Top 3 Dividend Stocks Offering Stability to your Portfolio in 2016
The S&P 500 and the Nasdaq indices have finished in positive territory over the last two days, though it doesn’t quite make up for the train wreck that has been the start of 2016. Because of China’s faltering growth and the sharp drop in oil prices over the last year, the world is fearful of an economic decline.
Both of these factors gave the market plenty of bad days in 2015, and it seems that these concerns are going to preoccupy much of the spotlight in 2016 as well. To help bring stability to your portfolio, you should consider picking up some reliable dividend stocks.
Dividends are a great way to pick up consistent returns, regardless of how the market is doing. Even if we have a sideways market like last year, you will still pick up your dividend income. It’s worth noting that dividends become a lot more attractive when interest rates are low.
Dividends are not guaranteed, so it’s wise to check up on a company’s dividend history. Do this so you can get a sense as to how reliable the company you invest in is with regards to paying out cash to investors.
These three companies have a fair track record with regards to their consistency in paying dividends. They each carry a yield of 6% or better.
Bank of Montreal-BMO
Bank of Montreal (BMO) is one of the largest banks in North America. It offers financial products and solutions. The firm engages in retail banking, wealth management, investment banking, and more. BMO is a Zacks Rank #2 (Buy). The bank also doles out a 6.45% dividend.
BMO has some valuable qualities. For example, its forward PE is 9.49, while the industry average is 11. Bank of Montreal also has a PEG of 0.95; a PEG below 1 may suggest that there is value present. The bank has a debt to equity of 0.12.
BMO has beaten our earnings consensus in each of the last two quarters by an average of 10%. Bank of Montreal is expected to announce its earnings on 2/23/16.
New Residential Investment Corp-NRZ
New Residential Investment Corp. (NRZ) is a REIT (real estate investment trust) engaged in investing and managing investments in residential real estate. NRZ is a Zacks Rank #2 (Buy) and also has a massive dividend yield of 17.71%.
Compared to other REITs with more of a mortgage focus, NRZ leaves a lot to be desired. New Residential has a forward PE of 5.18, while its industry’s is 6.2. The REIT also has a PEG of 0.6, while the industry has a PEG of 1.05. The company’s net margin is 41.48%.
New Residential Investment Corp. has been growing at a very fast pace since 2013. It posted a 59% increase in earnings in 2014. Sales are projected to grow by 30% this year. NRZ has beaten our EPS consensus in three of the last four quarters. The REIT is expected to report its earnings on 2/26/16.
Frontier Communications Corporation-FTR
Frontier Communications Corporation (FTR) is a communications company which services rural areas and small to medium-sized towns and cities in the US. The firm offers voice, data, internet, and TV services and products. FTR is a Zacks Rank #2 (Buy). It also doles out a 9.6% dividend.
Expect less price fluctuation with Frontier, as it has a beta of just 0.72. The stock trades at a price-to-book of just 0.87, which suggests that this stock may be undervalued. The company’s price to sales is also below 1 at 0.93. Frontier Communications belongs to an industry which lies in the top 8% of all industries covered by the Zacks Industry Rank.
FTR beat our consensus estimate by 400% last quarter, when we estimated that the company would report a loss of -.01 per share. Like Bank of Montreal and New Residential Investment, expect Frontier to reports its earnings on 2/23/16.
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BANK MONTREAL (BMO): Free Stock Analysis Report
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