Dividend stocks appeal to passive-income seekers. Broader markets have also seen record highs in recent days. Yet, investors still have opportunities for buying robust dividend names for less than where they were trading several weeks ago.
Of course, even businesses with significant catalysts come under stress every now and then. However, leading companies with good management and products (or services) usually come back fast — and even hit new highs before long. So, as volatility continues to create valuable buying opportunities for investors, I have identified seven dividend stocks that could gain traction for the rest of the year.
Which dividend stocks are the best candidates for your long-term, diversified portfolio? Here are my picks:
- AstraZeneca (NASDAQ:AZN)
- Freeport-McMoRan (NYSE:FCX)
- Merck (NYSE:MRK)
- Starbucks (NASDAQ:SBUX)
- Verizon (NYSE:VZ)
- Walmart (NYSE:WMT)
- West Fraser Timber (NYSE:WFG)
Dividend Stocks to Buy: AstraZeneca (AZN)
52-week range: $46.46 – $64.94
Dividend yield: 3.23%
Our first name on this list is biopharma group AstraZeneca. First off, you probably recognize this name because a large number of countries are using its latest two-dose vaccine for Covid-19. That said, this pick is also notable because the company’s shares are listed on the London Stock Exchange as well, where AZN stock is one of the most important names of the leading FTSE 100 Index.
In addition to its vaccine, this pharma group also possesses important drugs and therapies that address cardiovascular and respiratory illnesses, cancer and more. Sales in the U.S. represent close to one third of AZN’s revenues. Additionally, AstraZeneca has a promising pipeline that could soon lead to several more U.S. Food and Drug Administration (FDA) approvals.
AstraZeneca announced first-quarter results back on Apr. 30. Revenue went up by 15% to $7.32 billion. Profit after tax increased by 108% year-over-year (YOY) to $1.56 billion. The company also reported earnings per share (EPS) of $1.19, doubling from 59 cents in the prior-year period. Plus, cash and equivalents came to $7.24 billion, compared to $2.98 billion in the prior year. On the results, CEO Pascal Soriot noted the following:
“We delivered solid progress in the first quarter of 2021 and continued to advance our portfolio of life-changing medicines […] New medicines contributed over half of revenue and all regions delivered encouraging growth. This performance ensured another quarter of strong revenue and earnings progression, continued profitability, and cash-flow generation.”
Currently, AZN stock is up 17% so far in 2021. However, the shares have come under pressure in recent weeks. Currently, the stock has forward price-to-earnings (P/E) and price-to-sales (P/S) ratios standing at 17.47 and 4.98, respectively. A further decline below $57 could be an opportunity to buy shares of this innovative biopharma play.
Source: Coldmoon Photoproject/Shutterstock.com
52-week range: $9.78 – $46.10
Dividend yield: 0.73%
This next pick of the dividend stocks comes from the commodity space. Freeport-McMoRan is one of the largest copper miners globally, with its segments including “refined copper products, copper in concentrate, gold, molybdenum, oil” and more.
Of course, the past year has reminded us all that copper is an important commodity, with the economic recovery worldwide making copper a hot asset class. That’s because the metal is heavily used in infrastructure projects, such as construction, transportation and electrical networks. Copper is also significant for alternative energy sources and products. For example, some electric vehicles (EVs) can use up to four times more copper than traditional vehicles.
Back in April, Freeport-McMoRan released its Q1 results. Sales were $4.85 billion, up over 73% YOY. Adjusted net income was $718 million, or 48 cents per diluted share. As of Mar. 31, FCX also had $4.58 billion in cash and equivalents. On the results, CEO Richard Adkerson said the following:
“Our Board adopted a new financial policy aligned with our strategic position as foremost in copper, prioritizing a strong balance sheet, increasing cash returns to shareholders and disciplined investments in profitable long-term growth.”
In the past 12 months, FCX stock has returned nearly 283%. However, this pick of the dividend stock has also recently come under short-term pressure. Right now, its forward P/E and P/S ratios are 14.08 and 2.75, respectively. Long-term copper bulls may find these levels attractive for starting a position.
Dividend Stocks to Buy: Merck (MRK)
Source: Atmosphere1 / Shutterstock.com
52-week range: $68.44 – $83.78
Dividend yield: 3.41%
Next up on this list of dividend stocks is another pharma giant, Merck. This company’s treatment lines are focused mainly on cancer, infectious diseases and animal health. Currently, Keytruda — an antibody used in cancer immunotherapy — is the company’s leading source of revenue.
Like other names on this list, Merck released its Q1 numbers back in late April. Sales came to $12.1 billion for the quarter, thanks to the strong performance of Keytruda as well as its Bridion, Lynparza and animal health products. Additionally, non-GAAP EPS came to $1.40. Finally, the company also noted that it recently entered into an HIV collaboration with Gilead Sciences (NASDAQ:GILD). CEO Kenneth Frazier said the following about the results:
“While our results this quarter were impacted by the pandemic, the underlying demand for our innovative products remains strong and we remain confident in our future growth prospects.”
Currently, MRK stock’s forward P/E and P/S ratios are 12.63 and 4.01, respectively. Any further decline in MRK shares would make the company an even better candidate for dividend investing.
Source: Grand Warszawski / Shutterstock.com
52-week range: $71.06 – $118.98
Dividend yield: 1.60%
As one of the leading restaurant brands globally, Starbucks operates almost 33,000 stores across over 80 countries.
