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5 Top-Rated Dividend Stocks to Buy for a Notorious August

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US stocks have somehow managed to end July in the green. However, stocks did drift lower on the final trading day of the month. In fact, a month-long rally among stocks has actually slowed down a bit in recent times as investors remain apprehensive regarding the outcome of economic growth in the near future.

This can be attributed to the emergence of the more contagious Delta variant that has led to rising COVID-19 cases worldwide. The spread of the Delta variant has set off the alarm bells among investors as it may easily derail the economic recovery process. It may again lead to the implementation of lockdown measures on businesses and movements. And make no mistake; concerns about the Delta variant did result in some sort of volatility in the markets in the month of July.

By the way, China’s crackdown on technology companies did little to lift investors’ sentiments. Investors were taken aback when Beijing took a bold step to clamp down China’s most prominent tech companies involved in e-commerce, internet, and digital finance businesses, and are listed in US stock exchanges leading to investors losing hundreds of billions of dollars. China, however, claimed that the crackdown on such companies was intended to improve the competitive environment.

Meanwhile, Amazon’s discouraging sales growth in the second quarter of the year dampened investors’ sentiment as well. It’s worth pointing out that the e-commerce giant dulled the sentiment further by providing a disappointing sales guidance for the current quarter. Amazon expects sales for the third quarter in the range of $106 billion to $112 billion, lower than analysts’ expectations of $119.31 billion, per FactSet, citing a MarketWatch article. Amazon’s weak sales guidance, no doubt, indicated that the economy isn’t yet out of the woods, which doesn’t bode well for the broader stock market.

Investors should also keep in mind that they are entering the most dangerous period of the year for stocks. According to Bank of America analyst Stephen Suttmeier, since 1928, the S&P 500 on average had given a negative return of 0.03% in August, September, and October, touted to be the worst three-month period for the broader index, citing another MarketWatch article.

What’s more, since 1992, the Cboe Volatility Index (VIX) had time and again witnessed spikes in August, September, and October, while it had comparatively remained subdued in the April to July period, added Suttmeier, quoting the MarketWatch article.

Thus, if we consider the seasonality factor, this is the most unfavorable time of the year for stocks. And with the more transmissible strain of the coronavirus spreading worldwide coupled with China worries, things are not looking bright for the stock market in the near term. Despite such uncertainties, investors shouldn’t shun equities completely! Instead, they should focus on investing in sound dividend players. After all, these stocks have a long track of profitability, thanks to a sustainable business model. They are also unperturbed by market volatility.

We have, thus, highlighted five such stocks that have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and provide high yields.

Energy Transfer LP ET owns and operates diversified portfolios of energy assets primarily in the United States. The company has a Zacks Rank #1. It has a dividend yield of 6.2%, while its five-year average dividend yield is 9.3%. The company’s expected earnings growth rate for the current year is 987.5%.

Compass Diversified Holdings CODI was formed to acquire and manage a group of middle market businesses that are headquartered in North America. The company has a Zacks Rank #2. It has a dividend yield of 5.8%, while its five-year average dividend yield is 8.1%. The company’s expected earnings growth rate for the current year is 60.4%.

New York Community Bancorp, Inc. NYCB provides traditional and non-traditional products and services, and access to multiple service channels, including online banking and mobile banking. The company has a Zacks Rank #1. It has a dividend yield of 5.8%, while its five-year average dividend yield is also the same. The company’s expected earnings growth rate for the current year is 43.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Redwood Trust, Inc. RWT is a self-advised and self-managed real estate investment trust. The company sports a Zacks Rank #1. It has a dividend yield of 6.1%, while its five-year average dividend yield is 8.1%. The company’s expected earnings growth rate for the current year is 3,125%.

Western Midstream Partners, LP WES is formed to own, operate, acquire and develop midstream energy assets. The company has a Zacks Rank #2. It has a dividend yield of 6.4%, while its five-year average dividend yield is 9.2%. The company’s expected earnings growth rate for the current year is 86.4%.


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Western Midstream Partners, LP (WES) : Free Stock Analysis Report
 
Redwood Trust, Inc. (RWT) : Free Stock Analysis Report
 
Energy Transfer LP (ET) : Free Stock Analysis Report
 
New York Community Bancorp, Inc. (NYCB) : Free Stock Analysis Report
 
Compass Diversified Holdings (CODI) : Free Stock Analysis Report
 
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