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9 Safe Dividend Stocks to Buy for 2019

Wayne Duggan

Use dividend stocks to boost market returns.

During turbulent times in the stock market, investors start searching for relatively safe places to invest. Money flows out of high-risk growth stocks and into stocks with reasonable valuations, solid cash flow and reliable dividends. Early forecasts for 2019 predict another range-bound year for stocks, suggesting dividends may be one of the only guaranteed sources of market returns. Companies with relatively low payout ratios, the percentage of earnings committed to dividend payments, are the safest dividend stocks to buy in the current environment. Here's a look at nine safe dividend stocks CFRA says are smart long-term investments headed into 2019.

Broadcom (ticker: AVGO)

Apple (AAPL) iPhone chip supplier Broadcom has had a bumpy road in 2018. A proposed buyout of Qualcomm (QCOM) was blocked by the U.S. government due to national security concerns, and iPhone unit growth is showing signs of peaking. However, analyst Angelo Zino says Broadcom's cash flow gives the company financial flexibility, and operating margins should expand from 50 to 55 percent by fiscal 2020. Broadcom has a 3 percent dividend yield and a 23.1 percent payout ratio. CFRA has a "strong buy" rating and $282 price target for AVGO stock.

Bank of New York Mellon Corp. (BK)

Bank of New York Mellon is a U.S. bank with more than $34.5 trillion in assets under custody. Analyst Cathy Seifert says an environment of modestly rising interest rates will continue to improve margins and earnings. She says an increasingly complicated regulatory landscape is also driving customers away from smaller asset managers and toward larger operations like Bank of New York Mellon. Bank of New York Mellon has a 2.3 percent dividend yield and a 23.3 percent payout ratio. CFRA has a "strong buy" rating and $60 price target for BK stock.

Comerica Incorporated (CMA)

Comerica is a U.S. financial services company with $72 billion in assets. Analyst Harrison Webster says Comerica's 53 percent ratio of noninterest-bearing deposits to total deposits is highest among its peer group and is an indication that CMA's margins are stable and relatively insulated from fluctuations in interest rates. In the most recent quarter, net interest margin expanded 0.32 percent to a solid 3.6 percent. Comerica has a 3.3 percent dividend yield and a 25.8 percent payout ratio. CFRA has a "strong buy" rating and $109 price target for CMA stock.

CVS Health Corp. (CVS)

After more than five years of underperformance, CVS may finally be positioned to be a market leader. CVS recently closed its massive $69 billion merger with health insurance giant Aetna, and analyst Kevin Huang says the company is prepared to create a brand new health care model centered on its CVS Minute Clinics. Huang says CVS will likely incentivize Aetna's 22 million health plan customers to use CVS's services as well. CVS has a 2.7 percent dividend and a 66 percent payout ratio. CFRA has a "strong buy" rating and $95 price target for CVS stock.

Delta Air Lines (DAL)

Long-time investors know airlines have historically been extremely cyclical companies and not the type of stocks to be buying during periods of economic uncertainty. However, analyst Jim Corridore says Delta Air Lines is not your typical airline. Corridore says the company has much stronger free cash flow than its peer group, and management has committed to returning 70 percent of that cash flow to shareholders via buybacks and dividends. Delta has a 2.5 percent dividend yield and a 24.8 percent payout ratio. CFRA has a "strong buy" rating and $64 price target for DAL stock.

Eastman Chemical Co. (EMN)

Eastman Chemical manufactures chemicals, plastics and fibers for industrial and consumer products. Analyst Christopher Muir says Eastman's underperformance in 2018 has been tied to weakness in the China market amid the ongoing trade war, but volumes should continue to trend higher in the long term. Muir says Eastman's targeted cost-cutting coupled with its leading market share in innovative products will help drive earnings growth in coming years. Eastman has a 3.4 percent dividend yield and a 21 percent payout ratio. CFRA has a "strong buy" rating and $96 price target for EMN stock.

Morgan Stanley (MS)

Analyst Kenneth Leon says Morgan Stanley has a long track record of delivering consistent growth. The company generated a solid return on equity of 11.5 percent in the most recent quarter, despite a difficult trading environment. Leon says trading revenue has likely gotten a boost from the recent period of market volatility, and he is expecting a big fourth quarter from Morgan Stanley. Morgan Stanley has a 2.9 percent dividend yield and a 25 percent payout ratio. CFRA has a "strong buy" rating and $58 price target for MS stock.

Prudential Financial (PRU)

Prudential Financial is a global leader in insurance and investment management. Seifert says that, after years of underperformance, PRU stock is undervalued both compared to both its peer group and its own historical valuation range. Seifert says a shift in business mix, an improved interest rate environment and 2019 segment operating growth of between 3 and 6 percent should serve as bullish catalysts for the stock. Prudential has a 4.3 percent dividend yield and a 21.4 percent payout ratio. CFRA has a "strong buy" rating and $129 price target for PRU stock.

SunTrust Banks (STI)

SunTrust is one of the largest regional banks in the U.S., with more than $211 billion in assets. Webster says a combination of favorable loan mix, robust yields on earning assets and solid noninterest income businesses are key revenue growth catalysts for SunTrust. He says cooperation between the investment banking and corporate banking divisions will drive 3.3 percent income growth in 2019 as well. SunTrust has a 3.6 percent dividend yield and a 29.2 percent payout ratio. CFRA has a "strong buy" rating and $79 price target for STI stock.

These dividend stocks appear to be safe picks for 2019.

To recap, here are nine safe dividend stocks to buy for 2019:

-- Broadcom (AVGO)

-- Bank of New York Mellon Corp. (BK)

-- Comerica Incorporated (CMA)

-- CVS Health Corp. (CVS)

-- Delta Air Lines (DAL)

-- Eastman Chemical Co. (EMN)

-- Morgan Stanley (MS)

-- Prudential Financial (PRU)

-- SunTrust Banks (STI)

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