You can take these dividend stocks to the bank.
It’s no secret that the stock market has been rocky throughout 2022. Year to date, the S&P 500 index is down 18.1% through May 20. With futures contracts on the federal funds rate pricing in an 88% chance of a 50-basis-point hike in June and inflation figures hitting 8.3% year over year in April, the markets are expected to remain highly volatile. Investors looking to pivot their equity holdings to a more defensive allocation during these turbulent conditions can consider an allocation to low-beta dividend stocks. Beta is a measure of the volatility of a stock compared to the market. Stocks with a beta of less than 1 are considered less risky and have shown a lower correlation with the market. Here’s a list of seven low-volatility dividend stocks stocks to buy with yields above 3%.
Verizon Communications Inc. (ticker: VZ)
The U.S. telecommunications space is a highly regulated industry dominated by a few select mega-cap companies. These companies have strong economic moats and widespread customer bases, with highly diversified product and service lines. This translates into strong cash flows and earnings, which are generally distributed back to shareholders in the form of dividends. As one of the largest players, Verizon exemplifies these traits well. The company provides wireline and wireless services and has expanded into networking and cloud services in recent years. Recently, Verizon allocated an additional $97 million to its local capital spending in Texas to better meet growing demands on its network. The company also reported adding over 229,000 broadband internet subscribers in the first quarter, the most in more than a decade.
Annual forward dividend: $2.56 per share
Dividend yield: 5.2%
Beta: 0.41
AT&T Inc. (T)
Verizon’s main competitor, AT&T has a long and storied history. The company was founded in 1876 by none other than the inventor of the telephone, Alexander Graham Bell. Over 140 years later, AT&T has grown to become a multinational telecommunications juggernaut. While known for its easily recognizable retail storefronts in American malls, AT&T also operates a substantial business services segment, offering wireline and wireless plans for customers ranging from small businesses to global enterprises. Recently, AT&T divested WarnerMedia, its entertainment division, via a merger with cable TV company Discovery, forming Warner Bros. Discovery Inc. (WBD). In the first quarter, AT&T reported strong year-over-year customer growth, adding more than 691,000 postpaid phone customers.
Annual forward dividend: $1.11 per share
Dividend yield: 5.4%
Beta: 0.74
BCE Inc. (BCE)
The Canadian telecommunications industry is no different than the U.S. one in that it’s also made up of an oligopolistic set of companies enjoying little competition and an endless customer base. As a dual-listed stock on both the Toronto Stock Exchange and the New York Stock Exchange, BCE offers U.S. investors a chance to diversify their holdings with another great low-volatility, high-yielding pick. Despite the company’s maturity, BCE continues to grow strongly. Recently, the company posted adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, growth of 6.4% in the first quarter, with net earnings up over 36% compared with the same period the year prior. BCE also saw more than 26,000 retail internet net activations, representing a 22% increase from the year prior, and became the first major Canadian telecommunications operator to offer 3-gigabyte-per-second internet speeds, which is three times faster than cable technology.
Annual forward dividend: $2.89 per share
Dividend yield: 5.5%
Beta: 0.34
Pfizer Inc. (PFE)
Like the telecommunications industry, health care has also been a long-standing low-volatility sector with many stocks paying decent dividends. The sector also had the benefit of profiting from the COVID-19 pandemic, with vaccine producers like Pfizer seeing strong tail winds to their revenues, earnings and share prices. This trend looks to continue as prospects of a fourth COVID-19 booster shoot loom on the horizon. Pfizer management recently provided guidance, forecasting revenue from its Comirnaty vaccine to hit nearly $32 billion by the end of 2022. With U.S. health regulators recently approving booster doses of its vaccine for 5-to-11-year-olds, Pfizer could see continued momentum moving into the third quarter. The company was also granted Food and Drug Administration approval for its Paxlovid antiviral pills last year and expects to generate $22 billion in revenue throughout 2022 from sales.
Annual forward dividend: $1.60 per share
Dividend yield: 3.1%
Beta: 0.71
Gilead Sciences Inc. (GILD)
Gilead Sciences is behind some of the most innovative and influential pharmaceuticals this century. Products include Tamiflu, an antiviral medication used to treat influenza; Truvada, an HIV antiretroviral used as a pre-exposure prophylaxis; and Letairis, which is used to treat pulmonary arterial hypertension. In the first quarter, Gilead delivered a solid earnings beat, generating $1.5 billion in sales, which was $400 million higher than expectations. Driving this strong performance was strong demand for its COVID-19 antiviral drug Veklury, also known as Remdesivir, and an 18% increase in sales of Biktarvy, an HIV treatment. Overall, Gilead delivered a strong earnings beat, with earnings per share coming in at $2.12 versus the consensus analyst estimate of $1.80.
Annual forward dividend: $2.92 per share
Dividend yield: 4.6%
Beta: 0.39
General Mills Inc. (GIS)
General Mills makes some of the most recognizable products Americans consume daily, such as Lucky Charms cereal, Pillsbury dough, Haagen-Dazs ice cream, Totino’s pizza rolls, and Yoplait yogurt. Founded in 1928 as a flour miller, General Mills has expanded over the century to become a household name in American pantries and kitchens. As a member of the consumer staples sector, General Mills enjoys strong cash flows and revenues even during recessionary conditions due to sustained consumer demand for its products. As food costs continue to rise in the U.S., General Mills may be well-poised to continue its recent net income and margin growth. Strong demand for the company’s low-cost, packaged and pre-cooked products as consumers stock up in anticipation of a recession could lead to revenue increases throughout the remainder of 2022.
Annual forward dividend: $2.04 per share
Dividend yield: 3%
Beta: 0.44
Kellogg Co. (K)
Chances are you’ve had a Kellogg product at some point in your life, whether it was Rice Krispies cereal, Pop-Tart pastries, or Eggo waffles. As the largest manufacturer of cereal and snack foods in the U.S., Kellogg provides a delicious assortment of snacks and beverage brands that Americans love. Strong growth in demand for the company’s snack products led to an excellent earnings report for the first quarter, with net income coming in at $424 million, up 15% from the same quarter a year prior. Brands like Pringles (acquired from Procter & Gamble in 2012) and Cheez-Its sold well in international and domestic markets, offsetting a decline in North American cereal sales. Organic net sales growth increased the most in Asian, Middle Eastern and African markets, with a 17% rise. Kellogg revised its guidance for sales growth higher, to 4% from 3%, for the remainder of 2022.
Annual forward dividend: $2.32 per share
Dividend yield: 3.4%
Beta: 0.48
7 low-risk dividend stocks to buy for a choppy market:
— Verizon Communications Inc. (VZ)
— AT&T Inc. (T)
— BCE Inc. (BCE)
— Pfizer Inc. (PFE)
— Gilead Sciences Inc. (GILD)
— General Mills Inc. (GIS)
— Kellogg Co. (K)
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7 Low-Risk Dividend Stocks to Buy for a Choppy Market originally appeared on usnews.com
Update 05/23/22: This story was published at an earlier date and has been updated with new information.
