The year 2019 has been good for stocks so far, largely due to cues of a settlement in the trade dispute between the United States and China. The trade dispute and the resultant tariffs were primarily fueling volatility, which markets witnessed in the latter half of 2018.
Reportedly, the United States and China are inching toward a trade deal that could lead to a potential end to the year-long trade spat between the world's two biggest economies.
Moreover, central banks, particularly in the developed countries including the United States, have been less hawkish in their approach toward unwinding of quantitative easing (QE), providing a breather to the market.
Further, strong U.S. GDP and improving consumer confidence are fueling bullish sentiments. According to the Bureau of Economic Analysis, the U.S. GDP expanded at annual pace of 2.6% in the fourth quarter of 2018. It was way more than analysts’ expectations of a growth rate of 1.9%.
Consumer spending boosted economic growth. Consumer outlays improved a healthy 2.8% in the fourth quarter as Americans splurged on cars and trucks, health care, clothes and financial services, among other things.
Notably, all the three major stock indexes — the Dow, S&P 500 and Nasdaq Composite — gained 10.9%, 12.9% and 15.7%, respectively on a year-to-date basis. Several positive developments on the trade war front, Fed’s decision to put rate hikes on the backburner and recovery of energy and technology sectors were the major catalysts.
Dividend Growth: A Winning Strategy
Stock picking in a volatile market is tricky. With uncertainty ruling the markets, it is not surprising that dividend investing, in general, is one of the most popular investing themes.
Stocks with a rich tradition of dividend payout leads to a healthy portfolio and carry tax advantages. Consistent dividend payouts indicate a company’s financial strength and stability irrespective of market direction.
Additionally, these stocks have superior fundamentals that make dividend growth in payout ratio a quality and promising investment for the long term. These include sustainable business model, positive track record of profitability, solid cash flow generation ability, good liquidity and strong balance sheet.
Investing in sound dividend paying stocks seems judicious as such stocks provide steady income and cushion one’s portfolio against market risks. It's more common to see larger companies with more established profits give out dividends. Stocks with solid dividend yield and high returns offer excellent choices for investors seeking to create a portfolio that performs well in a volatile market and offer security.
Finding a strong dividend-yielding stock might seem difficult, but investors should not feel too intimidated. We have utilized the Zacks Stocks Screener to find five dividend companies with a Zacks Rank #1 (Strong Buy) or 2 (Buy), market cap of more than $10 billion and offering a high dividend yield of at least 4%.
Deutsche Telekom AG DTEGY, one of the Europe's largest communications company, has a Zacks Rank #2 and a dividend yield of 4.2%. Moreover, its five-year historical dividend yield is 1.45% and it has a market cap of $81.64 billion. Shares of the company have returned 9.5% year over year, against the industry’s decline of 7.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fortescue Metals Group Ltd. FSUGY is engaged in the exploration and mining of iron ore properties. The company carries a Zacks Rank #2 and has a dividend yield of 8.9%. Moreover, its five-year historical dividend yield is 21.5% and it has a market cap of $14.44 billion. Shares of the company have returned 34.6% year over year, outperforming the industry’s rally of 5.2%.
General Mills, Inc. GIS is a leading global food company. It has a Zacks Rank #2 and a dividend yield of 4.1%. Moreover, its five-year historical dividend yield is 5.28% and it has a market cap of $28.35 billion. Shares of the company have returned 22.3% on a year-to-date basis, outperforming the industry’s rally of 3.9%.
Philip Morris International Inc. PM is a tobacco company which is engaged in the development and commercialization of reduced-risk products (RRPs). The company has a Zacks Rank #2 and a dividend yield of 5.02%. Moreover, its five-year historical dividend yield is 3.5% and it has a market cap of $141.23 billion. Shares of the company have returned 35.9% on a year-to-date basis, outperforming the industry’s rally of 26.7%.
America's premier energy company, Southern Company (The) SO, has a Zacks Rank #2 and a dividend yield of 4.63%. Moreover, its five-year historical dividend yield is 3.42% and it has a market cap of $53.65 billion. Shares of the company have returned 18.1% year over year, outperforming the industry’s rally of 15.8%.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Southern Company (The) (SO) : Free Stock Analysis Report
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