2019’s best dividend stocks to invest in. Passive income becomes all the more desirable in times of uncertainty and risk aversion. That’s where Wall Street finds itself entering 2019, as skittish traders, concerned about the…
2019’s best dividend stocks to invest in.
Passive income becomes all the more desirable in times of uncertainty and risk aversion. That’s where Wall Street finds itself entering 2019, as skittish traders, concerned about the economic cycle, caused a fourth-quarter equities sell-off. The recent yield curve inversion, in which short-term Treasury yields exceeded longer-term yields, sparked more selling. With fixed income yields still historically low, dividend stocks should outperform the broader stock market. Many of the following names offer higher rates than you can find on 10-year Treasurys, and offer far higher capital appreciation potential to boot. Here are 10 of the best dividend stocks to buy for 2019, some with yields approaching 6 percent.
Often the forgotten third musketeer to Walmart (WMT) and Amazon.com (AMZN), big-box retailer Target offers something for investors that neither of its higher-profile competitors do: a robust, 3.6 percent yield. TGT’s payout ratio, or the percentage of its earnings paid out as dividends, sits at just 41 percent, a relatively low level indicating that Target can sustain its dividend payments indefinitely while retaining enough to reinvest in growth as well. Sales continue growing despite Amazon’s ruthless expansion, and a track record of growing quarterly payments for 50 consecutive years makes it both uniquely reliable and one of the best dividend stocks to buy for 2019.
A stereotypically defensive holding for conservative, income-seeking investors, tobacco giant Altria Group can funnel major capital back to shareholders through dividends and buybacks due to strong margins, customer loyalty and low reinvestment requirements. Altria, which owns Philip Morris USA (which owns Marlboro, Parliament, Virginia Slim and other brands) and dabbles in smokeless tobacco (Copenhagen, Skoal), cigars and e-cigarettes, pays a huge 5.7 percent dividend. Pursuing growth, MO invested $1.8 billion in Cronos Group, a Canadian cannabis company, and is seeking investments in Juul, the rapidly growing e-cigarette brand. Altria’s stability and ability to quickly seize new growth opportunities make it one of the best dividend stocks to buy for 2019.
Named as one of U.S. News’s best health care stocks to buy for the coming year, this $80 billion retail pharmacy chain also dishes out a respectable 2.5 percent dividend. Like several of the previous names, CVS likely won’t double your money very quickly, but it’s a low-risk, sound company that enters 2019 stronger than before. CVS just completed its $69 billion merger of health insurer Aetna, and is primed to use its blockbuster acquisition to drive traffic to its low-cost MinuteClinic treatment centers, which could shift demand from emergency rooms, decrease expenses for Aetna, and boost traffic, sales and profits for CVS itself.
Global growth fears and a supply glut are pressuring oil prices. For Occidental, a Houston-based oil and natural gas producer, that’s clearly not ideal — but it’s not a death knell, as it can be for less nimble rivals. Recent ambitious efficiency efforts to insulate OXY from incredibly low oil prices were successful, and the company can now break even — after paying dividends and upkeeping new wells — even if oil goes as low as $40 a barrel. With prices above $50 a barrel and a 4.5 percent dividend that increased even through the 2014 energy sell-off, OXY looks like one of the best dividend stocks to buy for the long term.
AbbVie, a spinoff of Abbott Laboratories (ABT), makes the best-selling drug in the world, Humira — a treatment for multiple symptoms including Crohn’s disease and rheumatoid arthritis, among others. Having increased its dividend payment for 45 consecutive years, ABBV has a proven track record of consistency, helping make it one of the best dividend stocks to buy for 2019. Humira’s EU patent expired in October, and will expire in 2023 in the U.S. Thankfully, this isn’t an apocalyptic scenario: AbbVie has struck multiple licensing deals with competitors producing biosimilars, ensuring a stream of future royalties from successful rivals. Investors can think of the 4.6 percent dividend as their own royalty.
Next up is Intel, the largest broad line semiconductor business (companies that design, produce and sell various types of computer chips) on earth. After the sell-off in tech stocks, INTC sells at a meaningful discount to 2018 highs, trading at just 11 times earnings. Analysts expect earnings to expand at an annualized 10 percent rate over the next five years as Intel works to meet growing demand in the automotive, data center, cloud and artificial intelligence areas. With a dominant foothold in the large, steady PC market, INTC’s combination of value, growth and stability make it one of the best dividend stocks to buy for 2019.
While stocks like Intel can provide a modicum of growth potential to a portfolio built for income, what many dividend investors look for, aside from a quarterly paycheck, is the regularity of that paycheck: stability and sustainability. In that vein, many of U.S. News’ top dividend stocks have been growing payouts annually for 40 years or more, and property and casualty insurer Cincinnati Financial is no exception. Its 2.6 percent yield doesn’t sound like much, but with a dividend growth streak of 57 years, you can count on it like clockwork, and a payout ratio of just 24 percent illustrates an enormous cushion for hard times.
Like Target, Best Buy has withstood a decades-long assault from brick-and-mortar-retailers’ primary villain, Amazon.com, although arguably against much bleaker odds. Fighting through the Great Recession as competitors like Circuit City and Radio Shack went bust, Best Buy made it through the hardest times, carving out its niche as the premiere physical electronics retailer. With increasing focus on e-commerce though, BBY more than doubled earnings per share in the last four years despite essentially stagnant revenue. Today, online sales are driving growth and expanding margins, providing more room to pay the dividend; BBY raised its dividend 32 percent in 2018 and another hike is expected in March.
Applied Materials is one of the world’s largest semiconductor equipment manufacturers. Heading into the New Year, it’s trading at absurdly low multiples amidst the swoon in tech. AMAT goes for just 8 times earnings, even though Wall Street expects earnings to grow nearly 17 percent annually over the next five years. Admittedly, 2019 will be a year of slower growth — and perhaps revenue decline — for AMAT. But market sentiment has gotten so negative as to be unrealistic about AMAT’s long-term prospects; the company is constantly researching, and between July 2017 and June 2018, Applied Materials was granted the fifth-most patents of any company in the Silicon Valley area at 403.
The last of the 10 best dividend stocks to buy for 2019 is Companhia Energetica de Minas Gerais, a Brazilian electric utility company. Despite being one of the riskier stocks on the list due to currency risk, CIG is no joke. The $4.7 billion company recently streamlined operations by selling its telecom assets, replaced U.S. dollar-based debt with real-based debt, initiated currency hedges, and saw several debt tranches upgraded by U.S. credit-rating agencies. Trading at a price-earnings ratio of 15 and forward P/E of 9, CIG’s 4.7 percent dividend is worth considering if it fits your risk tolerance. Brazil’s 2018 elections should bring more stability to the populous South American country.