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3 Safe Dividend-Paying Tech Stocks to Buy for Coronavirus Volatility
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U.S. stocks fell Wednesday as Wall Street reacts to rough earnings results from Bank of America (BAC - Free Report) , JP Morgan (JPM - Free Report) , and other banking giants. Plus, U.S. retail sales fell 8.7% in March as the coronavirus social distancing efforts brought a halt to large swaths of the economy.
Wednesday’s decline came as some investors likely start to take a step back and examine the broader economic picture, after a rapid three-week run saw the S&P 500 jump over 25% from its March 23 lows.
Nearly 17 million people in the U.S. have already applied for unemployment benefits since the coronavirus pandemic began to shut down large chunks of the U.S. economy, practically overnight. And this number is set to climb when this week’s figures come out.
Meanwhile, corporate earnings are projected to plummet nearly 14% in the Q1 and over 24% in the second quarter, based on our most recent Zacks data—with the outlook rapidly deteriorating in recent weeks (also read: Shaky Start to Q1 Earnings Season).
Clearly, there signs of hope on the coronavirus front and that social distancing measures are working to flatten the curve. There are now calls to start to reopen some parts of the U.S. and European economies in an effort to slowly return to normal.
That said, market volatility is likely to remain amid the uncertainty, even though the Fed and the U.S. government are providing support. Stocks could fall again and perhaps even test their March 23 lows. But that doesn’t mean that most investors will want to stay completely on the sidelines because no one knows the future—just think if you pulled out entirely right before the recent market bottom.
With this in mind, let’s take a look at three safe-haven, dividend-paying tech stocks that should help investors weather the current coronavirus storm. They might also prove to be steals at their current prices six months or a year from now, even if the market slips again…
Verizon is the largest U.S. wireless carrier by subscribers. The telecom powerhouse operates within a recession-resilient industry because people are less likely to cut wireless and broadband services during downturns, especially when they are stuck inside. Verizon has also not taken on a ton of debt to fuel expansion into new industries like rival AT&T (T - Free Report) . Even before the coronavirus outbreak, VZ was focused on various cost-cutting measures as it ramps up its 5G push, which requires a large amount of capital spending.
VZ closed 2019 on a high note, after it recorded its most Q4 wireless adds in six years. Our current Zacks estimates call for its fiscal 2020 and 2021 earnings and revenue to climb despite the economic downturn. VZ shares have outpaced their industry and AT&T in 2020, and are down just 3% in the last 12 months, which roughly matches the S&P 500 and crushes its industry’s 12% average decline—VZ is up 18% over a two-year stretch vs. AT&T’s 16% decline.
Verizon is currently a Zacks Rank #3 (Hold) that sports an overall “B” VGM score and its Wireless National industry rests in the top 11% of our more than 250 Zacks industries. On top of that, VZ’s dividend yield comes in at an impressive 4.32%. This crushes the S&P 500’s 2.08% average and its payout ratio rests at a solid and sustainable 51%. Investors should note that VZ is set to release its Q1 FY20 earnings results on Friday, April 24.
Microsoft is about as safe as they come at the moment, thanks in large part to its expansion into cloud computing. Today, Microsoft is an enterprise cloud leader alongside Amazon (AMZN - Free Report) . MSFT did warn Wall Street back in late February that it was likely to miss its quarterly sales guidance for its More Personal Computing segment. Yet, investors should be happy to note that at the time its Q3 guidance “remain unchanged” for its other units. This includes its key Intelligent Cloud unit that saw its sales surge 27% last quarter.
MSFT’s other segments have continued to evolve and expand as well. The company also owns LinkedIn, which saw its revenue jump 24% last quarter. Plus, its Teams business is tailor-made for the current stay-at-home environment and it’s ready to take on business and video communication firms such as Slack and Zoom (ZM - Free Report) .
Peeking ahead, Microsoft’s adjusted earnings are projected to surge over 17% and 11.5%, respectively in fiscal 2020 and 2021, with revenue set to jump 11.6% and 11%. These estimates mark the continuation of strong growth in recent years and show how resilient MSFT is to the current economic downturn—Microsoft is set to report on April 29.
