AT&T: A Higher-Than-Average Yield With Relative Safety

For investors who want more than a bond yield, but without taking much risk

AT&T Inc. (NYSE:T) is now among the stocks on the High-Yield Dividend Screener & High-Dividend Yield Stocks in Guru's Portfolios.

This GuruFocus screener identifies stocks owned by the investing gurus and with a dividend yield of at least 4%. AT&T makes the cut on guru portfolios because it was owned by 20 of the investing giants at the end of the first quarter of 2020, and because its current yield is 6.97%.

In its most recent 10-K, filed on Feb. 20, the company described its origins this way: “AT&T, formerly known as SBC Communications Inc. (SBC), was formed as one of several regional holding companies created to hold AT&T Corp.’s (ATTC) local telephone companies. On Jan. 1, 1984, we were spun-off from ATTC pursuant to an anti-trust consent decree, becoming an independent publicly-traded telecommunications services provider. At formation, we primarily operated in five southwestern states.”

Since 1984, it has merged with and acquired several other wireline and wireless companies, making it a big player in the telecommunications industry. In addition, it acquired DIRECTV in 2015 and Time Warner Inc. in 2018, making it an entertainment powerhouse as well.

Its full-year 2019 consolidated results featured these line items:

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Coca-Cola’s 20 Billion Dollar Brands & Future Growth

Coca-Cola (KO) has long been a favorite of income investors, due to its impressive history of dividend growth. Coca-Cola has increased its dividend for 58 consecutive years. It has one of the longest active streaks of annual dividend increases in the entire S&P 500 Index.

Coca-Cola’s dividend history places it in rare territory. It is on the list of Dividend Aristocrats, an exclusive group of stocks in the S&P 500 Index with 25+ consecutive years of dividend increases.

Coca-Cola is also a member of the Dividend Kings, an even more exclusive group of stocks that have raised their dividends for 50+ years in a row.

The company maintains a positive outlook of future growth and possesses durable competitive advantages. Combined with its solid dividend yield and long track record of rising dividends over time, Coca-Cola is understandably held in high regard among income investors.

When investors think of Coca-Cola, they often think of the company’s ubiquitous sodas. But Coca-Cola is so much more than a soda business.

This article takes a look at the 20 beverage brands Coca-Cola owns that generate $1 billion or more in sales each year. The impact of Coca-Cola’s billion dollar brands, along with emerging brands, will be analyzed to see Coca-Cola’s future growth potential.

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3 Stocks to Bankroll Your Retirement

When planning for retirement, many investors stock their portfolio with companies that offer a growing and generous dividend yield, but whose growth prospects fall somewhere between slim and none at all. People are living longer, increasing the threat that investors will outlast their retirement savings.

In recent years, in fact, life expectancy has made a sizable leap forward, increasing by 5.5 years between 2000 and 2016, the fastest increase since the 1960s, according to the World Health Organization (WHO).

As a result, what was once a perfectly acceptable investing approach may no longer be enough to fund your golden years. To offset the prospects of living longer and potentially running out of money, it's not a bad idea to layer an element of growth into your portfolio, helping to ensure that your nest egg will last as long as you do.

With that in mind, investors would do well to consider adding these three stocks to help bankroll their retirement.

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If You’ve Been Waiting, It’s Time To Buy AbbVie

High-Growth Dividend Stock With Tailwinds, Does It Have Tailwinds

I’m not going to lie. I like AbbVie (NYSE:ABBV). I like this stock very much. This is not the first time I have written about AbbVie it and I am sure it won’t be the last. For those who don’t know, AbbVie is a bio-pharma stock spun off of parent Abbot Laboratories (NYSE:ABT) about seven years ago. Abbott Laboratories is a best-in-breed play in the health care space and a prince of dividend payers, its offspring AbbVie is the same. If you’ve been waiting to buy this stock, for whatever reason, today is probably the day you should start pulling the trigger.

Today’s news includes an upgrade for AbbVie from Atlantic Equities, not the first this month. Over the past three weeks, AbbVie has received 3 upgrades, 2 increased price targets, 1 bullish reiteration, and 1 new analyst initiated at BUY.

