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8 Dividend Stocks to Buy Now in 2020

8 Dividend Stocks to Buy NowPosted on Thursday, January 30th, 2020 by MarketBeat Staff

Dividend stocks are always in fashion. Income investors find that dividend stocks can be a replacement for low-yielding Treasury bonds and other bond options. But dividend stocks can also play a role in the growth investor’s portfolio. Dividend stocks by nature tend to lag behind the broader market. This is due to the nature of the companies that issue dividends. In many cases, these are mature companies who have the liquidity to not only use profits for growth but also to reward shareholders.

However, in a bull market dividend stocks can also provide a significant amount of growth. This can provide investors of all styles with a nice total return. For those that are new to dividend stocks, it’s important to know what to look for in a dividend stock. Yield is important, but it’s not everything.

What you’re looking for is a company that has a proven history of not only issuing dividends but ideally increasing the amount of those dividends on an annual basis.

In this presentation, we’ll highlight eight dividend stocks in various sectors that are the best to buy. And for most of these stocks, they’re a good buy today and well into the future.

#1 - Walmart (NYSE:WMT)

Walmart logo

Walmart (NYSE:WMT) - It wasn’t long ago that investors were writing the eulogy for Walmart (NYSE:WMT). The suspicion was that Amazon (NASDAQ:AMZN) which continues to dominate the e-commerce space, was going to move in Walmart’s grocery sector. This would take away a significant lever Walmart had available to fend off the e-commerce giant. However, Walmart like Target (NYSE:TGT), has become one of the best examples of the “new retail”. The company has proven to be nimble enough to embrace an omnichannel model that is allowing the company to not only survive, but thrive.

In 2019, WMT stock rose by over 30%. If the company reports positive earnings for the fourth quarter, it should be well on its way to another solid year. And that’s good news for dividend investors. Lowe’s has raised its dividend every year for the last 45 years and there’s no reason to think that will change in 2020. It has a dividend yield of 1.8%, which compares favorably to two of its chief rivals Target at 2.1% and Costco (NASDAQ:COST) at 0.8%.

About Walmart
Walmart Inc. engages in the retail and wholesale operations in various formats worldwide. The company operates through three segments: Walmart U.S., Walmart International, and Sam's Club. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, drugstores, and convenience stores; membership-only warehouse clubs; e-commerce Websites, such as walmart.com, jet.com, shoes.com, and samsclub.com; and mobile commerce applications. The company offers grocery products, including meat, produce, natural and organics, deli and bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables, such as health and beauty aids, baby products, household chemicals, paper goods, and pet supplies; and health and wellness products. It also provides electronics, cameras and supplies, photo processing services, wireless, movies, music, video games, and books; stationery, automotive, hardware and paint, sporting goods, and outdoor living and horticulture; apparel for women, girls, men, boys, and infants, as well as shoes, jewelry, and accessories; and home furnishings, housewares and small appliances, bedding, home decor, toys, fabrics, crafts, and seasonal merchandise, as well as brand name merchandise. In addition, the company offers fuel and financial services and related products, including money orders, prepaid cards, wire and money transfers, check cashing, and bill payment. It operates approximately 11,300 stores and various e-commerce Websites under the 58 banners in 27 countries. The company was formerly known as Wal-Mart Stores, Inc. and changed its name to Walmart Inc. in February 2018. Walmart Inc. was founded in 1945 and is based in Bentonville, Arkansas.

Current Price: $113.78
Consensus Rating: Buy
Ratings Breakdown: 17 Buy Ratings, 11 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $124.80 (9.7% Upside)

#2 - Lowes (NYSE:LOW)


Lowe’s (LOW) -You can argue that for the home building sector, Home Depot (NYSE:HD) is a better stock, and I couldn’t put up much of an argument. But as a pure dividend stock, I’ll give Lowe’s (NYSE:LOW) the nod. One of the catalysts for the company is the housing market that is starting to heat up. With interest rates likely to stay at their current levels, prospective buyers seem to be warming up to the idea that now is the time to get in on historically low rates. And with consumer confidence remaining high as well as low unemployment, this is a trend that is likely to remain in place throughout 2020.

