As 2020 approaches, there is a strong undercurrent of uncertainty in the investment world. On the one hand, the longest running bull market (10-year extended) is making investors a bit dubious about whether it will end any time soon. This apart, the 59th presidential election, scheduled in late 2020 and related political uproar are also adding to the uncertainty in the equity market.
Besides, the ongoing trade tension between the United States and China has rattled international trade all through 2019. It has largely led to deferred investments leading to production cut. Although, on Dec 13, both the sides approved a "phase one" deal but some of the controversial issues are still unsolved, dampening market motivation.
According to BlackRock’s head of active investments for Asia-Pacific and chief investment officer for emerging markets Belinda Boa, in 2020, geopolitical risks, including the trade war, will be the “key driver” of the economy and markets in Asia (published in South China Morning Trust). Europe has already started to experience an economic slowdown with Brexit in the backdrop. Meanwhile, the Middle East’s economy, given its sole reliance on oil, is currently in doldrums.
An outlook provided by Vanguard indicates an overall choppy global scenario for 2020. While the United States is expected to register growth of around 1%, China is expected to register a below-trend pace of 5.8% in 2020. In Europe, the growth rate will be around 1%. With world trade slowing down, emerging market growth in 2019 weakened more sharply in Asia than in other parts. This trend is expected to continue through 2020.
Major Indices Lack Luster
The ongoing volatility in the global markets has increased anxiety among investors. This is reflected in the sluggish movement of the three major stock indices over the past week. While the Dow edged up just 0.88%, Nasdaq was up 1.4% this week. The S&P 500 managed to increase a mere 0.97% in this period.
Dividend Stocks in Focus Now
Amid this financial instability and uncertainly, it is a prudent idea to pick solid dividend stocks as these companies are financially stable, accruing profits in established markets. These stocks, irrespective of market movements, allow investors to enjoy a regular income stream.
This apart, the Fed in December kept interest rate unchanged and signaled no plans of any further change in 2020. This will further increase the prospects of dividend investing, making the following companies attractive bets for 2020.
Choosing the Right Stocks
We have taken the help of the Zacks Stock Screener to zero in on seven stocks which carry a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy). Apart from a favorable Zacks Rank, we have chosen companies with market cap of more than $100 million. Also, each of these stocks has a dividend yield of more than 5% and five-year average dividend yield of more than 5%.
You can see the complete list of today’s Zacks #1 Rank stocks here
Our first pick is Zacks Rank #1 stock Spark Energy, Inc. SPKE. An independent retail energy services company, Spark Energy provides an alternative choice for natural gas and electricity to residential and commercial customers across the United States. The stock has a market cap of $329.63 million. The company’s five-year average dividend yield stands at 6.53% while the stock offers a dividend yield of 7.74%.
Year to date, the stock has returned 33.8% compared with the industry’s 25.3% rally.
Our next pick is Artisan Partners Asset Management Inc. APAM. This Zacks Rank #2 company is an independent investment management firm that provides a broad range of U.S., non-U.S. and global equity investment strategies. Artisan Partners has a dividend yield of 8.08% with five-year average dividend yield of 7.38%. The stock has a market cap of $2.5 billion.
The stock has returned 66.5% compared with the industry’s 15.5% rally.
The third on our list is Delek Logistics Partners, LP DKL. Headquartered in Brentwood, TN, the company owns, operates, acquires and constructs crude oil and refined products logistics and marketing assets. This Zacks Rank #1 stock has a market cap of $788.3 million. The company’s five-year average dividend yield stands at 8.41% while the stock offers a dividend yield of 11.13%.
The stock has returned 22.5% compared with the industry’s 14.3% rally.
Next on our list is Barratt Developments PLC Unsponsored ADR BTDPY. This Zacks Rank #2 company engages in the business of developing residential and nonresidential properties primarily in the United Kingdom. Barratt Developments, a $9.9 billion market cap company, has a dividend yield of 9.2% with five-year average dividend yield of 6%.
The stock has returned 66.1% compared with the industry’s 21.8% rally.
The fifth in the list is Newtek Business Services Corp. NEWT. This is an internally managed business solutions company, which along with its controlled portfolio companies, provides a wide range of business and financial solutions under the Newtek brand to the small- and medium-sized business market. This Zacks Rank #2 stock has a market cap of $449.8 million. The company’s five-year average dividend yield stands at 8.5% while the stock offers a dividend yield of 12.51%.
The stock has returned 43.2% compared with the industry’s 32.6% rally.
Zacks Rank #2 company Macquarie Infrastructure Company MIC is also a lucrative pick. The company owns and operates a portfolio of businesses that provide services to other firms, government agencies and individuals primarily in the United States. This Zacks Rank #2 stock has a market cap of $3.76 billion. The company’s five-year average dividend yield stands at 7.8% while the stock offers a dividend yield of 9.2%.
The stock has returned 30.5% compared with the industry’s 32.5% rally.
Lastly, investors can also pick Vector Group Ltd. VGR. This Zacks Rank #2 stock has a market cap of $1.9 billion. The company is principally engaged in the manufacture and sale of cigarettes and the sale of information processing systems. The company’s five-year average dividend yield stands at 6.7% while the stock offers a dividend yield of 6%.
The stock has returned 62.4% compared with the industry’s 28.3% rally.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>
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Spark Energy, Inc. (SPKE) : Free Stock Analysis Report
Delek Logistics Partners, L.P. (DKL) : Free Stock Analysis Report
Macquarie Infrastructure Company (MIC) : Free Stock Analysis Report
Artisan Partners Asset Management Inc. (APAM) : Free Stock Analysis Report
Newtek Business Services Corp. (NEWT) : Free Stock Analysis Report
Vector Group Ltd. (VGR) : Free Stock Analysis Report
Barratt Developments PLC Unsponsored ADR (BTDPY) : Free Stock Analysis Report
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