Lately, big money has been migrating towards the safety of income stocks paying healthy dividends.
Tariff wars, tweets and an inverted yield curve have shaken the equity markets since they hit their 52-week highs back in late July.
Individual investors are nervous too. The S&P 500 is down 4% in just the last 30 days.
Yet it’s been a different story for the dividend-paying segment of the U.S. equity market.
That segment, as measured by the iShares Dow Jones Select Dividend Index (DVY), is up 11% since the beginning of the year.
What this tells us is that throughout the year big money has been migrating toward the relative safety of dividend stocks.
If we see more downside in the market at large, the best of these income-generating equities could be the place for your money.
Here are five income stocks to consider buying now.
Investors have been flocking to utility stocks for the last year trying to avoid market meltdowns, tariff wars and declining oil prices. Utility favorite Dominion Resources (NYSE: D) has become a second home for income investors as it increased its quarterly dividend earlier this year by 10% from 91.25 cents per share to 83.5 cents. The dividend hike is the third payout increase in the last 2 years bringing the stock’s yield to a hearty 4.9% at the same time the stock price is up 25% since June. If you’re an income investor looking for a steady “as she goes” dividend play, Dominion should be on your list.
Telecommunications companies are in a battle with other media conglomerates over content distribution, but that hasn’t stopped AT&T (NYSE: T) from gaining traction in a tariff and “tweet” driven stock market. With the stock up 25% year-to-date, AT&T continues to boost its dividends and now pays out a sweet 5.78% yield to investors. Yes, there are challenges shaking up the communications and media world, but AT&T isn’t going away anytime soon and for the next two to three years the stock can be a safety-first income play for investors looking for high yields.
As there seems to be no end to the tariff wars with China in the short-term, investors have been scrambling for safe havens in a number of defensive sectors including consumer staples. Food giant General Mills (NYSE: GIS) is a consumer defensive stock as the company produces snacks, cereal and frozen foods worldwide. General Mills has been a perfect place for income investors to park money as the stock is up 42% this year and the company is paying a very healthy 4.1% annual dividend. Combine that with a consistent year-over-year earnings performance, GIS is an obvious safe haven choice for serious income investors.
Tech giant IBM (NYSE: IBM) has evolved from a typical large hi-tech growth company into a seriously high yield income stock, raising dividends every year for the last 10 years. The company’s shift into the cloud market (buying Red Hat), artificial intelligence and enterprise services is picking up traction and helped it beat the $3.07 EPS estimate in its latest earnings report. The stock has traded sideways recently but is up over 20% year-to-date and pays a very respectable 4.78% dividend. IBM may not be a long-term “buy-and-hold” stock for everyone but it’s a solid income play if you can stomach the increasing volatility.
Here we go with the contrarian income stock play. Cigarette manufacturer Philip Morris (NYSE: PM) sports a 6.30% yield while the stock was up 31% year-to-date before the “potential merger” announcement with Altria (NYSE: MO) knocked the price back. Despite the merger damper, PM beat earnings 7 out of the last 8 quarters finding growth areas in E-cigarettes, cannabis and even insurance (yes, buying Reviti, a UK life insurance firm). The merger with MO is not a slam-dunk and if you are looking for a contrarian income play that is essentially free from the tariff wars, PM is worth taking a look.
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