7 Best Dividend Stocks to Buy for the Rest of 2017
Despite interest rates that are finally on the rise again, investors continue to hunt for the best dividend stocks to buy for the remainder of 2017.
While Janet Yellen and her colleagues at the Federal Reserve twice decided to raise rates this year, the 10-year Treasury still yields a measly 2.1 percent -- leaving income investors little choice but to look to the stock market for yield.
Equities undoubtedly carry more risk than government bonds, but they also have potential for a lot more return. With almost three quarters of the year in the rear view, there's still plenty of time left to reposition your portfolio.
[Read: 5 of the Best Stocks to Buy for September.]
Here are seven of the best dividend stocks to buy for the rest of 2017.
Johnson & Johnson (NYSE: JNJ). It doesn't get much more old-school and blue-chip than JNJ. Known primarily by consumers for its, well, consumer goods segment -- its products run the gamut from baby powder and shampoo to Band-Aids and Benadryl -- it's the pharmaceutical division that accounts for the most sales.
"What's driving the stock is the pharmaceutical business, which accounts for between 40 and 45 percent of sales now," says Jeffrey Loo, health care equity research analyst for CFRA. "They recently completed the acquisition of Europe's largest biotech company, Actelion Pharmaceuticals, for about $30 billion earlier this summer."
At 2.5 percent, JNJ is by no means one of the highest-paying dividend stocks on this buy list, but it's surely one of the most reliable: Johnson & Johnson has increased its dividend payout annually for each of the last 54 years, or since John F. Kennedy was president.
Rio Tinto (RIO). Fair warning: this stock isn't for everyone. There's a lot to like about this mining company, which is dramatically improving its balance sheets as commodity prices continue a recovery that began in early 2016. But Rio Tinto is only one of the best dividend stocks to buy to finish out the year if you're OK wagering on commodities.
Iron ore prices specifically are vital to Rio Tinto's performance, with the material accounting for about 80 percent of current profits. A required element in steel production, iron ore prices have soared from below $40 a metric ton less than two years ago to about $70 a metric ton today.
A 4.5 percent dividend, coupled with a favorable price-earnings ratio around 14, make RIO stock a compelling play -- as long as you're willing to sign over much of the stock's destiny to commodity prices.
McDonald's Corp. (MCD). Returning to a tried and true blue-chip name, McDonald's has certainly been one of the best dividend stocks to buy throughout 2017, and shares still remain attractive despite their roughly 30 percent year-to-date rally.
Under the leadership of Steve Easterbrook, who took the reins in 2015, shares have soared and same-store sales growth has returned in earnest. All-day breakfast, menu simplification and a popular mobile app have all helped turn MCD stock around, and the timeless fast food joint doesn't look to be going anywhere anytime soon.
A 2.4 percent yield is rather modest to be sure, but it's also one of Wall Street's safest dividends.
[See: 7 of the Best Socially Responsible Funds.]
Genuine Parts Corp. (GPC). Prefer to shy away from the mega-cap stocks? No problem. There are plenty of established companies with smaller market capitalizations that also happen to be elite dividend stocks. Take Genuine Parts Corp., a $12 billion auto parts supplier with a solid business and a consistent dividend that most of the Dow 30 would envy.
GPC currently yields 3.1 percent.
"If any potential investor is concerned about the safety of that dividend, the company has increased its dividend for an astonishing 60 consecutive years," says Bob Johnson, president and CEO of the American College of Financial Services in Bryn Mawr, Pennsylvania.
"Genuine Parts is not simply a good addition to a portfolio for the remainder of this year, but is a solid long-term play. The company benefits from the trend of people keeping their cars longer, and the average age of cars and light trucks recently hit a record high 11.6 years, continuing an upward trajectory," Johnson says.
Sanofi (SNY). From a technical perspective -- a fancy phrase for the way SNY stock looks like it's trending on a chart -- shares of health care giant Sanofi look attractive: shares are up 20 percent on the year and the stock is trading above its 50- and 200-day moving averages, showing longer-term strength.
Those sort of things matter if you're looking to buy the best dividend stocks on the market for the remainder of 2017.
Longer-term though, it helps to look at the fundamentals. Sanofi also scores well on that front; revenue is poised to grow 14 percent this year, the stock's forward P/E is only 14, and Sanofi's multiple sclerosis franchise is driving growth, growing its revenue 28 percent last quarter.
Sanofi's dividend sits at an impressive 3.3 percent.
Cisco Systems (CSCO). Blue-chip tech heavyweight Cisco has a lot of traits conservative income investors should like. It's a steady Eddie with fairly predictable revenue streams; it's got gobs of cash, boasting more than $14 per share in cash alone; CSCO trades at just 12.5 times forward earnings, and a sustainable dividend yield of 3.6 percent is nothing to scoff at either.
Cisco is also tweaking its business model, something that should help it thrive well into the future.
"Cisco's business model is transitioning from hardware focused to subscription focused," says Eric Ervin, CEO of Reality Shares, an ETF issuer and research firm exclusively focused on dividend growth investing. "This will increase the company's growth and free cash flow in the long term. Overall, Cisco safe and well-diversified."
Investing in high-growth areas like cloud security, analytics and the Internet of Things should also help grow free cash flow going forward.
Anheuser Busch Inbev (BUD). Finally, Anheuser Busch Inbev, the company behind brands like Budweiser, Corona, Stella Artois and many others, rounds out the list of the best dividend stocks to buy for 2017.
Another slow but steady multinational investors can count on, it's always great to see a sustainable long-term business -- that will exist regardless of unforeseen technological innovations -- with big market share and a deeply entrenched business with high barriers to entry.
With a 26 percent share of the global beer market, BUD is the biggest player in its space. Despite a slightly negative trend in U.S. sales, emerging markets growth in the mid-single digits, as well as continued synergies from its $103 billion merger with SAB-Miller, should only make this business stronger over time.
[See: 6 Reliable Dividend Stocks Paying Out for 100 Years or More.]
The company expects to reap annual savings around $1.4 billion from the September 2016 merger. The stock yields 3.6 percent, and its payout has grown annually for the last seven years.
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