That sad, somber look you see on the faces of many a college-age student means it must be the end of the summer: Time to gather up the clean laundry, the pre-fab plastic storage bins and head back to campus in that packed-up Ford Escort.
So you don’t own a Ford? Haven’t driven one lately? Not to worry, investors, because you can always own Ford Motor Co. (ticker: F) by way of your portfolio, in what might just be called a back-to-school special.
“Ford is one of my favorite high-yield stocks right now particularly because it is extremely cheap and out of favor,” says Vahan Janjigian, portfolio manager for Interactive Brokers Asset Management and chief investment officer of Greenwich Wealth Management.
[See: 9 Dividend Stocks to Sell Despite High Yield.]
“Ford has a 6 percent dividend yield based on regular dividends alone,” Janjigian says. “The yield is even higher if you include the special dividend, which the company often pays each January.”
Ford is one of three dividend-yielding stocks that experts recommend for the month of September. Here’s a closer look at the automaker and two other contenders that are good dividend stocks to buy for September.
Ford stock: Ready for a road trip.Taking a broader look through the eyes of analysts, Ford is overall rated a buy, though there’s some interesting intrigue when you break down opinions to an individual level. That is: More than half of analyst firms (seven of 13) recommend a “hold.” Two call Ford an “underperform” and “sell” respectively, but three bullish firms label it a “strong buy,” and one a “buy.”
What’s the big picture, then? On the one hand, this summer’s Chinese tariffs have not been good for Ford and its competitors, as they resulted in a 25 percent duty on U.S.-produced cars. But closer to home sales remain robust, with Ford’s F-series pickups holding ground as nothing less than a benchmark.
A bet on those trucks alone could be a smart one, as in 2017 the F-series produced $41.25 billion in North American revenue — more than Facebook ( FB), Coca-Cola Co. ( KO) or Nike ( NKE). Still, Ford’s stock has yet to follow suit. It trades near $10 per share, down 11 percent from a year ago.
After not awarding a dividend from mid-2006 through 2011, “it resumed paying dividends in 2012. And while the dividend steadily rose from 2012 through 2015, it has remained at the same level since 2015,” says Bob Johnson, professor of finance at Creighton University’s Heider College of Business.
That dividend currently stands at 15 cents per share per quarter, “but income investors should not count on that dividend continuing unabated into the future,” Johnson cautions — not because of Ford’s performance, but any headwinds the automotive industry may encounter.
Genuine Parts Corp.: Portfolio cargo that makes cars go. Johnson comes down in favor of another motor vehicle stock that’s been awarding consistent dividends under the radar — or if you prefer, under the hood. Genuine Parts Corp. ( GPC) is the parent company to NAPA, a brand familiar to any do-it-yourself car enthusiast or everyday driver.
Genuine Parts was founded in 1925: the year of “The Great Gatsby” and era of the Model T. It’s since doled out delicious dividends for more than six decades. Among dividend kings, it’s more dominant than legendary racer Mario Andretti. If it makes it through 2018 without a hitch, GPC will celebrate 62 consecutive years of increased dividends paid to shareholders.
To put that in perspective, GPC’s streak began in 1956 — predating Ford’s infamous Edsel by just a few weeks. Andretti was still a teenager and wouldn’t win his first race for a good three years.
[See: 7 Auto Stocks to Drive Income.]
What makes GPC special? Johnson says that unlike Ford, “Investors buying GPC can count on dividends continuing to grow in the foreseeable future. It sells at a very modest PEG ratio [price/earnings-growth] of 1.4.”
As for the future, it’s lovely to have a business that’s immune to recessions. “In difficult economic times, people tend to keep their older automobiles longer and delay purchasing new cars,” Johnson says. Even when things are good, the demand for fan belts, taillights and the like isn’t exactly going away.
CPC’s current quarterly dividend of 72 cents is up a robust 17 percent from 2015. Over the same period, its stock has jumped 25 percent to $99 per share.
Portland General Electric: More power to investors. Not to be confused with General Electric Co. ( GE) — a legacy company on the ropes — Portland General Electric ( POR) services more than 40 percent of Oregon residents. At about $47 per share, its stock remains unchanged over the last year; its dividend stands at 36.3 cents per share, reflecting a healthy upward trajectory. It’s risen a third since 2013.
Expect good things from POR in the months to come, says Christopher Ma, director of the George Investments Institute at Stetson University in DeLand, Florida. In July, POR and its ratepayers won big in a $130 million settlement with the Carty Generating Station, an Eastern Oregon gas-fired power plant — meaning Carty, not POR, had to pay for cost overruns connected with the plant’s construction.
“POR’s stock benefited from the Carty settlement,” Ma says. “And its dividend history includes 12 years of dividend growth, a 4.53 percent five-year growth rate, and 62.47 percent payout ratio.”
[See: 7 Utility Stocks to Power Your Investment Income.]
When you compare that with the rest of the utility industry, “POR has performed quite well,” Ma says. With regard to its dividend, POR recently increased its dividend by 6.6 percent, versus Exelon ( EXC) at 5.3 percent and Duke Energy Corp. ( DUK) at 4.2 percent.”
As for Wall Street analysts, they’re firmly fixed just above “hold,” in the direction of “buy.” Perhaps it will take some time for the effects of the Carty settlement to take full effect. Nonetheless, POR’s dividend boasts electricity to spare.
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3 Dividend Stocks to Buy in September originally appeared on usnews.com
