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5 Total Return Stocks to Buy Now That All Pay 5% or Higher Dividends
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Even though the economy clocked in a stunning 3.2% gross domestic product in the first quarter, way above estimates, and earnings mostly have been solid, there are warnings signs. Growth at some levels is slowing dramatically, and the stock market by historical valuation metrics is fully priced at current levels. That may be one reason that despite the big first-quarter GDP blowout number on Friday, stocks were only marginally higher that day.
Given the continued generational lows in interest rates, as evidenced by the 30-year U.S. Treasury bond sporting a paltry 2.92% yield, it makes sense to look for top companies not trading at all-time highs that pay solid dividends. We screened our 24/7 Wall St. research database and found five stocks that are rated Buy, with low valuations and big dividends, that make sense now for growth and income investors.
AT&T
This is a telecom component on the prestigious Merrill Lynch US 1 list. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE.
This telecom giant also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions. Trading at a very cheap 9.4 times estimated 2019 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.
The company reported a mixed earnings bag for the first quarter, and Merrill Lynch said this:
On a consolidated basis, 1Q revenue, EBITDA, and EPS were all pretty much in line with consensus estimates. Entertainment EBITDA was ahead of both us and the Street, as AT&T was able to bend the cost curve and drive up video average revenue per user. Due to definition changes, AT&T’s implied capex guidance is $20 billion and not $22 billion where the Street consensus is today.
Investors receive a massive 6.51% dividend. The Merrill Lynch price target for the shares is $37, and the Wall Street consensus target is $33.88. The stock ended trading on Friday at $30.68.
Altria
This maker of tobacco products offers value investors a great entry point now. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro.
Altria owns over 10% of Anheuser-Busch InBev, the world’s largest brewer. In addition, to help lagging cigarette demand, in December 2018 it acquired 35% of JUUL Labs. But Altria came in with a mixed bag of first-quarter results, and the stock has been weak recently. Merrill Lynch noted this on the results:
Net sales for the quarter totaled $3.9 billion, -$237 million versus our forecast and led by weaker than anticipated cigarette volumes. Altria management reaffirmed its guidance for 2019 EPS to be in a range of $4.15 to $4.27 (unchanged) despite higher fuel prices.
Shareholders receive a 6.09% dividend. Merrill Lynch has set a $66 price target, while the lower consensus target is $59.47. Shares were last seen trading at $52.79.
24/7 Wall St.Ford
This venerable automotive giant remains a solid value play now, and demand could jump with a trade deal with China paving the way. Ford Motor Co. (NYSE: F) is one of the world’s largest vehicle producers, with over 6 million units manufactured and sold globally. The company has made significant progress executing on its One Ford plan and delivering best-in-class vehicles.
The company also remains committed to positioning itself well within the evolving auto industry through balanced investments across electrification, autonomy and mobility services.
Ford reported very solid first-quarter results, and Jefferies, which has remained positive on the company, noted this:
Large first quarter beat, adjusted EPS of $0.44, 70% ahead of consensus, and updated guidance should finally drive some earnings upgrades. We think results validate the current strength of products ahead of critical launches at Ford and Lincoln brands. Credit risk stabilized and dividend confirmed. We continue to see Ford as the most promising restructuring investment case in Autos.
Shareholders receive a 5.77% dividend. The $11 Jefferies price target compares with a $9.53 consensus target. The stock rose almost 11% on Friday to $10.41.
GlaxoSmithKline
This top global pharmaceutical stock offers outstanding total return potential for investors. GlaxoSmithKline PLC (NYSE: GSK) offers pharmaceutical products in the therapeutic areas, including respiratory, antivirals, central nervous system, cardiovascular and urogenital, metabolic, antibacterials and emesis, dermatology, rare diseases, immuno-inflammation, vaccines and HIV. It also provides consumer health care products in wellness, oral health, nutrition and skin health areas.
The company has three divisions: Prescription Medicines (includes ViiV HIV joint venture with Pfizer and Shionogi), Consumer Health and Vaccines. In prescription drugs, its key franchises include Advair (asthma/COPD), HIV and other antiviral drugs.
GlaxoSmithKline investors receive a 5.71% dividend. Jefferies has a $46 price target. The consensus price objective is $44.33, and shares ended the week at $40.40.
24/7 Wall St.Invesco
This remains a very attractive way for investors to invest in the financial services arena. Invesco Ltd. (NYSE: IVZ) is one of the world’s largest independent asset management groups, with over 750 investment professionals worldwide and a presence in over 20 countries. It offers a range of investment styles and products to institutions and individuals through a variety of distribution channels around the world.
Last week, Invesco reported preliminary month-end assets under management for March 2019 of $954.8 billion, an increase of 1.0% month over month. The increase was driven by favorable market returns, non-management fee earning asset under management inflows and reinvested distributions, partially offset by foreign exchange and net long-term outflows.
The company also reported solid first-quarter results, with management focused on the pending Oppenheimer acquisition, as it increased its earnings-per-share accretion projections and provided a timeline of the expected expense savings. Most on Wall Street remain very positive on the acquisition as they see solid long-term growth.
Invesco investors receive a 5.72% dividend. The Jefferies price target is $24. The consensus target is $21.23, and shares closed at $21.77 apiece.
Nothing exciting here, and that’s exactly the point. With low volatility ratings, big dividends and some growth potential, these five stocks are ideal for investors looking for something they can add to their portfolios and forget about. Plus, none of these companies are real estate investment trusts, so no bothersome K-1s when tax time rolls around.
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