Atlantic Equities raised the rating from neutral to overweight, a two-notch upgrade I might add, citing factors like increased earnings and revenue visibility following the merger with Allergan. Earnings visibility will help with the stocks valuation, I'll get to that later. The $115 price target is not the highest on Wall Street but not far from it and above consensus. At today’s share prices, the consensus target represents a gain near 7.5% while the $115 target is closer to 20%.

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Hedge Funds' 25 Top Blue-Chip Stocks to Buy Now

2020 has been a wild year for everyone: even blue-chip stocks and the "smart money" investors that hold them.

Hedge funds ended 2019 with a record $3.32 trillion in assets under management (AUM). However, in 2020, volatility and a stock market led by only a narrow range of equities have damaged hedge fund returns and forced a number of investors to head for the exits.

Just have a look at industry statistics. Hedge funds' collective assets under management fell 11% to $2.96 trillion in the quarter ended March 31, according to Hedge Fund Research. That's the first time AUM has fallen below $3 trillion since the third quarter of 2016. More than $333 billion in assets was wiped out by performance losses, while net outflows claimed another $33.3 billion.

And yet hedge funds are still worth keeping tabs on. They command a vast pool of assets and have unparalleled resources for research. Heck, the best of the best can make a billion dollars in a single trade.

To get a sense of what hedge funds are holding these days, we turned to WhaleWisdom, which is a fount of data when it comes to institutional investors. We were able to determine hedge funds' favorite bets based on the number of funds holding a position in any given stock.

It should come as no surprise that big blue-chip stocks dominate the list. Indeed, of the 25 most popular hedge fund stocks, 14 are components of the Dow Jones Industrial Average. Partly that's a function of their massive market capitalizations and attendant liquidity. There's ample room for big institutional investors to build or sell large positions.

All these names likely appeal to the smart money because of their size and strong track records. But we'll delve into a few specifics that make each pick special.

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Walgreens: Ridiculously Cheap at Current Levels

Just over a week ago, I highlighted several stocks I thought looked attractive based on their valuations and dividend yields relative to their historical averages.

Of these names, Walgreens Boots Alliance (NASDAQ:WBA) was trading the furthest below its 10-year average valuation. The stock also offers a 4%+ dividend yield at the moment, which is nearly double the stock's average yield since 2010. A year-to-date share price decline of 28% has aided in realizing these figures.

Quarterly highlights

While I've already stated I am interested in the stock because of its valuation and dividend, Walgreens' most recent quarter was solid. Revenue grew 3.7% to $35.8 billion for the second quarter of fiscal 2020, beating analysts' estimates by $575 million. Excluding the impact of currency translation, revenue was higher by 4.1%. Adjusted earnings per share decreased 7.3% to $1.52, though this was 6 cents higher than Wall Street analysts were looking for. Earnings declined mostly due to a challenging retail market in the UK.

The Retail Pharmacy U.S. segment had sales growth of 3.8% to $27.2 billion. Comparable same-store sales for locations opened at least one year were higher by 2.7%. Pharmacy sales were up 5.3%, with comparable sales growing 3.7%. The total number of prescriptions filled reached 296.8 million, 3.7% higher than the previous year. Even with this growth, prescription market share decreased 50 basis points to 21%. Still, Walgreens' prescription market share is second only to CVS Health Corporation (NYSE:CVS), which means the company is still a dominant player in the U.S. market.

Retail Pharmacy U.S.'s retail business had a sales decline of 0.3%, but, excluding tobacco sales, improved 1.9%. Overall, comparable sales were up 0.6%. Strong demand in Health & Wellness due to cold, cough and flu season aided results.

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5 Consumer Staple Dividend Stocks To Enrich Your Portfolio

The novel coronavirus and the resultant social distancing have messed up the economy, thanks to travel restrictions, business shutdowns and major supply-chain bottlenecks. These hurdles weighed on corporate results of companies across several sectors in the recently-reported first-quarter earnings cycle. As the pandemic started hurting businesses around mid-March, the second quarter stands in an even worse position, with the results of many companies expected to be under pressure.

Although bans are being lifted and businesses are gradually reopening, the constant rise in the number of cases has set in fears of a second wave of the crisis. And with no vaccine discovered yet, there is a lot of uncertainty surrounding the duration and severity of the virus. With so many qualms plaguing investors’ minds, dividend-paying stocks seem like a tempting option at the moment.

