Back to top

4 Growth Dividend Stocks While Markets Choose Direction

Read MoreHide Full Article

Stocks generally offer either modest/low growth but pay good dividends or high growth but against little or no dividends. It’s sort of a double treat to find stocks that offer good growth and do not compromise on dividends.

Why Choose Dividend Paying Stocks?

Market speculation is driven by investor sentiment and it is common to adopt a risk-free approach in tumultuous times. It’s like a fight or flight approach for an active market player. Investors can either decide to bet on high-growth, high-risk stocks that can move in any direction or park their money in stable, decent dividend paying but comparatively low-growth stocks. But basically, if an investor is looking for stable gains over a time period, dividend stocks are the best bets.

A Look At Economic Factors

While the Fed stayed put with interest rates in June, it remains to be seen whether the July meet is different or gives a stronger signal on an expected rate hike. While the U.S. jobs report for June was encouraging, second-quarter earnings are unlikely to impress. Growth, however, is expected to inch up in the second half of 2016. Quite a few S&P 500 stocks have been touching their 52-week highs lately. However, at the same time, investors are flocking to fixed income securities, giving mixed signals on investor confidence in a market rebound.

Across the pond, Theresa May has become the new prime minister of the U.K., endowed with the massive task of seeing the country through its exit from the European Union. But her decision to make Boris Johnson the Foreign Secretary is raising eyebrows due to his previous unflattering public statements. In a separate but surprising move, Bank of England has kept rates unchanged when almost everyone speculated a rate cut.

Moving further to Asia, yen has weakened while China posted an improvement in GDP figures signaling that the economy might finally be stabilizing. 

Overall, there is no clarity on the direction in which the economy will move, how earnings will turn up or markets will perform. While speculation runs wild from recessionary fears to an uptick in earnings, we give you four dividend-paying stocks to invest in amid rampant volatility.

Our Stock Picks

We have selected stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy), growth score of A, and a dividend yield of 3% or higher. We believe these factors alongside other fundamentals such as PE ratio and expected earnings growth make these stocks favorable picks.

Best Buy Co., Inc. (BBY - Free Report) with its headquarters in Richfield, MN sells a range of personal computers and other electronic devices through a chain of retail stores. 

Zacks Rank #2

Growth Score: A

Dividend Yield: 3.57%

The company has a PE of 10.84 compared with an industry PE of 16.80. Earnings for the current fiscal are expected to grow 4.21%.

Frontline Limited (FRO - Free Report) , headquartered in Hamilton, Bermuda, is the world’s leading oil tanker shipping company.

Zacks Rank #2

Growth Score: A

Dividend Yield: 20.75%

In addition to an impressive dividend yield, Frontline has a PE of 4.28 compared with an industry PE in excess of 100, making it a good pick.

Spark Energy, Inc. (SPKE - Free Report) , based out of Houston, TX, is a retail energy services company. It operations include retail distribution of natural gas and electricity.

Zacks Rank #2

Growth Score: A

Dividend Yield: 5.2%

The company has a PE of 12.53 compared with an industry PE of 14.70.  Earnings are poised to grow by over 100% this year.

New Media Investment Group Inc. , headquartered in New York, is an online advertising and digital media company.

Zacks Rank #2

Growth Score: A

Dividend Yield: 6.83%

New Media has good earning potential with an expected growth rate of 24% and over 48% for the June-end quarter and fiscal 2016 respectively. Moreover, the company posted positive earnings surprises in the three of the last four quarters at an average rate of 17.74%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 DaysClick to get this free report >>




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Frontline Ltd. (FRO) - free report >>

Best Buy Co., Inc. (BBY) - free report >>

Spark Energy, Inc. (SPKE) - free report >>

More from Zacks Analyst Blog

You May Like

Published in