Back to top

Image: Shutterstock

4 Value Stocks With Solid Dividend Yield to Buy in 2020

Read MoreHide Full Article

The benchmark S&P 500 Index has recorded an unprecedented Bull Market rally since Mar 9, 2009 – the longest stint in history. The equity market has returned about 376.6% (as of Dec 23, 2019) to investors during this tenure, putting it just behind nearly 417% return recorded during the Bull Run of the1990s.

Mixed Bag

However, the dream run witnessed some of the scariest drops and intense market volatility in recent memories due to the European sovereign debt crisis and the Sino-U.S. trade war. In addition to the whimsical equity market performance, mixed economic data at certain times have also been misleading as it lacked clarity on the broader economic picture. Global macroeconomic uncertainty and volatile oil prices have added to the cacophony.

However, the “Phase One” deal between the United States and China put the market back on growth trajectory, with the partial trade accord representing a major breakthrough in the 21-month standoff between the world's two largest economies. In addition, the Federal Reserve’s decision to cut rates thrice this year – in July, September and October – coupled with the central bank’s assertion of a robust labor market and strong economic activity soothed investor sentiments. Soaring job growth and a 50-year low unemployment rate have added to the optimism. Moreover, factory production is rebounding, domestic homebuilding market is taking off, while the increase in consumer spending suggests solid momentum for the overall economy.

Potential Saviors

Amid the vagaries of the broader equity market, a prudent investment decision would be to focus on value stocks that are perceived to be “bargains” or are undervalued. In value investing, investors tend to hold a stock until it meets its target price and sometimes even longer provided the company demonstrates continued profitability.

Added to the intrinsic value proposition of value stocks, a healthy dividend yield would satiate the appetite of risk-averse investors. The facts that these stocks have the potential to outperform the market, while also providing a decent dividend yield, have made them prized assets. With market volatility likely to stay, value stocks with healthy dividend yield appear to be a safe haven to brace the rout.

Top 4 Picks

With the help of the Zacks Stock Screener, we have selected Zacks Rank #1 (Strong Buy) or #2 (Buy) stocks that have dividend yield of more than 5%. In order to narrow down the list, we have taken those stocks which have Value Style Score of A or B. Our research shows that stocks with a Value Style Score of A or B when combined a Zacks Rank #1 or #2 offer the best opportunities in the value investing space.

In addition, these stocks have a solid Zacks Industry Rank and are placed within the top 50% of more than 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

Delek Logistics Partners, L.P. DKL: Headquartered in Brentwood, TN, Delek Logistics owns and operates logistics and marketing assets for crude oil, and intermediate and refined products in the United States. The company appears to be a solid pick with a Zacks Value Style Score of B, Zacks Industry Rank #43 (top 17%) and a dividend yield of 11.2%. Delek Logistics sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Artisan Partners Asset Management Inc. APAM: Founded in 1994 and based in Milwaukee, WI, Artisan Partners Asset Management is an independent investment management firm, primarily focusing on mutual funds and separate accounts. With a dividend yield of 8.1% and a Zacks Industry Rank #93 (top 37%), this Zacks Rank #2 stock has a Zacks Value Style Score of A.

Patterson Companies, Inc. PDCO: Founded in 1877 and headquartered in St. Paul, MN, Patterson is one of the leading distributors of dental and animal health products. This Zacks Rank #2 stock appears to be a solid pick with a Zacks Value Style Score of A and a Zacks Industry Rank #91 (top 36%) with a dividend yield of 5%.

Waddell & Reed Financial, Inc. : Overland Park, KS-based Waddell & Reed Financial Inc., one of the nation’s oldest mutual fund asset managers, offers investment management, investment advisory, investment product underwriting and distribution, as well as shareholder services administration to mutual funds, institutional funds and separately managed accounts to customers in various parts of the country. With a dividend yield of 5.9% and a Zacks Industry Rank #93 (top 37%), this Zacks Rank #2 stock has a Zacks Value Style Score of A.

Moving Forward

A sneak peek into some possible value stock outperformers backed by a solid Zacks Rank, healthy dividend yield and a favorable Zacks Industry Rank could be a great idea for investors to gain from in the New Year.

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>