3 Safe Dividend Investments For Long-Term Growth
Unlike many dividend stocks, these three picks have the potential to hand investors share price gains and big dividend checks. Find out what makes these under-the-radar dividend growth stocks smart additions to your portfolio.
The stock market has tripled since the financial crisis, Yet, low rates are still squeezing savers. Investors are now faced with finding worthwhile investments in unique places.
The stock market is hitting all-time highs again.
The Dow Jones Industrial Average has now tripled since the depths of the financial crisis.
Yet, thanks to the financial crisis, we’re in a unique position — the market is hitting new highs, but interest rates remain near historical lows.
Swiss Re did some research and found that US investors have “lost” $1 trillion in income during the eight years following the financial crisis given the drop in interest rates during 2008. And things haven’t improved much since.
The days of getting a 10% rate of return on a CD (certificate of deposit) have been gone since the 1990s. Instead, CD investors have been stuck with sub 1% rates for nearly eight years.
Investors looking to save for the future are in a tough position. Do you invest when markets are making new all-time highs, or do you risk playing it safe and suffer through near all-time low yields on fixed income securities?
Still, there might be a way for investors to have their proverbial cake and eat it too. That is, investors shouldn’t fear investing in a market that’s trading at a historically expensive valuation.
The answer may lie in finding dividend-growth stocks. The three stocks below are great opportunities for generating higher returns than you’ll find with fixed-income or by investing in marketing tracking funds.
Top Dividend-Growth Stock No. 1: T. Rowe Price (NASDAQ: TROW)
Many of the major asset management companies have taken it on the chin for the last couple years. This comes as the global job market remains weak and employers continue to trim employee benefits. So, the likes of Oaktree Capital (NYSE: OAK) and Apollo Management (NYSE: APO) are both down more than 20% since the start of 2014.
T. Rowe Price has over $800 billion in assets under management and is one of the largest asset managers in the US but has seen its shares crumble 15% in just the last two years. It’s now paying out a 3.2% dividend yield and boasts a 30-year streak of consecutive dividend increases.
Over 85% of T. Rowe Price’s mutual funds have beat its peers on a 10-year basis. Going forward, T. Rowe Price should benefit nicely from the aging population. Its target-date retirement funds have lead to sizable capital inflows for T. Rowe Price.
Its target-date fund assets have grown 10-fold over the last decade. Now, retirement accounts make up two-thirds of its managed funds and could grow even bigger as more Baby Boomers enter retirement age.
Top Dividend-Growth Stock No. 2: Gilead Sciences (NASDAQ: GILD)
The iShares NASDAQ Biotechnology ETF (NASDAQ: IBB) has fallen 20% since mid-2015, which comes as the political environment could put a damper on drug pricing. Shares of Gilead Sciences have fallen 27% during the last 18 months. Despite the headwinds, there are plenty of other positives for the drug industry and Gilead, including a rise in clinical and drug approvals.
Gilead, despite what some consider an over-reliance, has a stranglehold on the HIV and HCV markets. Dividends are unusual in the biotechnology space, with Gilead being one of just a couple stocks paying a dividend at all. Much less a hefty 3% yield. The company started paying a dividend in 2015 and is still paying out less than 25% of its earnings via dividends.
The uncertainty in biotechnology should help create merger opportunities as well. Gilead has $12 billion in cash that it can put to work toward a buyout. So, the core HIV and HCV business will be more than enough to support the current dividend, but Gilead is also building a pipeline outside of these core markets. Again, that could be where a focus on acquisitions could help.
Top Dividend-Growth Stock No. 3: Macy’s (NYSE: M)
Thanks to Amazon.com (NASDAQ: AMZN), the retail industry has been up in arms for years. The Select Sector S&P Retail SPDR (NYSE: XRT) has fallen nearly 20% since mid-2015. However, Macy’s shareholders have suffered much worse. The retailer has fallen over 55% during the same period.
Macy’s is still paying a hefty 4.8% dividend yield and managed to increase its annual dividend for six straight years. Macy’s also has a strong portfolio of owned real estate that could be a catalyst for the retailer if it chooses to aggressive with monetizing it.
Macy’s has grown itself into one of the largest department stores in the U.S. and has changed the retail game for the better. This includes developing an omnichannel presence that blends digital and physical shopping, as well as localizing merchandise to better fit the needs/wants of shoppers.
This isn’t the first time Macy’s has struggled, however. During the height of the financial crisis, shares of Macy’s sunk to nearly $5 a share. For surviving this downturn, Macy’s will focus on its purchasing power to lower costs and boosting its higher margin private label offerings.
In the end, building a long-term-focused portfolio is about more than market timing. So, despite the fact that we’re trading at all-time highs for all the major indices, there are pockets of the market that look appealing right now — think: getting solid and growing dividends at a unique discount.
But, while the stocks above are solid investments, there are a certain group of high-yield stocks that I track and research that can accelerate the dividend income you earn. I have strict requirements that every high-yield stock must meet before I recommend it to my Dividend Hunter newsletter subscribers. Every stock that I recommend must have a high potential for dividend growth and a large margin of safety in their cash flows.
Now, there are 20 high-yield stocks currently available through my Monthly Dividend Paycheck Calendar, a system for generating a recurring monthly income stream from the market’s most stable high-yield stocks.
The Calendar tells you when you need to own the stock, when to expect your next payout, and how much you can make from these low-risk, buy and hold stocks paying upwards of 12%, 13%, even 18%. I’ve done all the research and hard work, you just have to pick the stocks and how much you want to get paid.
The next critical date is Friday, March 17th (it’s closer than you think), so you’ll want to take action before that date to make sure you don’t miss out. This time, we’re gearing up for an extra $4,109 in payouts by March 30th, but only if you’re on the list before March 17th. Click here to find out more about this unique, easy way of collecting monthly dividends.
Category: Dividend Stocks