Lowe’s does have some work to do in terms of its e-commerce operation. But that shouldn’t be an issue to the security and growth of its dividend. The company has increased its annual dividend for over 50 years, in many cases raising it at double-digit rates. All of this is to say, you can rely on the company’s dividend. And you may even get some growth.

About Lowe's Companies
Lowe's Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States, Canada, and Mexico. The company offers a line of products for construction, maintenance, repair, remodeling, and decorating. It provides home improvement products in various categories, such as lumber and building materials, appliances, seasonal and outdoor living, tools and hardware, fashion fixtures, rough plumbing and electrical, paint, millwork, lawn and garden, flooring, and kitchens. It also offers installation services through independent contractors in various product categories; extended protection plans; and in-warranty and out-of-warranty repair services. The company sells its national brand-name merchandise and private branded products to homeowners, renters, and professional customers. As of February 1, 2019, it operated 2,015 home improvement and hardware stores. The company also sells its products through online sites comprising Lowes.com and Lowesforpros.com; and through mobile applications. Lowe's Companies, Inc. was founded in 1946 and is based in Mooresville, North Carolina.

Current Price: $113.30
Consensus Rating: Buy
Ratings Breakdown: 21 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $130.70 (15.4% Upside)

#3 - Southern Company (NYSE:SO)

Southern logo

Southern Company (SO) - When considering dividend stocks, utilities are always a solid choice. Utilities are highly regulated and they frequently operate as monopolies in certain regions. This lack of competition is bad for consumers, but great for investors who rely on consistent revenue to support a dividend.

But not all utilities provide the maximum benefit for investors. Size doesn’t always matter. But in the case of Southern Company (NYSE:SO), it matters a lot. The company is one of the largest utilities in the country. And it’s diversified in both electric and natural gas so it has reliable revenue that is less affected by the volatility of the commodities market.

Southern has not cut its dividend in over 70 years and it currently has a dividend yield of around 3.5%. If there’s any concern about SO stock at the moment, it’s that it may be a little expensive. But a larger concern may be that the company is currently investing in new infrastructure that will likely keep any dividend growth muted since the company will deploy the cash for other purposes.

About Southern
The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. It operates in four segments: Gas Distribution Operations, Gas Pipeline Investments, Wholesale Gas Services, and Gas Marketing Services. The company also constructs, acquires, owns, and manages power generation assets, including renewable energy facilities and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, wholesale gas services, and gas pipeline investments operations. It owns and/or operates 33 hydroelectric generating stations, 26 fossil fuel generating stations, 3 nuclear generating stations, 13 combined cycle/cogeneration stations, 40 solar facilities, 9 wind facilities, and 1 biomass facility; and constructs, operates, and maintains 75,200 miles of natural gas pipelines and 14 storage facilities with total capacity of 158 Bcf to provide natural gas to residential, commercial, and industrial customers. The company serves approximately 9 million electric and gas utility customers. It also provides products and services in the areas of distributed generation infrastructure, energy efficiency, and utility infrastructure. In addition, the company offers digital wireless communications services with various communication options, including push to talk, cellular service, text messaging, wireless Internet access, and wireless data. The Southern Company was founded in 1945 and is headquartered in Atlanta, Georgia.

Current Price: $66.19
Consensus Rating: Hold
Ratings Breakdown: 1 Buy Ratings, 9 Hold Ratings, 3 Sell Ratings.
Consensus Price Target: $63.21 (-4.5% Upside)

#4 - AT&T (NYSE:T)

AT&T logo

AT&T (T) - You can’t have a discussion about investing in 2020 without talking about 5G. But honestly, that’s not the reason to consider AT&T (NYSE:T) as a great dividend stock. AT&T has a massive dividend yield of over 5.5%. The company can support the dividend because it has a wireless subscriber base of over 150 million consumers.

