Downturn Gives These 3 Buys Juicy Dividend Yields


If there’s one good reason for the bear market, it’s that income investors have higher dividend yields at their disposal.



MarketBeat.com – MarketBeat

While it’s hard to know if this week’s stock rebound will last, we do know that many stocks continue with a significant discount. And that those who pay generous dividends are hanging on to attractive returns that may further limit the downside.

When income investors see dividend yields of 3%, 4% or more, they usually don’t last long. These stocks are finally offered to the point where yields converge closer to the market average.

The current performance of the S&P 500 has risen to about 1.7%. More than 50 of its components offer at least twice the performance.

However, simply pursuing higher returns is not a winning strategy. Companies that have long-term growth prospects to support these dividend payments are ideal.

What energy stocks pay a big dividend?

Enbridge Inc. (NYSE: ENB) is an energy infrastructure company that pays an annual dividend of $ 2.65. After the sharp fall in equities since the highs of 2022, this equates to a term return of 6.4%. In comparison, the average performance of the energy sector is around 4.2%.

With Enbridge, income investors not only get an above-average quarterly cash payment, but also above-average fundamentals. The company’s diverse network of oil and gas pipelines transports most Canadian oil exports to the United States and nearly one-fifth of U.S. natural gas. This generates a stable cash flow and profits that are shared with investors.

Over the last 20 years, distributions to Enbridge shareholders have grown at a rate of 12%. This growth is likely to persist based on an evolving plan to increase the capacity of its main transportation line. Meanwhile, there are more synergies that can be achieved with the merger of Spectra Energy, which should achieve solid results.

What is particularly unique about Enbridge is that it has a growing regulated utilities business that serves more than 3 million retail customers. That, along with a lot of wind power assets off the coasts of Canada and Europe, make it a bit of a utility company in an energy business wrapper.

Management expects EBITDA to increase by approximately 9% this year, which bodes well for its 65% target payout ratio. Shares have fallen amid rising rates and fears of a recession, but the dividend remains safe and sustainable.

What is a good telecom defense value?

BCE Inc. (NYSE: ECB) is the largest telecommunications company in Canada. It is also one of the largest dividend payers in the country, with a 6% return on shares below $ 50. This is a performance that is more than double that of the average communications stock.

As the name of Bell Canada, ECB provides wireless, landline and multimedia services to residential and business customers across the country. Approximately 70% of the country obtains its local and long distance telephone service through Bell Canada.

The stock has performed better this year due to its reliable cash flow generation and defensive nature. No matter where the US economy goes in the second half of the year, demand for ECB services will persist. As a result, management expects growth of 2% to 7% in earnings per share (EPS) by 2022. It is a wide range that reflects the uncertainty of the current economic climate, but also confidence in steady financial growth.

Despite the influx of competition in its core wireless market, ECB is performing well due to its superior scale, cost management and focus on customer service. Given reliable growth and a growing dividend to match it, it may be time to call on the ECB.

Are Gilead shares a buy and a hold?

Gilead Sciences, Inc. (NASDAQ: GILD) has not found its place in the post-pandemic market. The shares of the biotechnology company have fallen by 17% this year, with the risk-free mode not being a favorable backdrop for the growth-oriented sector.

Recent concerns about Gilead include a declining contribution to remdesivir, the first US-approved Covid-19 treatment, as the pandemic becomes endemic. But that doesn’t mean it’s the end of the road for growth opportunities.

With the core business of HIV / hepatitis as its backbone, Gilead is also making inroads into an oncology market that is expected to be the long-term engine of the business’s growth. Therapeutic candidates for blood cancer, leukemia, and breast cancer have reported positive results in clinical trials this year. A new partnership with Dragonfly Therapeutics to advance an immunotherapy program aimed at solid tumors is also promising.

As Gilead’s oncology portfolio continues to grow, its leading franchises on HIV and hepatitis will continue to generate solid profits. Management’s confidence in this two-pronged growth strategy is evident. It recently raised its quarterly dividend to $ 0.73, marking the seventh consecutive year of dividend growth.

On an annualized basis, Gilead has a dividend yield of 4.8%, the best among the health names in the S&P 500. This should continue to create a ground for stocks until the market recognizes the growth potential of the various programs. of oncology.



Source link

Leave a Reply