MSFT stock, which is a Zacks Rank #3 (Hold), has climbed roughly 8% in 2020, against the S&P 500’s 12% coronavirus-driven decline. And Microsoft still rests over 10% below its highs. Plus, the tech powerhouse consistently raises its dividend payout, repurchases stock, and sits on over $130 billion in cash and equivalents. The company’s current dividend yield of 1.19%, which is not artificially inflated by a falling stock price, crushes the 10-year U.S. treasury’s 0.64%.
Apple is another $1 trillion-plus market cap powerhouse that appears to be a straightforward safe-haven. That said, AAPL is far more exposed to consumer spending since it sells high-priced electronics and it flashed one of the earliest warning signs about the coronavirus. Apple on February 17 said it didn’t expect to meet its previously announced revenue guidance due to setbacks in China in terms of demand and production. AAPL then on March 13 announced that it would close all of its “retail stores outside of Greater China until March 27.”
Clearly, things have gotten even worse in the U.S. since then, but the Chinese economy is slowly restarting and customers can still shop for Apple products online. Plus, Apple has expanded its non-iPhone business in recent years. This includes its key services unit, which features its app store, Apple Music, its new Apple TV+ that hopes to compete alongside Netflix (NFLX - Free Report) , and more. Nonetheless, Apple’s Q2 fiscal 2020 sales are projected to fall nearly 7%, with its adjusted quarterly earnings expected to dip 12.6%.
Despite the expected short-term setbacks, Apple still appears to be a safe long-term play. AAPL stock is down just 3% in 2020 and hovers 13% off its 52-week highs. This might offer an attractive buying opportunity for the global titan that will likely be able to withstand even the worst-case coronavirus pandemic scenarios.
Like MSFT, Apple buys back stock and sits on billions of dollars in cash. Apple’s 1.08% dividend yield also provides income and is far from boosted since the stock is still up over 40% in the last 12 months. That said, some investors might want to wait for Apple to release its financial results on Thursday, April 30.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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3 Safe Dividend-Paying Tech Stocks to Buy for Coronavirus Volatility
U.S. stocks fell Wednesday as Wall Street reacts to rough earnings results from Bank of America (BAC - Free Report) , JP Morgan (JPM - Free Report) , and other banking giants. Plus, U.S. retail sales fell 8.7% in March as the coronavirus social distancing efforts brought a halt to large swaths of the economy.
Wednesday’s decline came as some investors likely start to take a step back and examine the broader economic picture, after a rapid three-week run saw the S&P 500 jump over 25% from its March 23 lows.
Nearly 17 million people in the U.S. have already applied for unemployment benefits since the coronavirus pandemic began to shut down large chunks of the U.S. economy, practically overnight. And this number is set to climb when this week’s figures come out.
Meanwhile, corporate earnings are projected to plummet nearly 14% in the Q1 and over 24% in the second quarter, based on our most recent Zacks data—with the outlook rapidly deteriorating in recent weeks (also read: Shaky Start to Q1 Earnings Season).
Clearly, there signs of hope on the coronavirus front and that social distancing measures are working to flatten the curve. There are now calls to start to reopen some parts of the U.S. and European economies in an effort to slowly return to normal.
That said, market volatility is likely to remain amid the uncertainty, even though the Fed and the U.S. government are providing support. Stocks could fall again and perhaps even test their March 23 lows. But that doesn’t mean that most investors will want to stay completely on the sidelines because no one knows the future—just think if you pulled out entirely right before the recent market bottom.
With this in mind, let’s take a look at three safe-haven, dividend-paying tech stocks that should help investors weather the current coronavirus storm. They might also prove to be steals at their current prices six months or a year from now, even if the market slips again…
Verizon (VZ - Free Report)
Verizon is the largest U.S. wireless carrier by subscribers. The telecom powerhouse operates within a recession-resilient industry because people are less likely to cut wireless and broadband services during downturns, especially when they are stuck inside. Verizon has also not taken on a ton of debt to fuel expansion into new industries like rival AT&T (T - Free Report) . Even before the coronavirus outbreak, VZ was focused on various cost-cutting measures as it ramps up its 5G push, which requires a large amount of capital spending.