Wireless communications make up the bulk of AT&T’s revenue and earnings. And while that isn’t changing, it may be getting supplemented now that it is entering the streaming space now that it has completed its merger with Time-Warner. Some analysts are concerned that AT&T may be late to the streaming game and others point to DirecTV as a dying business model. But neither of those issues should affect the company’s ability to generate free cash flow. This means AT&T should be able to pay down the debt from these acquisitions while still providing and increasing its dividend, which the company has done for 35 years.

About AT&T
AT&T Inc. provides telecommunication, media, and technology services worldwide. The company operates through four segments: Communications, WarnerMedia, Latin America, and Xandr. The Communications segment provides wireless and wireline telecom, video, and broadband and Internet services; video entertainment services using satellite, IP-based, and streaming options; and audio programming services under the AT&T, Cricket, AT&T PREPAID, and DIRECTV brands to residential and business customers. This segment also sells handsets, wirelessly enabled computers, and wireless data cards manufactured by various suppliers for use with company's voice and data services, as well as various accessories, such as carrying cases and hands-free devices through the company-owned stores, agents, and third-party retail stores. The WarnerMedia segment primarily produces, distributes, and licenses television programming and feature films; distributes home entertainment products in physical and digital formats; and produces and distributes mobile and console games, and consumer products, as well as offers brand licensing services. It also operates cable networks, multichannel premium pay television, and over-the-top services; and digital media properties. The Latin America segment offers video entertainment and audio programming services under the DIRECTV and SKY brands primarily to residential customers; pay-TV services, including HD sports video content; and postpaid and prepaid wireless services under the AT&T and Unefon brands, as well as sells various handsets through company-owned stores, agents, and third-party retail stores. The Xandr segment provides digital advertising services. The company was formerly known as SBC Communications Inc. and changed its name to AT&T Inc. in November 2005. AT&T Inc. was founded in 1983 and is based in Dallas, Texas.

Current Price: $37.10
Consensus Rating: Hold
Ratings Breakdown: 9 Buy Ratings, 10 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $40.03 (7.9% Upside)

#5 - Coca-Cola (NYSE:KO)

The Coca-Cola logo

Coca-Cola (KO) When it comes to a tried-and-true dividend stock, it’s hard to beat Coca-Cola (NYSE:KO). And investors can use the argument, if it’s a good enough for Warren Buffett, it’s good enough for you. But is the stock too safe? The potential anchor to the stock has been that soft drinks, particularly of the sugary kind that Coca-Cola is known for, have fallen out of favor. Part of it is due to concerns over childhood obesity and some is because of the changing tastes of consumers who are demanding optionality in every aspect of their life. But Coca-Cola is navigating this pivot well. First, they’ve invested in other brands. This strategy is providing an effective hedge against potential revenue losses to the flagship brands.

And the company just released its own energy drink, Coke Energy, in January and the company is looking to get into the caffeinated seltzer and flavored water arena. Analysts are becoming bullish on the company in advance of its earnings which the company reports on January 30.

About The Coca-Cola
The Coca-Cola Company, a beverage company, manufactures and distributes various nonalcoholic beverages worldwide. The company provides sparkling soft drinks; water, enhanced water, and sports drinks; juice, dairy, and plant-based beverages; teas and coffees; and energy drinks. It also offers concentrates, syrups, beverage bases, source waters, and powders/minerals, as well as fountain syrups to fountain retailers, such as restaurants and convenience stores. The company sells its products primarily under the Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, Fanta, Schweppes, Sprite, Thums Up, Aquarius, Dasani, glacéau smartwater, glacéau vitaminwater, Ice Dew, I LOHAS, Powerade, AdeS, Del Valle, innocent, Minute Maid, Minute Maid Pulpy, Simply, ZICO, Ayataka, Costa, FUZE TEA, Georgia, Gold Peak, and HONEST TEA brands. The Coca-Cola Company offers its beverage products through a network of company-owned or controlled bottling and distribution operators, as well as through independent bottling partners, distributors, wholesalers, and retailers. The company was founded in 1886 and is headquartered in Atlanta, Georgia.

