I don't typically cover individual dividend stocks too often here, but in a world where most Treasuries are still yielding under 1% and the S&P 500 is yielding a measly 2%, it's worth pointing out where the attractive yields are at.
With the coronavirus impacting all corners of the global economy, dividend safety has become a paramount concern. Dozens of companies have already cut or suspended their dividends until the pandemic passes (and maybe indefinitely).
For yield seekers, I've advocated for focusing on ETFs that target quality dividend stocks, those that are backed by healthy balance sheets and lots of cash flow. Pure high yielders are especially risky right now and even some long-term dividend growers have been at risk of a cut.
In other words, it's more of a dividend pickers market.
With that being said, here are 7 stocks from the S&P 500 that currently offer yields of 5% or more.
While I consider these "safer" yields, don't assume them to necessarily be "safe". Some companies are trying to hang on to their quarterly dividends for as long as they can before they're forced to make a change.
It's important to remain diligent with these and all dividend stocks and be prepared to move quickly if they give any indication that they're entering a precarious financial situation. That's the type of thing that leads to a dividend cut and a likely nosedive in the stock price.
Dividend Yield: 7.5%
Dividend Growth: 37 Years
In April, ExxonMobil's CEO went on record saying that the company is "committed to maintaining" the dividend.
The company also said it will be reducing capital spending by about $10 billion and will cut expenses by 15%. That's no guarantee that the company will not cut the dividend in the future, but it's about as good as we'll get for the time being.
Dividend Yield: 5.6%
Dividend Growth: 7 Years
AbbVie has nearly tripled its dividend over the past 7 years. Management just reaffirmed their 2020 earnings guidance, which is a pretty good sign that the company isn't in any immediate financial peril.
AbbVie is likely more focused on its acquisition of Allergen.
Dividend Yield: 5.3%
Dividend Growth: 20 Years
Just today, IBM's CEO went on TV and said that not only will the company not be breaking up, but it won't be cutting its dividend either. IBM did pull its forward guidance, which hasn't been that unusual in the current environment.
IBM is using about half of its free cash flow on the dividend, so it appears the company does have some financial flexibility in maintaining the dividend going forward.
Wells Fargo (WFC)
Dividend Yield: 7.6%
Dividend Growth: 9 Years
The trouble in the financial sector, where banks are forced to endure record low interest rates and deal with loan holders deferring or defaulting on their monthly payments, has spurred lots of speculation as to whether or not dividend cuts are in the future.
Wells Fargo just reported earnings and reiterated its quarterly dividend. The Federal Reserve is also unlikely to force banks to suspend their dividends in the near future, so this one feels secure for now.
Dividend Yield: 5.5%
Dividend Growth: 4 Years
Chevron has already vowed that it will not cut its dividend.
The company's dividend growth streak is either more than 30 years or less than 10 years depending on how you count a brief pause in the dividend schedule several years ago.
Either way, this is a company with a strong history of cash flow generation and dividend growth. But it's also a part of the beleaguered energy sector, which has had its share of struggles with producing crude oil profitably under the current low price environment.
Philip Morris (PM)
Dividend Yield: 6.4%
Dividend Growth: 11 Years
This stock might be one of the dicier propositions on the list. The cigarette business isn't necessarily the safest one to be in and companies have tried to diversify into other business lines with modest success.
But PM has a healthy dividend growth streak and also just reiterated its dividend. The balance sheet and liquidity appear to be in relatively good shape, which should support ongoing dividend growth in the future.
Dividend Yield: 7.0%
Dividend Growth: 35 Years
AT&T has lots of debt and suspended its share buyback program, which invited worries that the dividend might be next. It did receive approval for a $5 billion loan recently, which should offer an extra degree of flexibility.
AT&T is known for its dividend as much as any company, so it'll be under some pressure to maintain it in the future. The extra liquidity and a relatively low payout ratio should allow the company to safely maintain its quarterly payment.
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