US stocks closed in the red today, the second to last trading day of a year that saw equities reach record highs. The DJIA fell over 180 points while the S&P 500 declined over 0.5% and the NASDAQ Composite slipped 0.67%.
The decline in stocks came after equities rallied last week amid year-end optimism. With the S&P 500 up nearly 30% YTD, dividend paying stocks can add to the returns of the record run in the stock market. Let’s take a look at a few coveted dividend paying stocks that can bring additional value to a portfolio in 2020.
Coca-Cola(KO - Free Report) is a calculated move to make for those who may feel that 2020 might not yield as lucrative of a return that 2019 has. The beverage giant has actively innovated its product portfolio and just recently unveiled its energy drink line this past October, which includes regular and cherry flavors, as well as zero-calorie versions of each.
Energy drinks make up a $53 billion global industry that’s expected to grow at an annual rate of over 7% to reach $86 billion by 2026. Coca-Cola research found that the US energy drink market penetration has been slow as consumers are wary of the unfamiliar brands that produce the drinks, which is why the company plans to leverage its brand recognition to tap the US market.
To add to Coca-Cola’s value, the company pays out a dividend with a solid 2.89% yield and it is likely that it will increase in the coming years. Our fiscal 2019 estimates call for earnings to grow about 1% to $2.10 per share and for net revenue to climb over 15% to $36.8 billion. Top and bottom-line growth is projected to continue in the first quarter of fiscal 2020 with a 13.8% sales jump and an 8.3% earnings increase.
McDonald’s(MCD - Free Report) is another move to make for those looking for a stock that can weather broader market turbulence. The fast food titan is coming off a third quarter where systemwide sales grew 5% year-over-year. In addition, the company continues to grow on the international front as Q3 comparable store sales rose 8.1% in its “International Developmental Licensed” segment.
The company has employed several tech initiatives like online ordering, delivery services, and order-ahead and pickup options to stimulate sales. McDonald’s massive scale also gives it the ability to withstand an economic downturn; its size gives it formidable purchasing power.
Additionally, McDonald’s just recently increased its dividend payout in the fall and it now stands at a yield of 2.52%. Our fiscal 2020 estimates forecast earnings to rise over 8% to $8.48 per share and for net revenue to pop roughly 3% to $21.7 billion.
AT&T(T - Free Report) could have a big year in 2020 as the telecommunications giant continues to develop its 5G network throughout the country. According to the company, the 5G network is up and running in 13 markets and the firm aims to have it available nationwide before the end of the first half of 2020. The new network is the next big development in wireless tech and will likely drive traffic.
In addition to the potential of the new network, AT&T just recently added to its already generous dividend payout earlier this month. The company now sports a dividend with a hefty 5.2% yield that can hold down the fort for shareholders while the 5G network takes off.
AT&T’s stock also currently trades at a buyer friendly forward multiple of 11X its forward earnings, which is below the industry average of 14.8X. Our consensus estimates for fiscal 2019 forecast revenue to climb over 6% to $181.4 billion and for earnings to pop 1.42% to $3.57 per share.
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