Stocks started off September off with a late-summer plunge, as the Nasdaq 100 nosedived more than 3% in a single session while the S&P 500 slipped just over 2%. Don’t act so surprised that volatility is back in full force. Undoubtedly, the tech trade seems quite vulnerable again, especially if this latest sell-off sees markets shed more of the gains enjoyed in August.
Indeed, Nvidia (NASDAQ:NVDA) didn’t deliver a big needle-mover of a blowout in its latest quarterly reveal. While I attribute a part of Tuesday’s turbulent session to the Nvidia number (NVDA stock shed nearly 10% on the day) as investors had the long weekend to dig deeper into the GPU firm’s results, the more recently announced DoJ anti-trust investigation hitting Nvidia certainly did not help the cause.
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While blue chips and perceived value plays also stumbled, I can’t help but imagine that they’re in better shape to weather what could be another seasonal monsoon for stocks.
The blue-chip dividend stocks may be incredibly snooze-inducing compared to the AI stocks. However, I think there’s a good chance they out stage the previously red-hot AI plays for a while longer. As value seeks to outshine growth again, at least on a relative basis, betting on tried-and-true blue chips with new money is starting to feel like a better idea than buying every dip in AI chip stocks thrown your way.
With Berkshire Hathaway (NYSE:BRK-B), a firm I previously praised as having all the tools to do well in a market pullback, actually moving 0.19% higher on the bloodbath of a session, I’d argue that there hasn’t been a better time to pivot towards a more “slow and steady” approach than right now.
In this piece, we’ll examine two steady value stocks that also have impressive dividend yields.
Wendy’s
Wendy’s (NYSE:WEN), the home of the Dave’s Single burger, has been feeling the rumbles of inflation and changing consumer tastes in recent years. The stock is stuck in a hangover, now down 15% year to date and close to 32% from its 2021 all-time high. Amid the steady fall off its peak, Wendy’s dividend yield has slowly swelled past the 6% mark. Now up 4% off 52-week lows, the yield sits at a still bountiful 5.91%, making Wendy’s one of the best restaurant picks out there for those hungry for yield.
Undoubtedly, Wendy’s has taken similar steps as many of its peers in the fast-food scene. Whether we’re talking about doubling down on value menus or serving up limited-time new products, the company seems to be following the same playbook as its rivals. The company needs to do more if it’s to better withstand competitors seems more than willing to lure in diners with margin-eroding deals.
The great deals (think the $3 breakfast combo) will bring in hungry customers, but Wendy’s needs to convince them to buy more after they’ve had a seat and finished their meals. Indeed, this can prove difficult for fast-food chains that aren’t named McDonald’s (NYSE:MCD).
Either way, Wendy’s has a great product and a digital offering that has room to run. That alone may be enough to warrant buying the stock while it’s down and out following its latest downward guidance revision.
At writing, the stock trades at 16.82 times trailing price-to-earnings (P/E). That’s way too cheap for such an established player in an industry whose pressures may be clearing up along with what remains of high inflation.
Verizon
Verizon (NYSE:VZ) is an ailing telecom that’s been hurting for many years now. Indeed, Warren Buffett’s Berkshire Hathaway sold out of the stock before VZ stock really had a chance to implode. It was good timing on Berkshire’s part. And while only time will tell if they’ll get back in now that shares are going for markedly lower prices, I do think the telecom needs to do more to win back the shareholders that jump0ed ship amid its extended plunge that spanned 2020 all the way through late-2023.
The good news is VZ stock is marching higher again, now up close to 40% from its multi-year low. Believe it or not, VZ stock is now up over 25% in the past year, thanks in part to a few steady quarters and, of course, anticipation of lower interest rates.
The dividend yield may not be as rich as a year ago, but it’s still attractive at 6.37%. Arguably, the value proposition looks better now that Verizon has gained ground on a number of fronts.
Recently, Morgan Stanley (NYSE:MS) analyst Simon Flannery sees a 2% dividend raise on the horizon, partly thanks to confidence over its “improving consumer wireless” business.
At just 16.14 times trailing P/E, you’re getting a very solid dividend grower whose fortunes seem to be turning. With a potential head-and-shoulders bottom technical pattern that could be in the works, VZ stock looks the timeliest it’s been all decade.
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