Growth investors had quite a year in 2020, chasing tactical plays based on the rise of the ” stay at home trade” and natural interest in biotechnology stocks resulting from the pandemic.
Entering 2021, the future catalysts for the stock market are not quite as obvious. That may mean it’s time to look beyond the flashy narratives of the last year and get back to basics with slow and steady dividend payers that will offer income streams regardless of Wall Street’s ups and downs.
The following five stocks have all done very well in recent weeks, and they offer a dividend higher than 3% entering the new year:
— CF Industries Holdings (ticker: CF)
— Diamondback Energy (FANG)
— Lincoln National Corp. (LNC)
— NetApp (NTAP)
— Simon Property Group (SPG)
CF Industries Holdings (CF)
Current yield: 3.2%
Not exactly a household name, $8 billion agricultural stock CF Industries manufactures and distributes fertilizers and other hydrogen and nitrogen products. That probably doesn’t sound particularly interesting to most folks, but if you’re an income-oriented investor, then you should know many of the most reliable dividend payers are slow and steady stocks like CF and not high-flying corporations that get a lot of attention. The fact remains that modern farms require a constant demand of these products to yield the kind of harvests they expect and grocery stores demand — meaning a tremendously stable revenue stream. The 30-cent dividend was paid like clockwork even through the pandemic, and there’s no reason to expect disruptions to stop anytime in early 2021, either.
Diamondback Energy (FANG)
Current yield: 3.1%
Independent oil and gas explorer Diamondback is one of the few energy names that has remained profitable in 2020 even amid all the ups and downs. That’s primarily because it focuses on the Permian Basin shale field in West Texas, which offers some of the cheapest domestic production of energy to keep margins high even when crude oil prices are low. With crude oil back in the high $40s after crashing back in spring, the 37.5-cent quarterly dividend from FANG is looking particularly good right now — as is the roughly 50% surge in share prices over the last three months to finish the year.
Lincoln National Corp. (LNC)
Current yield: 3.2%
An annuities and life insurance provider, LNC was hit hard in the spring on fears that the “black swan” event of the pandemic could spark a big increase in death benefits. Shares are up more than 100% from those early lows, however, as the worst was not realized and we are now already seeing the rollout of vaccines around the world. Dividends have continued uninterrupted at 40 cents a share, and as death rates and statistics normalize, investors can be sure the well-run operations and responsible underwriting at Lincoln will keep paying off in 2021.
Current yield: 3%
One of the rare tech stocks that pay a generous dividend, NTAP provides software, systems and services to help organizations manage on-site networks as well as private and public clouds. This includes everything from back-up processes and storage optimization as well as security and compliance needs. It’s not a super business when compared with the high potential of the continued growth of cloud providers out there like Amazon Web Services; but it certainly is reliable, as many organizations need more than just access to a remote server to stash files or host their website. Long-term relationships with customers help fuel reliable dividends that are just half of total earnings, and shares have jumped by nearly 30% in the last month on improving 2021 forecasts.
Simon Property Group (SPG)
Current yield: 5.3%
Admittedly, Simon had a terrible year in 2020. The largest mall operator in the U.S. was already facing pressures on operations amid the rise in e-commerce over the last few years, and the social distancing caused by the pandemic made it even less likely that folks would visit SPG shopping centers. However, after cutting down its dividend and seeing its share price slashed from around $140 to $40, things have normalized. SPG stock is still a long way from prior highs and its $1.30 quarterly dividend is reduced from $2.10 previously, but shares are up more than 30% in the last three months on optimism that the worst of the pandemic is over and 2021 will be much better for shareholders.
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Update 12/17/20: This story was published at an earlier date and has been updated with new information.