In recent times, stock markets across the world have been grappling with macroeconomic issues like lackluster growth in China, oil price slump, strengthening of the U.S. dollar and depressed energy markets. Investors also remain jittery following a disappointing Q2 earnings season as earnings growth for the S&P 500 index was negative.
Moreover, investors continue to be skeptical about the current state of market affairs that are being dictated by the movement in crude prices. With uncertainty ruling the markets since the beginning of the year, it is not surprising that dividend investing has emerged as one of the most popular investing themes.
Why Choose Dividend Paying Stocks
Dividend stocks are always the investors’ preferred choice as they provide steady income and cushion against market risks. These stocks are generally less volatile in nature and hence, are dependable when it comes to long-term investment planning.
In a low interest rate environment, dividend paying stocks offer substantial yields on a regular basis. Moreover, dividend-paying stocks are historically proven to outperform in the long term and are relatively safe in terms of wealth creation.
How to Pick the Best Stocks?
Although the benefits of dividend investing cannot be stressed enough, one should keep in mind that not every company can keep up with its dividend paying momentum. Hence, a cautious strategy needs to be followed in order to select the best dividend stocks with potential for steady returns.
Choosing the right dividend stocks can be a daunting task as it requires careful consideration of both the past performance of the company and its future prospects. If a stock has delivered strong performance in the past, but faces troubled times ahead, it definitely does not qualify as an attractive pick.
We note that an impressive current-year dividend yield and a strong dividend yield history are also important for identifying strong dividend-paying stocks.
We have used the Zacks Stock Screener to narrow down to four stocks that offer current and historical dividend yield of more than 3%, has a favorable Zacks Rank #1 (Strong Buy) or 2 (Buy) and has market cap of $3 billion or less.
4 Stocks to Bet On
AllianceHoldings GP, L.P. AHGP
Alliance Holdings and its subsidiaries produce and market coal, primarily for utilities and industrial users in the United States. The company engages in the production of a range of steam coal with varying sulfur and heat contents.
Alliance Holdings sports a Zacks Rank #1 and currently offers a dividend yield of 9.11%. The partnership’s five-year historical dividend growth rate is 7.85%.
Southcross Energy Partners, L.P. SXE
Southcross Energy Partners provides natural gas gathering, processing, treating, compression, and transportation services in the United States. The company also offers natural gas liquid (NGL) fractionation and transportation services. In addition, it supplies natural gas to industrial, commercial, and power generation customers as well as local distribution companies.
This Zacks Rank #2 stock currently has an impressive dividend yield of 23.26%. The partnership’s five-year historical dividend growth rate is 29.82%.
Golar LNG Partners Limited Partnership GMLP
Golar LNG Partners owns and operates floating storage regasification units (FSRUs) and liquefied natural gas (LNG) carriers under long-term charters in Brazil, the United Arab Emirates, Indonesia, and Kuwait. The company also engages in the leasing of its fleets.
Golar LNG Partners carries a Zacks Rank #1 and currently has a robust dividend yield of 12.18%. The partnership’s five-year historical dividend growth rate is 7.64%.
Hancock Holding Company HBHC
Hancock operates as the bank holding company for Whitney Bank that provides a range of community banking services to commercial, small business, and retail customers.
Hancock, which sports a Zacks Rank #1, currently has a dividend yield of 3.01%. The company’s five-year historical dividend growth rate is 3.17%.
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HANCOCK HLDG CO (HBHC): Free Stock Analysis Report
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