Current Price: $57.60
Consensus Rating: Buy
Ratings Breakdown: 12 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $60.29 (4.7% Upside)

#6 - AbbVie (NYSE:ABBV)

AbbVie logo

AbbVie (ABBV) - Pharmaceutical company AbbVie (NYSE:ABBV) has been an exceptional stock for growth and income since it became a separate entity from Abbott Labs in 2013. The company has increased its dividend by an average of nearly 25% per year. In fact, AbbVie has increased its dividend in each of the last 45 years. This is music to investors’ ears, particularly when you consider the stock has a juicy 5.65% dividend yield.

If there’s any concern about the future growth of the stock, it stems from the expiring patent on their best-selling drug Humira. The patent for Humira expired in 2018 and the U.S. patent will expire in 2023. But the good news is that in 2019, international sales did not decline as much as investors feared. And in 2019, the market research firm EvalutePharma was projecting Humira sales to remain over $15 billion in 2024. And with many other drugs in the company’s pipeline, the company is projecting $35 billion in additional revenue on top of what it may get from Humira. Pharmaceutical stocks can be volatile. But not when they have a pipeline like what investors get from AbbVie.

About AbbVie
AbbVie Inc. discovers, develops, manufactures, and sells pharmaceutical products in the United States, Japan, Germany, Canada, Italy, Spain, the Netherlands, the United Kingdom, Brazil, and internationally. The company offers HUMIRA, a therapy administered as an injection for autoimmune and intestinal Behçet's diseases; IMBRUVICA to treat adult patients with chronic lymphocytic leukemia (CLL), small lymphocytic lymphoma (SLL), mantle cell lymphoma, waldenström's macroglobulinemia, marginal zone lymphoma, and chronic graft versus host disease; VENCLEXTA, a BCL-2 inhibitor used to treat adults with CLL or SLL; VIEKIRA PAK, an interferon-free therapy to treat adults with genotype 1 chronic hepatitis C virus (HCV); TECHNIVIE to treat adults with genotype 4 HCV infection; and MAVYRET to treat patients with chronic HCV genotype 1-6 infection. It also provides KALETRA, an anti-human immunodeficiency virus (HIV)-1 medicine used with other anti-HIV-1 medications to maintain viral suppression in HIV-1 patients; NORVIR, a protease inhibitor indicated in combination with other antiretroviral agents to treat HIV-1; and SYNAGIS to prevent respiratory syncytial virus infection at-risk infants. In addition, the company offers AndroGel, a testosterone replacement therapy for males; CREON, a pancreatic enzyme therapy for exocrine pancreatic insufficiency; Synthroid to treat hypothyroidism; and Lupron to treat prostate cancer, endometriosis, and central precocious puberty, as well as anemia. Further, it provides Duopa and Duodopa, a levodopa-carbidopa intestinal gel to treat Parkinson's disease; Sevoflurane, an anesthesia product; and ORILISSA, a non-peptide small molecule gonadotropin-releasing hormone antagonist for women with moderate to severe endometriosis pain. It has collaborations with Alector, Inc.; Janssen Biotech, Inc.; Galapagos; Bristol-Myers Squibb Company; and Calico Life Sciences LLC. The company was incorporated in 2012 and is headquartered in North Chicago, Illinois.

Current Price: $88.41
Consensus Rating: Buy
Ratings Breakdown: 8 Buy Ratings, 5 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $89.30 (1.0% Upside)

#7 - Ventas (NYSE:VTR)

Ventas logo

Ventas (VTR) - One sector that investors look to for attractive dividends are real estate investment trusts (REITs). REITs lease out residential and commercial space to consumers and businesses. By law, REITs are required to pay out at least 90% of their profits in the form of a dividend. In one sense, this makes them similar to utility stocks. And like utility stocks, not all REITs are the same. Ventas (NYSE:VTR) for example covers the healthcare sector. That includes hospitals, medical centers, and senior living facilities.

