Investing in dividend stocks can be a profitable endeavor, providing regular income and potentially strengthening your portfolio during market downturns. However, identifying the best dividend stocks to invest in can be a daunting task, especially for new investors. Here are my pick of 7 dividend stocks with yields higher than 4.15% (Apple’s high-yield saving offering) that will provide you stable income every month. My criteria are the stocks need to have long time dividend payment history, and the payout ratio should be less than 80% to ensure the security of the dividend in the future. I also choose the stocks that are undervalued right now, so that it would also bring potential capital gain in the future.
1. $T
AT&T (T) is a telecommunications company that provides wireless, wired, and satellite television services. The company has a long history of dividend payments and a strong financial position. In the past 3 months, the stock has decreased 15%, probably because AT&T’s first-quarter results showed weak free cash flow and slower wireless customer growth. AT&T’s stock has experienced a decline of 37% over the past 5 years, but the company’s focus on debt reduction and potential for earnings growth presents an opportunity for investors.
Despite these challenges, T stock is still a relatively safe investment with a dividend yield of 6.8%. AT&T’s low price-to-earnings ratio (P/E) of 7 compared to the S&P 500’s P/E of 18 suggests a potential floor for the stock’s valuation. Debt reduction and spin-offs have improved AT&T’s balance sheet, leading to lower interest payments and the potential for increased earnings per share (EPS). Despite lower growth expectations than the S&P 500, AT&T’s stable core business and customer base growth could provide solid investment returns when factoring in the stock’s dividend.
2. $WPC
WP Carey Inc. (WPC) is a real estate investment trust (REIT) that owns and operates a diversified portfolio of commercial properties. The company has a long history of dividend payments and a strong financial position. It has experienced a decline in its stock performance over the past three months, but it is still a relatively safe investment with a dividend yield of 5.8%.
The company’s fundamentals remain strong, particularly its Return on Equity (ROE) which stands at 7.9%. While the ROE is higher than the industry average, W. P. Carey’s earnings growth has been moderate compared to the industry average of 18% over the past five years. The company has a high payout ratio, but it has still managed to grow its earnings. Analysts expect a future decline in earnings for W. P. Carey.
3. $MPW
Medical Properties Trust, Inc. (MPW) is a healthcare real estate investment trust (REIT) that owns and operates a diversified portfolio of medical office buildings and hospitals. Medical Properties Trust (MPW) stock has formed a bullish double-bottom chart pattern with a neckline at $9.
MPW shares have experienced a significant decline of 57.64% in the past 12 months and 33.40% this year. Rising interest rates have negatively impacted Medical Properties Trust, leading to a jump in short interest to 19% for his 10 billion debt.
MPW offers a high forward dividend yield of 15% and has significantly cheap multiples compared to the sector median. MPW’s stock is reasonably valued with a price to earnings multiple of 6.31, EV to EBITDA of 11, and a price-to-book ratio of 0.54.
4. $EPD
Enterprise Products Partners (EPD) is a midstream energy company that owns and operates a diversified portfolio of pipelines, terminals, and storage facilities. Enterprise Products Partners (EPD) is a master limited partnership (MLP) that offers investors a high cash distribution, currently yielding 7.7%. The MLP’s first-quarter financial results highlight its stable cash flow and strong payout, supported by solid numbers and a conservative payout ratio. Enterprise Products Partners is well-positioned for growth, with multiple expansion projects underway and a history of increasing its distribution for 25 consecutive years.
Enterprise Products Partners generated $1.9 billion in distributable cash flow in the first quarter, a 5.5% increase from the previous year, benefiting from the stability of its cash flow and fee-based contracts. Enterprise Products Partners plans to put approximately $3.8 billion of assets into service in 2023, including a petrochemical plant and the expansion of its Acadian Gas Pipeline system, supporting future distribution growth.
5. $ET
Enterprise Products Partners L.P. (ET) is a midstream energy company that provides gathering, processing, transportation, and storage services for crude oil, natural gas, natural gas liquids (NGLs), and refined products. Kelcy L. Warren, executive chairman of Energy Transfer’s board of directors, recently purchased one million shares of the company, showing continued bullishness despite disappointing earnings. Corporate insiders have bought ET shares worth $57.7 million in the last three months, indicating positive insider confidence in the company.
Energy Transfer has an attractive dividend yield of 8% and a strong cash position. The company’s diversified portfolio and strong geographic footprint bode well for future growth prospects.
6. $PFE
Pfizer (PFE) is a large pharmaceutical company that develops, manufactures, and sells a wide range of prescription drugs. The company has a strong track record of innovation and has a portfolio of blockbuster drugs that generate billions of dollars in revenue each year.
PFE stock has been on a slight upward trend in recent months, and it is currently trading at a price-to-earnings ratio of 12.5, lower than the sector median. This makes PFE stock a relatively attractive investment, especially for investors who are looking for a dividend-paying stock. The company has paid a quarterly dividend to its shareholders for over 50 years, and the current dividend yield is 4.4%.
7. $SPG
Simon Property Group (SPG) is a real estate investment trust (REIT) that owns and operates a portfolio of premier shopping centers in the United States, Europe, and Asia. The company has a strong track record of growth and profitability, and it has a dividend yield of 7%. SPG stock is currently trading at a price-to-earnings ratio of 17.5, which is slightly above the average for the REIT sector. However, the company’s strong fundamentals and dividend yield make it a good investment for investors who are looking for a long-term investment with a steady stream of income.
Revenues in Q1 2023 rose by 4.2% to $1.35 billion, driven by post-pandemic recovery, leasing momentum, and improved occupancy. Simon’s net operating income (NOI) increased by 3.9% compared to Q1 2022. The company secured an average base rent of $55.84 per square foot, exceeding industry standards. Simon increased its financial guidance for Fiscal 2023, expecting stable performance compared to the previous year.
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