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3 Top-Ranked Stocks for Investors Seeking Dividend Income
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All major indexes have registered strong gains so far this year, which has helped investors recover from the 2022 slumps and restore confidence in the stock market. The S&P 500, the Nasdaq and the Dow have posted positive returns of 16.4%, 31.3% and 6.1%, respectively, in the year-to-date period. A favorable inflation trend, a boom in the artificial intelligence field which is considered as the fourth industrial revolution, and expectation from the Fed that it will sooner or later end the interest rate hike cycle are some of the significant reasons for the indexes to scale up.
However, unexpected events in August reminded investors to remain cautious. Moody’s, on Aug 7, downgraded 10 small and medium-sized lenders and placed six banks on review for a potential downgrade, citing funding risks and weaker profitability. Investors are worried as they have already witnessed the collapse of major U.S banks like the Silicon Valley and Signature Bank earlier this year. The Federal Reserve’s aggressive monetary policy tightening to counter inflation has pushed borrowing costs to a 16-year high, resulting in a slowdown in loan demand for businesses and consumers.
The consumer price index for the month of July increased 3.2% year over year, which was higher than the 3.0% growth in June, recorded as the lowest since March 2021. Now all eyes are now on Fed’s key interest rate hike decision from the Sep 19-20 FOMC meeting. A cooler-than-expected inflation report in July raised optimism that the Fed will hold interest rate hikes in September.
Also, the already resilient labor market, higher wages, rising crude prices due to the decision by the OPEC+ members to cut production, and a collapsing Chinese economy could trigger inflation pressure.
Thus, prudent investors who wish to bet their money for regular income and capital preservation in such critical situations can invest in dividend stocks. Due to their well-established businesses, these companies pay out regular dividends and remain profitable due to their proven business models. Companies that tend to reward investors with a high dividend payout outperform non-dividend-paying stocks during market volatility. On that note, let us look at solid dividend payers like Gerdau GGB, Crestwood Equity Partners CEQP and Townsquare Media TSQ.
Gerdau is a steel producer. This Zacks Rank #2 (Buy) company is the largest long steel producer in Latin America that made an important contribution in building the history of the Brazilian industry.
GGB has a dividend yield of 10.8% compared with the industry average of 1.5%.
Gerdau has witnessed the Zacks Consensus Estimate for its current-year earnings increasing nearly 8.6% over the last 60 days. GGB shares have gained 20.6% over the past year compared to the S&P 500’s gain of 6.6%.
Crestwood Equity Partners is a master limited partnership formed in 2001. This Zacks Rank #2 company provides a wide range of fee-based infrastructure solutions in major U.S. shale plays like the Bakken Shale, Delaware Basin, Powder River Basin, Marcellus Shale and others.
CEQP has a dividend yield of 10.3%, compared with the industry average of 7.2%
Crestwood Equity Partners has witnessed the Zacks Consensus Estimate for its current-year earnings increasing nearly 20.0% over the last 60 days, and its shares have gained 7.7% over the past year.
Townsquare Media is a local media and entertainment company. This Zacks Rank 2 company owns and operates radio, digital and live event properties in small to mid-sized markets across the country and specializes in creating and distributing original entertainment, music and lifestyle content.
TSQ has a dividend yield of 7.5% compared with the industry average of 0.0%.
Townsquare Media has witnessed the Zacks Consensus Estimate for its current-year earnings increasing nearly 3.9% over the last 60 days and its shares have gained 8.4% over the past year.
Gerdau S.A. (GGB): Free Stock Analysis Report
Crestwood Equity Partners LP (CEQP): Free Stock Analysis Report
Townsquare Media, Inc. (TSQ): Free Stock Analysis Report
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