The stock market staged another comeback on Tuesday. The S&P 500 rose 0.16%, and the tech-heavy Nasdaq Composite climbed 1.75%. However, the Dow Jones Industrial Average closed 0.4% lower.

However, the yield curve remains inverted, which, if sustained, could mean a warning sign for the economy. The Fed’s aggressive stance on inflation has raised worries about a potential recession.

Amid this volatile market scenario, investors are seeking consistency. And dividends can provide a stable source of income and help withstand market volatility. Dividend funds have taken in $3 billion in June.

Hence, we think dividend stocks AT&T Inc. (T) and Enterprise Products Partners L.P. (EPD) yielding more than 5% might be solid additions to one’s portfolio to weather the market storm. These stocks are rated Buy in our proprietary POWR Ratings system.

AT&T Inc. (T)

T is a telecommunication, media, and telecommunication services, global provider. The company operates through the Communications and Latin America segments. It operates AT&T, Cricket, AT&T PREPAID, AT&T Fiber, and Unefon brand names.

On June 28, the city of Amarillo in Texas announced a $24 million project with the company for building a fiber network to more than 22,000 customer locations throughout the city. Fred Maldonado, Regional Vice President, AT&T Texas, said, “We have a long history of connecting businesses and residents in Amarillo, and we look forward to working with the city of Amarillo on making plans to bring high-speed internet to those who need it most.”

On May 10, T launched its location-based routing for the automatic transmission of wireless 9-1-1 calls to the appropriate 9-1-1 call centers nationwide. The country-wide rollout of the offering was expected to be completed by the end of June.

On June 28, T declared a quarterly dividend of $0.2775 per share on its common shares. The company also declared quarterly dividends on its 5.000% Perpetual Preferred Stock, Series A, and its 4.750% Perpetual Preferred Stock, Series C. The dividends are payable to shareholders on August 1. Its annual dividend of $1.11 yields 5.24% on its current share price. T has a 55.51% payout ratio.

T’s net cash provided by financing activities increased 31.2% year-over-year to $24.25 billion in the fiscal first quarter of 2022. The company’s cash, cash equivalents, and restricted cash balance came in at $38.65 billion, registering an improvement of 238.2% from the prior-year quarter.

Analysts expect T’s EPS to come in at $0.61 for the quarter ended June 2022.

T’s stock has gained 13.9% year-to-date and 17.3% over the past three months to close its last trading session at $21.17.

T’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

T has a Sentiment grade of B. In the 20-stock Telecom – Domestic industry, it is ranked #5. Click here to see the additional POWR Ratings for T (Growth, Value, Momentum, Stability, and Quality).

Enterprise Products Partners L.P. (EPD)

EPD operates as a midstream energy services provider of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. The company operates through the four broad segments of NGL Pipelines & Services; Crude Oil Pipelines & Services; Natural Gas Pipelines & Services; and Petrochemical & Refined Products Services.

On April 25, EPD subsidiary Enterprise Products Operating LLC and Occidental Petroleum Corporation (OXY) subsidiary Oxy Low Carbon Ventures, LLC announced the execution of a letter of intent to work toward a potential carbon dioxide transportation and sequestration solution for the Texas Gulf Coast. The joint project is expected to benefit the company.

On April 7, EPD declared a quarterly distribution of $0.465 per unit, which was payable to common unitholders on May 12. This cumulates to a $1.86 annualized dividend and yields 7.75% on its current share price. The company’s dividend payouts have increased at a 1.8% CAGR over the past three years and a 2.3% CAGR over the past five years. EPD has a record of 23 years of consecutive dividend growth.

For the fiscal first quarter ended March 31, EPD’s revenues increased 42.1% year-over-year to $13.01 billion. Non-GAAP distributable cash flow rose 5.8% from the prior-year quarter to $1.84 billion. Net cash flow provided by operating activities improved 6% from the same period the prior year to $2.15 billion.

The consensus EPS estimate of $0.59 for the quarter ended June 2022 indicates an 18% year-over-year increase. Likewise, the consensus revenue estimate for the same quarter of $12.32 billion reflects an improvement of 62.1% from the prior-year period.

The stock has gained 9.3% year-to-date and 4.9% over the past six months to close its last trading session at $24.00.

It’s no surprise that EPD has an overall B rating, which translates to Buy in our POWR Ratings system. It has a B grade for Value, Momentum, Stability, and Sentiment. 

EPD is ranked #10 out of the 34 stocks in the MLPs – Oil & Gas industry. The industry is rated A. To see the additional POWR Ratings for Growth and Quality for EPD, click here.

T shares were trading at $21.03 per share on Wednesday afternoon, down $0.14 (-0.66%). Year-to-date, T has gained 17.24%, versus a -19.35% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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