- High-yielding dividend stocks to buy are the go-to now. However, yields aren’t always sustainable and the selection process is critical.
- Citigroup (C): Citigroup is a new Warren Buffett favorite. The bank’s stock is significantly undervalued relative to its book value and exhibits robust dividend-related metrics.
- Chevron (CVX): Chevron stock is a momentum play. CVX’s expansion in Mexico could add to its already solid balance sheet.
- Intel (INTC): The firm’s CPUs and GPUs are performing well amid an artificial intelligence surge.
- Verizon (VZ): Utilities could prosper in the event of an economic downturn, and Verizon could be a “best-in-class” pick.
- Ford (F): Ford’s payout ratio is lagging historical averages. Thus, a dividend increase could be in the offing.
Finding dividend stocks to buy is a great option right now.
First of all, risk aversion tends to shift investor sentiment into high-yielding assets such as dividend stocks and investment-grade bonds. Secondly, contractionary economic policies such as rising interest rates provide support to dividend-paying stocks as they’re generally able to absorb fluctuating consumer sentiment.
Although most dividend payers are generally safe bets, some exhibit risk from a yield vantage point. For example, a dividend might exhibit a lucrative yield in the current market climate, which could later erode due to cyclical purposes.
The goal of this article is to identify high-yielding dividend stocks to buy that could sustain their yield into perpetuity. So, without further ado, here are five high-yield dividend stocks to buy.
|VZ||Verizon Communications Inc.||$49.10|
|F||Ford Motor Company||$12.85|
Dividend Stocks to Buy: Citigroup (C)
Citigroup (NYSE:C) stock has been overlooked during the past year. I suspect that investors have thrown caution to the wind during the firm’s restructuring period. However, Citi’s prospects are looking up, and legendary investor Warren Buffett thinks so too after adding approximately 55 million Citi stock to his portfolio during the first quarter.
The big bank’s dividend yield of 4% is highly respectably, especially considering that C stock is undervalued. Citigroup stock is trading at a 1.9x discount to its book value, which suggests that the asset holds value in abundance.
I expect Citi to outperform the market in a higher interest rate environment. Higher rates will provide support to the bank’s debt segment as well as stagnate its wage bill, in turn, providing attractive residual value to its investors.
This is a momentum play. Chevron (NYSE:CVX) has benefited dearly from rising energy prices, which has resulted in the firm now carrying $33.05 billion in ongoing cash from operations. I remain bullish on energy stocks for the foreseeable future as oil and gas prices need to retrace substantially before the sector’s profitability takes a hit.
CVX stock’s dividend yield is both lucrative and robust. First off, Chevron’s dividend yield of 3% is supported by a coverage ratio of 2.9x, conveying sustainability. In addition, Chevron’s return on equity of 14.7% suggests that it provides justified value to its investors.
Intel’s (NASDAQ:INTC) use case has grown significantly during the past decade. The company’s been able to leverage the artificial intelligence market with its CPUs being used for time-series programs and its GPUs for image recognition programs. Intel’s prospects look bright amid a surge in technological hardware and software during the pandemic.
Intel’s momentum is there for all to see. The company recently beat its first-quarter earnings target by 8 cents per share amid robust demand for semiconductors.
Furthermore, Intel provides a lucrative dividend at a yield of 3.1%. Additionally, Intel’s shareholder compensation seems sustainable, given that it sports a dividend coverage of 2.4x.
Dividend Stocks to Buy: Verizon (VZ)
I disagree with Ray Dalio’s first-quarter Verizon (NYSE:VZ) sale. I believe that utilities provide a great option at the moment, given the economic climate. Additionally, Verizon could tap into AT&T’s (NYSE:T) investor base, which has grown increasingly frustrated with the firm’s recent shift in shareholder policy.
Michael Rollins of Citigroup substantiates my opening argument well. Rollins said last month that communications could show durability during a trying economic period as investors view them as relatively defensive.
Verizon stacks up well from a quantitative vantage point. The stock provides a stunning dividend yield of 5.1%, backed by an earnings-before-interest-and-tax margin of 21.4%. Lastly, Verizon boasts $180,740 net income per employee, suggesting that it could leapfrog the rising input costs caused by a tight labor market.
Ford (NYSE:F) is one of the most widely traded stocks on the market. Thus volatility is inevitable. Furthermore, F stock is cyclical due to the nature of its product offerings. Nonetheless, I believe that Ford is a solid long-term dividend-yield play if you’re willing to bear the risk.
The company’s ICE and EV divisions are both performing proficiently, with total wholesale shipments coming in strong at around 970,000 vehicles in the first-quarter, leading to a revenue beat of $457.31 million and an earnings beat of 1 cent per share.
Lastly, Ford pays a lucrative dividend with a yield of 3%. Ford’s dividend payout ratio is 92% lower than its five-year average, prompting me to believe that dividend increases are on the way.
On the date of publication, Steve Booyens held indirect long positions in C, CVX, INTC, VZ, and F. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.