Dividend Stocks From the Defensive Zone: A Win-Win Situation?

Although companies across many sectors suspended buyback activities and dividend payments to preserve financial flexibility amid the crisis, there are players in the Consumer Staples universe, which are continuing with dividend payment practices even amid such difficult times. This tells a lot about their sustainable business models, long track record of profitability, rising cash flows, solid liquidity and some value characteristics.

In fact, the defensive Consumer Staples sector has always been a go-to place for investors. At a juncture where most sectors are grappling with coronavirus-led disruptions, many companies from the consumer staples space are gaining from burgeoning demand for essential items amid the coronavirus-led stockpiling. That said, investing in consumer staple dividend stocks seems to be the right thing to do at present.

Here’s the Right Way to Pick Them

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5 Cheap Growth Stocks With Attractive Dividend Yields

These cheap growth-at-a-reasonable-price (GARP) stocks have huge upside potential with attractive yields

When considering stocks to highlight today, I wanted to find five growth stocks that not only pay attractive dividends but also have above-average upside prospects. But to be interesting for this list, these growth stocks also have to be reasonably cheap using fundamental metrics. The idea is that you get the best of both worlds — a cheap purchase points and high expected returns.

For example, the stocks I’ve honed in on here have expected earnings and/or free cash flow for the next year but still sell for less than sixteen to seventeen times earnings. In addition, the dividend yields are higher than average at 3% to 5%.

So, in a sense, you get both a growth stock and a relatively cheap stock.  In fact, there is a term for this: GARP stocks (Growth At a Reasonable Price). You can Google the term “GARP stocks” and see what I mean.

GARP Stocks, Their Price Targets and Upside Potential

GARP stocks are in a sort of mid-point between the growth and value stock investment philosophies. They are cheap but their earnings are growing fast. They also pay attractive dividend yields.

The growth stocks also have good upside prospects. I measured the value of each stock using three different methods and then average them. The first is the price target based on its average dividend yield.

A second target price was derived by using the historical price-to-earnings ratio and applying it to forward earnings per share.

The last method uses comparable ratios of peers and applies those measures to derive the comp-based target price. I then averaged all three methods. The upside potential of all of these growth stocks is between 12% and 62%. As a group, they average about 38% upside potential.

The five cheap growth stocks I finally settled on are:

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Grab 4 Solid Dividend Growth Stocks at a Bargain Price

Dividend investing has been in vogue amid market volatility and near-zero interest rates. This is because dividend-paying securities are a major source of consistent income for investors to create wealth when returns from the equity market are at risk.

Additionally, investors’ drive for income has raised demand for dividend stocks. In particular, the Fed has turned super dovish and hinted at no rate hikes through 2022.

While there are several dividend stocks that could provide capital appreciation, honing in on stocks with a history of dividend growth leads to a healthy portfolio, with a greater scope of capital appreciation as opposed to simple dividend-paying stocks or those with high yields.

Why Dividend Growth Investing Is Better?

Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market, and thus act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, these offer downside protection with their consistent increase in payouts.

Additionally, these stocks have superior fundamentals that make dividend growth a quality and promising investment for the long term. These include a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics. Further, a history of strong dividend growth indicates that dividend increase is likely in the future.

Although these stocks do not necessarily have the highest yields, they have outperformed for a longer period than the broader stock market or any other dividend-paying stock.

As a result, picking dividend growth stocks appears as a winning strategy when some other parameters are also included.

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Top Dividend Stocks For June

The more you follow stocks, the harder it becomes to avoid the belief that you have an instinctive read on how the market will move next. The trouble is, everyone gets that feeling, but not everyone is a billionaire with a near-bottomless bank account – which means you need more than gut feelings to make money on your investments. 

So much of the way that stocks are covered concerns the daily ups and downs of share prices, but that’s not the only way to make money in the market. In fact, unless you have the time to be a day trader, it’s entirely impractical – and potentially very costly – to trade solely based on daily share prices. 

If you want to avoid chasing trends but also want to make money this year instead of a decade from now, dividends might be just what you’re looking for. However, there’s more to dividends than just finding the biggest payoff – you want to be sure that the companies you invest in will be paying dividends in the long term. 

