Is now the time for dividend investing?
While the dividend investing style is almost always overlooked, it still has a place in many portfolios even though many consider it a 'boring' way to growth wealth in a portfolio. Sure investors often prefer growth securities that are increasing earnings or revenues, or securities with value metrics such as low PEs and modest debt levels, but now could actually be an interesting time for dividend investing.
That is because markets are still near all time highs, but volatility is definitely returning. High dividend stocks can often be less volatile than their low-yielding or non-dividend paying counterparts and this could be vital if volatility levels run higher from here.
But even if you aren't concerned with the state of the market right now, dividend investing can be great for other reasons too. The idea of reinvesting dividends-- where investors use to dividend payments to buy more shares-- can be a great long term strategy. After all, this approach can really add up over time thanks to the impact of compounding and it is a factor that is often glossed-over by investors these days.
Where to Find the Best Dividend Stocks Now?
Easily one of the biggest problems with dividend stocks is finding the right ones. There are plenty of stocks that pay dividends and you certainly can't just pick whichever ones have the highest yields. A better way to find top dividend stocks is to look at ones that have market-beating yields, and are seeing rising earnings estimates too.
Securities with this combo may be the perfect mix for dividend investors while still providing the potential for outperformance. So definitely consider any of the names highlighted below if you are looking for excellent income stocks in this uncertain environment:
Cincinnati Financial (CINF - Free Report)
If you are looking for a safer choice in the dividend world right now then CINF might be a great pick. The company operates in the relatively safe property and casualty segment of the insurance world which is currently a top 25% ranked industry. Plus, insurance companies are often known for their dividends as CINF has a nearly 3% payout.
Best of all, CINF has been seeing rising earnings estimates as of late and the consensus estimate for both the current quarter and the current year has moved higher in the past two months. Add that into a nice history at earnings season-- including two straight beats of at least 50%-- as well as a Zacks Rank #2 Buy), and investors may have a winner with this insurance stock.
Exelon (EXC - Free Report)
Another potentially safe choice comes to us from the utility segment in the form of EXC. This security currently has a Zacks Rank #2 (Buy) and a great 'A' grade for Value as well. Throw in a 4.6% dividend yield and investors have a very solid value pick on their hands with EXC.
It is also worth noting that EXC has seen rising earnings estimate revisions for its current year forecast lately, including four such increases in the past sixty days and not a single analyst estimate lower in the same time frame. The company also has a pretty good history at earnings season, including three straight beats and two in a row of more than 15%.
Texas Instruments (TXN - Free Report)
The technology sector isn't exactly known for its dividend payers but TXN is an impressive exception. The company pays out a 2.6% yield which is easily higher than most in the space, though it is worth noting that the semiconductor-general segment is ranked in the top 10% for all industries.
TXN has also been seeing rising earnings estimates too as more than a dozen estimates have moved higher in the past two months for both the current quarter and the current year time frame, compared to zero lower. With this type of agreement over TXN's outlook it shouldn't be a surprise to note that Texas Instruments currently has a Zacks Rank #1 (strong buy) as well.
Highwoods Properties (HIW - Free Report)
REITs are usually solid income destinations and HIW is no exception. Highwoods pays out nearly 4% a year to investors, roughly double the overall market. And though some might be worried about REITs right now, we should note that this corner of the REIT market has a top 20% industry rank right now.
HIW in particular has seen a number of analysts increase their earnings estimates over the past two months including five higher for the current quarter and nine higher for the current year, compared to one lower in both time frames. The security currently has a Zacks Rank #2 (buy) and it could be a higher yield choice for investors in this market.
National Health Investors (NHI - Free Report)
For a different way to play the REIT space, investors may also want to check out NHI. This security focuses in on the health care space in particular the long-term care and senior housing industries which can arguably be more stable (and in higher demand) than other types of REITs. NHI pays out a pretty good yield too, giving out roughly 5.7% a year to investors.
This stock has also seen rising earnings estimates as of late too, including four higher for the current year compared to zero lower in the past two months, plus year-over-year growth projections in excess of 11%. NHI also has a Zacks Rank #2 (Buy) making it a solid pick for investors seeking a combo of yield and possible outperformance in the months ahead.
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