This has been an interesting year for investing. The volatility of the market has left many investors scrambling. On the one hand, the sharp declines have led to high-yield stocks, but on the other hand, they’re a lot less safe than they used to be.
The key in this time is to locate great-yielding options that can maintain their dividends, regardless of the potential for a looming recession. The market has rebounded a bit since the initial plummet this year, but the swings have resulted in fewer high-dividend opportunities.
There are still several stocks that show promise with potential payouts of around 5%, however many of them aren’t the strongest companies. Your best bet is to find companies with the highest potential for returns with the lowest risk of a complete crash as the economy continues to be impacted by lingering and ongoing ramifications of the COVID-19 pandemic.
Unlike a day trader, you’re looking for stability and growth over time. Based on projections and historical data, here are five stocks with high dividends you may want to consider investing in right now.
IBM, International Business Machine, has a market value of $110.9 billion. Throughout the volatility of 2020, they’ve managed to lose only 5%, versus the average 7% of the entire S&P 500. As far as tech stock goes, IBM’s growth is consistently slow. However, over the past 25 years, they’ve managed payout raises every year for their shareholders.
With a market value of $33 billion, MetLife is one of the largest insurance companies in the world. 2020 has been rough for the insurance company; that’s no surprise, since insurance tends to be one of the first expenses to go in financial turmoil. However, with a 150-year long history — the company knows how to rebound. While it will likely be down for a couple of years, it’s expected to grow as the economy heals. In other words: it’s smart to buy these stocks while they’re low because a rebound is imminent. In the meantime, they recently increased their quarterly distribution, and their dividends sit comfortably at a 5.1% yield.
With a market value of $124 billion, this pharmaceutical company is one to watch. If you aren’t familiar with them, they’re the company responsible for the rheumatoid arthritis drug, Humira. Their sales have slowed; however, they’re planning to merge with Allergan, which will generate an additional $30 billion in annual revenue. Allergan is responsible for Botox if you aren’t familiar with them. AbbVie has had seven years of dividend increases and is considered one of the safest high-yield dividend stocks on the market.
4. Prudential Financial
Prudential Financial is another insurer whose market value sits at $24 billion. The company is known for its $1.5 trillion in assets and the fact they’re an ESG-friendly company. (ESG stands for environmental, social, and corporate governance.) Forbes listed Prudential Financial as one of the companies that Change the World. Like most giants, 2020 has been a rough year for Prudential Financial. They’ve seen their shares fall by 35% and experienced a decrease in profits during the first quarter of 2020. Despite this, the company has upped its payout by 10%. Analysts expect their share value to cover their dividends greater than twice over. While their battle back to profitability and share buyback is a steep one, they’re known for having incredibly balanced sheets and strategic foresight, making them poised for a bounce back.
If you like commodities markets, Bunge is a company worth considering. With a market value of $5.5 billion, they’re a leading agricultural company focusing on grains like wheat and corn. When the year hit, the company successfully cut $250 million in annual expenses to adapt. They’ve experienced a decline; however, their payout has stayed above 5%. Their yearly cash flow has been higher than $1 billion for four out of the last five years, which has allowed them to continue to increase dividends. Their robust cash flow and balanced sheet make them uniquely poised to weather any upcoming economic volatility.
Investing in These Uncertain Times
No matter how surefire any stock seems, things can change rapidly. There’s a high level of volatility this year, and that’s expected to continue through 2021. When trying to decide where to invest, it’s essential to do thorough research and choose companies that have a history of paying out high dividends — even in declines.
You want to look for companies that have balanced sheets and decent cash flow and a reputation for taking care of their shareholders. Remember, things are changing rapidly, so before you invest, check in with your favorite sources to ensure that something hasn’t dramatically shifted.
About the Author: Skylar Hammond is a writer for True Trader who specializes in topics such as stock trading, personal finance, and forex. He focuses on helping beginners and experts alike learn more about the market and improve their trading skills.
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