That’s where our AI (artificial intelligence) comes in. By rating 4 aspects of every stock according to present values, it – and we – can help decide which of this week’s stocks are safe bets – and which you want to avoid until better fortunes befall the company behind the ticker.  

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7 Dividend Stocks On the Highway to the Danger Zone

Investors are scrambling for income now that savings rates have evaporated; just be careful where you look for it. Some dividends aren’t what they appear.

Back in the late 1990s when the dotcom boom was in full bull mode, a common refrain among brokers asserted “growth is the new income.”

These days, you could say that income is the new income. People are looking for growth and income for either some security over the long term — rather than pure growth stocks — or, they’re looking to move some cash out of bank accounts and CDs that barely have yields at this point.

Either way, there are some solid dividend paying stocks out there; I’m finding plenty of exciting contenders for my Growth Investor Buy List. But these are not those stocks.

These are stocks that face significant fights to stay afloat in some cases and to save their dividends in others. The outbreak of novel coronavirus has many companies stuck between their shareholders and a hard place.

“Research shows that dividend cuts are associated with significant share price declines on announcement,” Cornell University Professor of Finance and Harold Bierman Jr. Distinguished Professor of Management Andrew Karolyi told InvestorPlace in an email. “Since dividends provide important signals about future earnings prospects (cuts imply uncertainty), they are often delayed, and are interpreted as a last resort action.”

Dean Karolyi went on to say that the sectors most likely to see dividend cuts are those that have high yields and relatively high fractions of dividend-payers, compounded with “uncertainty about future earnings during the COVID crisis.”

With that in mind, here are 7 dividend stocks that could be in danger:

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8 Dividend Aristocrat Stocks to Buy Now

Here are the best dividend stocks to buy in a risky environment

After the big shock in March, many investors are still looking for defensive stocks to buy now. Of course, in the most extreme example, you can elect to go all into cash. However, history has proven that to be the worst thing to do. Instead, this is a good time to consider dividend aristocrats.

First, market uncertainty incentivizes stable dividend stocks to buy now. How so? Passive-income generating companies typically perform better than high-flying growth names during bearish phases.

For one thing, investors can still collect their payouts even if their portfolio isn’t doing too well. Moreover, organizations that have a history of consistent payouts tend to be levered toward secular or otherwise steady industries.

And there’s no better paragon of stability than dividend aristocrats. For those who are unfamiliar with the term, dividend aristocrats have three main requirements: they must be equities traded in the S&P 500, have 25 years-plus of dividend increases and meet size/liquidity benchmarks.

However, a word of caution. Just because you put dividend aristocrats in your list of stocks to buy now doesn’t guarantee a smooth ride. If the markets turn volatile, you can expect virtually all names to incur red ink.

But the major selling point is magnitude. With dividend aristocrats, you’re limiting your potential losses due to the robustness of the target company. Better yet, the volatility provides a rare discount for these stalwarts of industry.

So with that in mind, here are eight stocks to buy now with a long track record of payouts:

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UPS Is Undervalued Based on Its Above-Average Yield

The company's yield is much higher than its long-term average. With no dividend cut likely, this could mean the stock offers an opportunity for a strong return

Aside from reviewing a company’s most recent earnings report, one item I like to consider before making an investment is how the current dividend yield compares to the long-term historical average. I often use both the five and 10-year averages to see if shares are over- or undervalued based on the yield. If the company can’t provide earnings per share guidance, then using the dividend yield can be another way to value a stock.

One company that is trading with a dividend yield above both its five and 10-year averages is United Parcel Services Inc. (NYSE:UPS).

On April 28, UPS, which is the largest integrated air and ground package delivery carrier in the world and trades with a market capitalization of nearly $93 billion, reported mixed first-quarter earnings results. Revenue grew 5.1% to $18 billion, beating estimates by $865 million. Earnings per share, however, declined 17% to $1.15, 8 cents below what analysts were looking for.

Adjusted net income declined by $200 million, with $140 million of this related to the disruption to customers related to the Covid-19 pandemic. Casualty self-insurance accruals were a $110 million drag on results. These were partially offset by an additional operating day, which added $50 million to net income totals.

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