VZ closed 2019 on a high note, after it recorded its most Q4 wireless adds in six years. Our current Zacks estimates call for its fiscal 2020 and 2021 earnings and revenue to climb despite the economic downturn. VZ shares have outpaced their industry and AT&T in 2020, and are down just 3% in the last 12 months, which roughly matches the S&P 500 and crushes its industry’s 12% average decline—VZ is up 18% over a two-year stretch vs. AT&T’s 16% decline.
Verizon is currently a Zacks Rank #3 (Hold) that sports an overall “B” VGM score and its Wireless National industry rests in the top 11% of our more than 250 Zacks industries. On top of that, VZ’s dividend yield comes in at an impressive 4.32%. This crushes the S&P 500’s 2.08% average and its payout ratio rests at a solid and sustainable 51%. Investors should note that VZ is set to release its Q1 FY20 earnings results on Friday, April 24.
Microsoft (MSFT - Free Report)
Microsoft is about as safe as they come at the moment, thanks in large part to its expansion into cloud computing. Today, Microsoft is an enterprise cloud leader alongside Amazon (AMZN - Free Report) . MSFT did warn Wall Street back in late February that it was likely to miss its quarterly sales guidance for its More Personal Computing segment. Yet, investors should be happy to note that at the time its Q3 guidance “remain unchanged” for its other units. This includes its key Intelligent Cloud unit that saw its sales surge 27% last quarter.
MSFT’s other segments have continued to evolve and expand as well. The company also owns LinkedIn, which saw its revenue jump 24% last quarter. Plus, its Teams business is tailor-made for the current stay-at-home environment and it’s ready to take on business and video communication firms such as Slack and Zoom (ZM - Free Report) .
Peeking ahead, Microsoft’s adjusted earnings are projected to surge over 17% and 11.5%, respectively in fiscal 2020 and 2021, with revenue set to jump 11.6% and 11%. These estimates mark the continuation of strong growth in recent years and show how resilient MSFT is to the current economic downturn—Microsoft is set to report on April 29.
MSFT stock, which is a Zacks Rank #3 (Hold), has climbed roughly 8% in 2020, against the S&P 500’s 12% coronavirus-driven decline. And Microsoft still rests over 10% below its highs. Plus, the tech powerhouse consistently raises its dividend payout, repurchases stock, and sits on over $130 billion in cash and equivalents. The company’s current dividend yield of 1.19%, which is not artificially inflated by a falling stock price, crushes the 10-year U.S. treasury’s 0.64%.
Apple (AAPL - Free Report)
Apple is another $1 trillion-plus market cap powerhouse that appears to be a straightforward safe-haven. That said, AAPL is far more exposed to consumer spending since it sells high-priced electronics and it flashed one of the earliest warning signs about the coronavirus. Apple on February 17 said it didn’t expect to meet its previously announced revenue guidance due to setbacks in China in terms of demand and production. AAPL then on March 13 announced that it would close all of its “retail stores outside of Greater China until March 27.”
Clearly, things have gotten even worse in the U.S. since then, but the Chinese economy is slowly restarting and customers can still shop for Apple products online. Plus, Apple has expanded its non-iPhone business in recent years. This includes its key services unit, which features its app store, Apple Music, its new Apple TV+ that hopes to compete alongside Netflix (NFLX - Free Report) , and more. Nonetheless, Apple’s Q2 fiscal 2020 sales are projected to fall nearly 7%, with its adjusted quarterly earnings expected to dip 12.6%.
Despite the expected short-term setbacks, Apple still appears to be a safe long-term play. AAPL stock is down just 3% in 2020 and hovers 13% off its 52-week highs. This might offer an attractive buying opportunity for the global titan that will likely be able to withstand even the worst-case coronavirus pandemic scenarios.
Like MSFT, Apple buys back stock and sits on billions of dollars in cash. Apple’s 1.08% dividend yield also provides income and is far from boosted since the stock is still up over 40% in the last 12 months. That said, some investors might want to wait for Apple to release its financial results on Thursday, April 30.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>