auto giant is behind on 21st century technologies such as autonomous driving. However, in January the company signaled it was very optimistic about the future with a 5-cent special dividend on top of its already generous standard payout. And while Ford signaled profits may dip because of bigger investments, if those moves work out this could be a dynamic name in 2018 — and not just for the dividend potential.
Dividend yield: 5.3 percent
YTD performance: -6 percent
General Electric Co. (GE)
GE’s rather ho-hum 2016 has given way to a bit of a meltdown in 2017. While the industrial conglomerate has its fingers in many pies, its core power and energy businesses still are the prime drivers of overall performance — and lately, performance just hasn’t been there from a top-line perspective. Still, efficiencies and shrewd management have kept earnings moving higher and allowed GE to return about $26 billion to shareholders via cash and dividends in 2016. So will the profits keep coming to fuel General Electric and win over Wall Street? Or will the pain continue? Keep watching for a clue.
Dividend yield: 3.8 percent
YTD performance: -20 percent
Bank of America Corp. (BAC)
Bank of America was supposed to be one of the big winners under Republican dominance and looser regulations. But Bank of America has largely tracked the market in 2017 despite a big rally across November last year that hinted at bigger things to come. The financial stock did turn a major corner as it passed its so-called stress test of capital reserves with flying colors. Bank of America has come a long way in shoring up its balance sheet, and if the cyclical recovery we were promised under President Donald Trump happens, this stock — and its dividend — could come roaring back in the next year or two.
Dividend yield: 2 percent
YTD performance: 9 percent
Microsoft Corp. (MSFT)
While some investors may think Microsoft is old news compared with the new crop of high-growth tech stocks, the company has gotten some mojo back in the last year or two. Shares have roughly doubled the returns of the Standard & Poor’s 500 index in 2017, and in the last two years the stock is up a very impressive 70 percent or so. MSFT typically increases its dividend in the fourth quarter, so it will be interesting to see how the tech company responds now that it is so profitable; dividends remain roughly 40 percent of next year’s earnings, so there’s a chance a big boost could be forthcoming.
Dividend yield: 2.1 percent
YTD performance: 19 percent
Altria Group (MO)
Altria Group is a mainstay among dividend stock investors, and for good reason. The company not only offers an above-average yield, but it continues to push those dividends higher. Most recently, MO announced an 8 percent increase to its quarterly dividend, from 61 cents per share to 66 cents. That marks the 48th consecutive year of increases. Of course, it’s safe to say traditional tobacco products are on the outs and growth is hard to come by. This dividend darling has started to soften recently, so will it be able to offset the lack of growth with stability and dividends? Or will investors start to give up on this no-growth name?
Dividend yield: 4.1 percent
YTD performance: -6 percent
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7 Dividend Stocks to Watch originally appeared on usnews.com
