24/7 Insights

• Sell in May and go away? Maybe not this year, but be careful.
• Altria Group Inc. (NYSE MO) still owns 8% of Anheuser-Busch InBev S.A. (NYSE: BUD) after selling millions of shares.
• In early May, Pfizer Inc. (NYSE: PFE) hit its lowest level since 2012.
• Chevron Corp. (NYSE: CVX) is struggling to close its purchase of Hess Corp. (NYSE: HES).

Dividend stocks, a perennial favorite among investors, hold significant potential. They provide a steady income stream and offer a promising avenue for total return. Total return, a comprehensive measure of investment performance, encompasses interest, capital gains, dividends, and distributions realized over time. 

Consider this scenario: You purchase a stock at $20 that pays a 3% dividend. Over a year, the stock price rises to $22. Despite the fluctuations, your total return remains at a promising 13%. That is, 10% for the increase in stock price and 3% for the dividends paid.

We have covered dividend stocks at 24/7 Wall St. for 15 years, and rarely have we seen so many top companies left behind as artificial intelligence mania has gripped investors. While we understand that the game-changing technology will alter much of how business and even everyday life is conducted by the bold new frontier that AI has opened, some outstanding companies are ripe for the picking now, and they all pay big dividends.

One word of caution: After the blow-out earnings from Nvidia Corp. (NASDAQ: NVDA) and the highly anticipated 10-for-1 stock split, more gas has been thrown on the stock market rally fire, which has been roaring since last fall. A recession and a major market correction in the second or third quarter could be on the horizon.

Here are my favorite three stocks to buy in June.

Altria

This tobacco company offers value investors a great entry point now and a rich 8.46% dividend. Altria Group Inc. (NYSE: MO) manufactures and sells smokable and oral tobacco products in the United States through its subsidiaries.

The company provides cigarettes primarily under the Marlboro brand:

• Cigars and pipe tobacco, principally under the Black & Mild brand
• Moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands
• on! Oral nicotine pouches

It sells its tobacco products primarily to wholesalers, including distributors and large retail organizations, such as chain stores.

Altria used to own over 10% of Anheuser-Busch InBev S.A. (NYSE: BUD), the world’s largest brewer. The company sold 35 million of its 197 million shares through a global secondary offering. That represents 18% of their holdings but still leaves a hefty 8% of the outstanding shares in their back pocket. They also announced a $2.4 billion stock repurchase plan funded in part by the sale. 

Chevron

This integrated giant is a safer way for investors looking to get positioned in the energy sector, and it pays a rich 4.14% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries.

The company operates in two segments:

• Upstream
• Downstream

The Upstream segment is involved in the following:

• Exploration, development, production, and transportation of crude oil and natural gas
• Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
• Transportation of crude oil through pipelines
• Transportation, storage, and marketing of natural gas, as well as operating a gas-to-liquids plant

The Downstream segment engages in:

• Refining crude oil into petroleum product
• Marketing crude oil, refined products, and lubricants
• Manufacturing and marketing renewable fuels
• Transporting crude oil and advanced products by pipeline, marine vessel, motor equipment, and rail car
• Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives

Chevron announced in the fall that it has entered into a definitive agreement with Hess Corp. (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.

Three lawsuits have been filed against Hess, charging inadequate disclosure over the sale, and Chevron has said arbitration over Hess’s Guyana assets could delay the closing timeline until October 2025. However, most Wall Street analysts feel the deal ultimately will get done, and Chevron will emerge even more powerful in the energy sector.

Warren Buffett’s Berkshire Hathaway owns 6.7% of Chevron’s outstanding stock with 122,980,207 shares, and the energy giant makes up 5.1% of the portfolio. Each year the stock generates $776,734,888 in dividend income for Berkshire Hathaway.

Raymond James Has 5 Passive Income Dividend Stocks to Buy With Yields Up to 14%

Pfizer

This top pharmaceutical stock was a massive winner in the COVID-19 vaccine sweepstakes but has been crushed as many are not getting boosters. Pfizer Inc. (NYSE: PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide and pays a hefty 5.68% dividend, which has risen yearly for the last 14 years.

The company offers medicines and vaccines in various therapeutic areas, including:

• Cardiovascular metabolic and women’s health under the Premarin family and Eliquis brands
• Biologics, small molecules, immunotherapies, and biosimilars under the Ibrance, Xtandi, Sutent, Inlyta, Retacrit, Lorbrena, and Braftovi brands
• Sterile injectable and anti-infective medicines and oral COVID-19 treatment under the Sulperazon, Medrol, Zavicefta, Zithromax, Vfend, Panzyga, and Paxlovid brands.

Pfizer also provides medicines and vaccines in various therapeutic areas, such as:

• Pneumococcal disease, meningococcal disease, tick-borne encephalitis
• COVID-19 under the Comirnaty/BNT162b2, Nimenrix, FSME/IMMUN-TicoVac, Trumenba, and the Prevnar family brands
• Biosimilars for chronic immune and inflammatory diseases under the Xeljanz, Enbrel, Inflectra, Eucrisa/Staquis, and Cibinqo brands
• Amyloidosis, hemophilia, and endocrine diseases under the Vyndaqel/Vyndamax, BeneFIX, and Genotropin brands

Trading at its lowest split-adjusted level in thirteen years, the stock is an incredible bargain at current levels and pays a massive dividend. Despite a stunning 44% decline in profits, the company still posted first-quarter earnings that came in above Wall Street estimates. The company reported $0.55 diluted earnings per share and $14.9 billion in first-quarter sales, trouncing analysts’ $0.51 and $13.87 billion estimates, respectively.

While the pharmaceutical giant reported its fifth straight year of year-over-year revenue and net income declines, the numbers are still skewed somewhat from the enormous revenues posted during the pandemic. Patient investors will get paid one of the highest blue-chip dividends going, and shares trade at a reasonable 10.75 times estimated 2025 earnings.

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