The current low interest rate environment has made it really difficult for investors to ensure a steady stream of income. While there is some optimism over the success of medical science to contain the virus in the near term, the continued increase in coronavirus cases should keep the investment environment difficult for some time. In such a scenario, betting on stocks that offer high dividend yields could be a great option.
While many companies suspended or cut dividends amid the pandemic, some companies have been able to keep rewarding shareholders with solid dividends as they were either able to withstand the pandemic or profit from its societal changes. Overall, dividend stocks have performed well this year, as indicated by the Vanguard High Dividend Yield ETF’s (VYM) 38.2% gain since March.
Verizon Communications, Inc. (VZ), AbbVie, Inc. (ABBV), and KB Financial Group, Inc. (KB) possess strength in their financials and business models and pay high dividends. So, betting on these stocks could help provide you a steady stream of income while offering strong potential for capital appreciation.
Verizon Communications, Inc. (VZ)
VZ is one of the leading telecommunication providers in the United States. The company provides information, communication, and entertainment products and services. VZ’s stock has gained 20.8% since hitting mid-March lows.
VZ is now offering a new line-up of iPhones which will run on the 5G VZ network. The company has also agreed to acquire a part of Bluegrass Cellular, which is a rural wireless operator based in Kentucky.
The company distributed a $0.6275 dividend per share for the last quarter, which is an increase of 2.03% from the earlier dividend amount. The company’s dividend payout has a five-year CAGR of 2.51%. The expected annual dividend yield is 4.16%, while the four-year average dividend yield is 4.62%.
VZ is expected to witness revenue growth of 2.8% for the quarter ending March, 2021 and 3.7% in 2021. The company’s EPS is estimated to grow 2.9% in 2021 and at a rate of 2.3% per annum over the next five years.
How does VZ stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Industry Rank
A for Overall POWR Rating
You can’t ask for better. The stock is also ranked #1 out of 25 stocks in the Telecom – Domestic industry.
AbbVie, Inc. (ABBV)
ABBV develops, manufactures, and markets therapies for a wide variety of diseases. These conditions include rheumatoid arthritis, hepatitis C, HIV, Parkinson’s disease, and more. ABBV’s stock has gained 11.5% so far this year.
ABBV has recently announced the results of its Phase 3 clinical trials of an ophthalmic solution for the treatment of symptoms linked with presbyopia. The results of the clinical trials indicated that the treatment met the primary efficacy endpoint. The company has also submitted applications to the FDA and EMA for the approval of RINVOQ, to be used for the treatment of atopic dermatitis.
The company distributed a $1.3 dividend per share for the last quarter, which is an increase of 10.2% from the earlier dividend amount. The company’s dividend payout has a five-year CAGR of 20.86%. The expected annual dividend yield is 5.27%, while the four-year average dividend yield is 4.32%.
ABBV is expected to witness revenue growth of 48.3% for the quarter ending March, 2021 and 17.5% in 2021. The company’s EPS is estimated to grow 16.4% in 2021 and at a rate of 9.27% per annum over the next five years.
It’s no surprise that ABBV is rated a “Strong Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade, Buy & Hold Grade, and Peer Grade. In the 240-stock Medical – Pharmaceuticals industry, it is ranked #2.
KB Financial Group, Inc. (KB)
KB provides banking and other financial services to individuals and companies in South Korea, and internationally. It is one of the four largest banks currently operating in South Korea. KB’s stock has gained 2.2% so far this year.
KB recently announced that it will no longer be financing coal-based energy projects domestically or internationally. The decision was made keeping sustainability and environment concerns in mind for the long-term health of the company.
The company has distributed a $1.785 dividend per share for 2019, which is an increase of 7.03% from the earlier dividend amount. The company’s dividend payout has a five-year CAGR of 20.36%. The expected annual dividend yield is 4.24% while the four-year average dividend yield is 3.95%. The company’s EPS is estimated to grow at a rate of 4.9% per annum over the next five years.
KB’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” in Trade Grade, Buy & Hold Grade, and Peer Grade. In the 44-stock Foreign Banks industry, it is ranked #6.
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VZ shares were trading at $60.06 per share on Thursday afternoon, down $0.26 (-0.43%). Year-to-date, VZ has gained 2.09%, versus a 12.15% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...
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