This pick of the dividend stocks announced its Q2 metrics on Apr. 27. Investors were pleased to note that stateside comparable store sales increased by 9%. Management highlighted that this increase meant a “full sales recovery” for the United States. Meanwhile, Q2 comparable store sales growth in China was 91%. Overall, “global comparable store sales increased 15%.”
In addition, consolidated net revenues were $6.7 billion, up 11% from the prior year. The non-GAAP operating margin was also 16.1%, an increase of 9.2% YOY. Finally, non-GAAP EPS was 62 cents. Management also raised full-year fiscal 2021 EPS, margin and revenue guidance. On the results, CEO Kevin Johnson had the following to say:
“I am very pleased with our progress to date in fiscal 2021, as our second quarter results demonstrated impressive momentum in the business with full sales recovery in the U.S. […] [A]s we celebrate our 50th anniversary, we remain confident in our ability to execute our ‘Growth at Scale’ agenda and unlock the full potential of the Starbucks brand.”
Since the start of the year, SBUX stock is up nearly 5% but has come under pressure in recent weeks. Its forward P/E and P/S ratios are 37.63 and 4.68, respectively. A further decline toward $100 would make the shares even more attractive here.
Dividend Stocks to Buy: Verizon (VZ)
Source: Ken Wolter / Shutterstock.com
52-week range: $52.85 – $61.95
Dividend yield: 4.38%
Verizon — one of the leading communication companies in the U.S. — needs little introduction. This name offers wireless and fixed-line telecom services and has also put considerable resources into 5G infrastructure. Now, investors are hopeful that 5G can provide strong momentum for growth in the VZ stock price.
Verizon had strong Q1 results back in April, with management highlighting growth in its wireless service revenue as well as increased cash flow. Additionally, consolidated operating revenue was $32.9 billion, an increase of 4% YOY. Net income also came at $5.4 billion, representing a 25% YOY, while EPS came in at $1.27 versus $1 in the prior year. Finally, Verizon’s free cash flow was $5.2 billion for the quarter, up from $3.6 billion in Q1 2020.
On the results, CEO Hans Vestberg said the following: “Verizon is off to an excellent start in 2021 as we met the challenge of intense competition in the first quarter by achieving revenue growth across our three business segments.”
Currently, VZ stock is down 2.8% YTD but relatively flat for the past year. For many long-term investors, the juicy dividend yield is the main attraction here. Verizon has raised its dividend payments back-to-back for nearly a decade. Right now, its forward P/E and P/S ratios are 11.26 and 1.77, respectively. Altogether, June could prove to be a good time to buy Verizon shares.
Source: Jonathan Weiss / Shutterstock.com
52-week range: $117.01 – $153.66
Dividend yield: 1.56%
With a market capitalization of $393 billion, Walmart is the largest retailer worldwide, having become ubiquitous in the U.S. and currently employing around 2.2 million people. Thanks to its moat, Walmart has also been able to weather many economic downturns and provide shareholder returns for the long haul. Most recently, the pandemic has brought this pick of the dividend stocks increased revenues and cash flow.
Walmart announced its Q1 metrics back in mid-May. For the quarter, revenue came at $138.3 billion, up 2.7% YOY. Analysts also noted that the company’s domestic e-commerce sales grew by 37%. Similarly, international e-commerce sales increased 49%. Finally, operating income was $6.9 billion (up about 32%) while the adjusted EPS came to $1.69. On the results, CEO Doug McMillon said the following:
“This was a strong quarter. Every segment performed well, and we’re encouraged by traffic and grocery market share trends […] We have a strong position as our store environment improves and eCommerce continues to grow […] We anticipate continued pent-up demand throughout 2021.”
So far this year, WMT stock is down nearly 3%. Its current forward P/E and P/S ratios also stand at 23.8 and 0.72, respectively. If you believe the upcoming summer months will bring shoppers to Walmart, then you might consider buying the dips in this pick of the dividend stocks.
Dividend Stocks to Buy: West Fraser Timber (WFG)
52-week range: $29.46 – $91.53
Dividend yield: 0.85%
Last up on this list of dividend stocks, West Fraser Timber is a leading wood products company based in Canada. WFG’s product lines include lumber, pulp, engineered wood, wood chips and more, as well as energy via its bioproducts. The company has over 60 facilities in Canada, the U.S. and Europe. Moreover, the pandemic has made lumber and related products a hot commodity amidst the hot housing market. Therefore, lumber prices have increased significantly, providing tailwinds to the profitability of this business.
West Fraser announced its Q1 metrics back on May 6. For the quarter, sales went up by 163% YOY to $2.34 billion. Earnings also skyrocketed to $665 million while diluted EPS came to $6.96. Finally, cash and short-term investments were $1.4 billion in Q1. On the earnings call for the results, CEO Ray Ferris remarked the following:
“While we recognize there are many factors outside of our control that can temporarily influence markets […] [W]e remain optimistic about the favorable market fundamentals we’re currently seeing, supported by the underlying environmental benefits of building with wood, which have never been more clear and more widely accepted.”
WFG saw an all-time high back in early May, but the price of lumber has taken a breather recently. So, WFG stock has also come under short-term pressure. Currently, its forward P/E and P/S ratios are 2.76 and 0.84, respectively. Altogether, readers who are bullish on lumber should definitely look further into this pick of the dividend stocks.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.