Dividend-paying stocks are in vogue again, even as long-term government bond yields have soared this year. Traders seem to crave high-quality chips that offer consistent (and often increased) profits. This can be a more exciting investment than massive Treasuries.
Quarterly or annual dividend payments provide good income streams for investors who need cash in the short term. And for those who play the longer game, dividends can be reinvested to buy more shares in those same companies.
The High Dividends for the S&P 500 ET (Spide)
It’s only down 4% this year and has gone up quite a bit over the past 12 months, a much better performance than the market as a whole. The Standard & Poor’s 500
It declined by more than 17% in 2022.
The High Dividend Fund, as its name suggests, has exposure to companies that offer high returns, such as energy giants ExxonMobil (XOM)
And the chevron (CVX)
. Both stocks have risen this year as oil prices have skyrocketed.
Other major collectibles in the box include Cardinal’s health (CAH)
And the Home Finance (PFG)
and technical services company iron mountain (IR)
. All three stocks are in the green this year as well, with Cardinal Health up 30%.
It only makes sense that dividend stocks are doing well in these turbulent economic times. When a company pays dividends – and keeps increasing them steadily – this is a sign of financial stability.
said Austin Graf, chief investment officer at Titelist Asset Management and principal TrueShares Low Income ETFs.
As such, many consumer staples companies, such as the food and beverage giants that can be counted on for reliable sales and profit growth, tend to have the highest dividend stocks. Keurig Dr Pepper (KDP)
And the Philip Morris (evening)
Both announced on Wednesday that they would raise their dividends, for example.
Growth companies pay dividends too
With more market volatility likely in the future, investors who still want shares over bonds can continue to look for dividend payers. Even the tech sector has its fair share of dividends, including apple (AAPL)
And the Microsoft (MSFT)
And the inspiration (ORCL)
Graf said investors eyeing dividend stocks need to focus not just on their returns. Since the dividend yield is the annual return divided by the stock price, high-yield stocks are often called value traps, which are companies with a falling stock price.
Graf said he prefers companies with decent, if not high, returns, and whose profits are steadily increasing. Investors can find companies that are able to achieve good growth in sales and profits.
some examples? owns a graph United Health (United nations)
service American Electric Power (AEP)
and cyber security company Norton Live Look (NLOK)
in the box.
UnitedHealth’s dividend yields 1.2%, NortonLifeLock’s returns 2.2%, and American Electric Power has a 3% return. So yields are still low enough — below the current rate of 3.4% for 10-year Treasuries — and that there is room to continue increasing dividend payouts even as companies invest in their businesses to keep earnings high.
“These are not just companies that have nothing better to do with their money,” Graf said.
So it is no longer the case that dividends are only for conservative investors or retirees on a pension or other fixed income.
“If you were asked to portray a typical dividend investor, you would probably conjure up an elderly widow or widower,” said Jack Applin, chief investment officer at Cresset Capital. Report
advance this month. “But now that monetary policy is tightening, dividends are taking center stage again. Investors believe that dividends provide little certainty in an uncertain investment environment.