Ventas is positioned for the inevitable aging of the baby boom generation. The company misread the market in 2019 as supply exceeded demand in the senior housing space. However, this appears to be a temporary bump in the road. Ventas may have a balance sheet that has more leverage than its peers, but for investors who are willing to ride out potential short-term volatility, Ventas looks like a solid dividend stock for years to come.

About Ventas
Ventas, Inc., an S&P 500 company, is a leading real estate investment trust. Its diverse portfolio of approximately 1,200 assets in the United States, Canada and the United Kingdom consists of seniors housing communities, medical office buildings, university-based research and innovation centers, inpatient rehabilitation and long-term acute care facilities, and health systems. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. References to “Ventas” or the “Company” mean Ventas, Inc. and its consolidated subsidiaries unless otherwise expressly noted.

Current Price: $59.49
Consensus Rating: Hold
Ratings Breakdown: 2 Buy Ratings, 12 Hold Ratings, 3 Sell Ratings.
Consensus Price Target: $64.78 (8.9% Upside)

#8 - Royal Dutch Shell (NYSE:RDS.A)

Royal Dutch Shell logo

Royal Dutch Shell (RDS) - The issue of climate change will remain a hot topic in the run-up to the 2020 Presidential Election. The common-sense reality is that whoever wins the White House, the country is still going to be reliant on traditional carbon fuels for some time. Even as the economic argument for renewables (like solar and wind) begins to win the day, there is an infrastructure that has to be built. That will keep demand steady.

Enter Royal Dutch Shell (NYSE:RDS.A) is one of the giants in this space and brings a substantial 6.2% dividend yield to the table. Shell is not only well-positioned for the energy demands of today, but they are making strategic investments to position themselves for where the energy sector may be headed. This includes buying into solar farms and electric charging stations. In fact, Shell plans to spend as much as $3 billion annually over the next five years. All of which makes a compelling case for the company and its dividend.

About Royal Dutch Shell
Royal Dutch Shell plc operates as an energy and petrochemical company worldwide. The company operates through Integrated Gas, Upstream, and Downstream segments. It explores for, and extracts crude oil, natural gas, and natural gas liquids; markets and transports oil and gas; produces gas-to-liquids fuels and other products; and operates upstream and midstream infrastructure necessary to deliver gas to market. The company also markets and trades natural gas, LNG, crude oil, electricity, carbon-emission rights; and markets and sells liquefied natural gas as a fuel for heavy-duty vehicles and marine vessels. In addition, it trades in and refines crude oil and other feed stocks, such as gasoline, diesel, heating oil, aviation fuel, marine fuel, biofuel, lubricants, bitumen, and sulphur; produces and sells petrochemicals; and manages oil sands activities. Further, the company produces base chemicals comprising ethylene, propylene, and aromatics, as well as intermediate chemicals, such as styrene monomer, propylene oxide, solvents, detergent alcohols, ethylene oxide, and ethylene glycol. Royal Dutch Shell plc was founded in 1907 and is headquartered in The Hague, the Netherlands.

Current Price: $45.75
Consensus Rating: Hold
Ratings Breakdown: 6 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $64.33 (40.6% Upside)

With the stock market continuing to challenge, or exceed, previous records, it can be difficult to pay attention to dividend stocks. But their stability offers benefits that provide growth in any market. First, a solid, regular dividend points to a company that is financially healthy.

Second, when a company builds a history of paying and increasing, its dividend, it will go to great lengths to continue to do so. Many companies that have cut their dividend or stopped issuing them altogether have fallen out of favor with investors and have never recovered.

Finally, in a bull market such as the one investors continue to enjoy, dividend stocks can provide an attractive level of growth that lets investors double-dip, particularly with stocks that allow them to reinvest their dividends.

The companies that we’ve listed in this presentation have a long history of issuing dividends and merit consideration in every investor’s portfolio.

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