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11 S&P 500 Stocks That Will Give You A Yield For A Steal

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11 S&P 500 Stocks That Will Give You A Yield For A Steal

While current yields for S&P 500 dividend stocks are low compared to historical standards, they are higher than one year ago: an average of 2.19% compared to 1.98% 12 months ago.

Several companies are giving out record levels of cash to their stakeholders through options such as buybacks and payouts.

The long-term yield average is closer to 5%, so they are still worth investing in.

Read on for a list of eleven great buys.

 

Fed up of these interest rates

The Federal Reserve is staying the course with its modest rise in interest rates.  

So, investors looking for yield need to focus on dividends.

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They won’t find them without taking on much higher risk, which they could do by investing in master limited partnerships or junk bonds.

Dividend stocks do, however, have reliability and ability to appreciate in price steadily over time.

If you are no venture capitalist but merely want good returns for your investments over time, look no further than this article.

It’s always in the last place you look

Interesting is the fact that the most generous yields available from S&P 500 stocks are from those where you might not at first be inclined to look.

Often they are the result of fallen stock prices that have a good reason, like a weak declining industry or a fragile market.

And very often they look like they’re in for more shorting and have dividends that are at risk.

What follows now is a list of those dividend stocks, which we have compiled not just using their current dividend yields, but also wider financial indicators, from balance sheets and announcements (revenue, EBITDA, growth, etc.).

But first, below is a graph shows the increase in dividend yield in the S&P 500 from last year to this year, which was mentioned in the introduction.

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We begin out list with Procter & Gamble Co.: Yield of 3.2%

The multinational company based in Ohio,  which is responsible for all manner of consumer goods.

It has been an important part of the Dow Jones Average since time immemorial.

It has also, remarkably, been paying rising dividends since all the way back in the 19th century, when stock markets were but a blossoming flower.

This record ensures they are a safe bet, and you can bank on those dividends keeping on.

And right now, PG is reimbursing shareholders through a massive buyback program.

This is when companies buy existing stock in their company, giving cash to stockholders and reducing outstanding shares on which dividends must be paid (allowing for potentially higher dividend yields).

On top of the $18 billion in dividends and said buybacks each year, it is also streamlining its operations to the tune of $10 billion in the coming years.

After beating its downward trend of a few years ago, its shares have been at a market-beating 5% for the last 12 months.

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Pfizer Inc.: Yield of 3.5%

Another huge name in the pharmaceuticals industry, Pfizer also relies on acquisitions to grow operations.

It recently tried to purchase Allergan, but its $160-billion-move for the company fell through, hurting its position both in terms of growth prospects and reputation.

However, the market has treated Pfizer surprisingly well since, and the company has seen its highest stock price for a year.

The stock is up 8% and has beaten the competition in the S&P 500 by a healthy 6%.

This is a real target for the patient investor.

Dividend stocks pay out in the long run, so you need to be prepared to hold for longer periods and weather storms and wobbles, like a failed acquisition or weak growth or performance.

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Its stock has doubled in the last five years, attesting to its strong position in the market and the confidence in its long-term potentials for dividend payouts.

AbbVie Inc.: Yield of 3.8%

The pharmaceutical producer and researcher ABBV has experienced modest performance in the stock markets this year, trading in line with the S&P 500 average.

However, it possesses a golden egg with which its future prospects are as bright as the day is long.

Humira is one of its prized products.

It is the top selling immunology drug, and that industry is seeing very high growth as prevention becomes an increasing area of focus due to its ever clearer economic efficiency (as opposed to treatment).

With this in its arsenal, ABBV should see strong growth in the future.

It has a long-term growth rate of 15%. This, coupled with the dividend yield of almost 4%, holds it in good stead for the future.

Demographic changes in the world prove auspicious for this company as they do for any healthcare sector.

Sanofi: Yield of 4.2%

A French pharmaceutical company, this is an investment target of the celebrity investor Warren Buffett.

He is normally quite careful when it comes to investing in the healthcare sector.

The patent block is the main reason for prudence regarding pharmaceuticals.

As mentioned before, big-selling drugs eventually lose their patents, meaning anyone can produce and make money from them.

Patents are only really allowed to allow for backing from investors, or nothing would get off the ground in the first place.

Sanofi saw an increase in its rare-disease drugs sales of 8% Year-on-Year in the first quarter of 2016.

These rarely see much competition, so boosted prices can ensure strong performance.

Sanofi’s innovation is what makes it an appealing target for the dividend stock seeker.

Merck & Co.: Yield of 3.2%

One of the largest pharmaceuticals in the world, Merck is currently engaging in the common tactic of mergers and acquisitions in an effort to cut costs without reducing operations.

And it seems like it is working.

As just mentioned, blockbuster, disease-curing, patient-saving drugs eventually lose their patents and have to be replaced by other best-sellers in the pipeline.

Merck, however, has five that are under review by the regulators, and 25 late-stage as well as 11 mid-stage ones in the pipelines.

Thus, investors can be safe in the knowledge that Merck has plenty to offer to the market to maintain its leading position in the pharmaceuticals industry.

Dividends will continue to pay out healthily even if they don’t see the huge numbers of some riskier stocks and industries.

The role of pharmaceuticals will only grow as developing nations increase their spending on healthcare and require more pharmaceuticals to attain public health targets rapidly.

The shares of Merck & Co. saw a growth of 8% this year, better than the average S&P performance by almost 6%.

Returns are guaranteed to be healthy when you consider this along with the dividend performance.

Boeing: Yield of 3.3%

With current controversy over its deal with Iran, being labeled by some as a money-before-safety approach, the markets are worried about the company’s headwinds.

There are also fears that the industry cycle could be unfavorable to Boeing in the long run.

Airbus, its main competitor from Europe, has beaten Boeing for the last two years concerning total orders.

And the strong dollar is helping too, as US Industries become less competitive globally due to higher prices.

Airbus’ latest addition to its A321 family has also been a huge hit.

However, in June Boeing saw huge growth and increase in orders, partly thanks to the Iran deal.

While its shares are down 8% due to the aforementioned fears, this recent pickup makes for rational bullishness on buying stock in Boeing.

It is taking back market share that it has lost in the last decade.

With a projected growth of 10% and a very generous dividend, patient investors should consider it as a dividend stock worth sticking with.

Its household name in the aeronautics industry, emanating reliability and industrial strength, ensures it will continue to create profits for dividends for a long time yet.

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Cisco Systems: Yield of 3.6%

Cisco, the largest IT networking hardware supplier in the world, recently acquired Jasper’s cloud platform business for $1.4 billion, called the Internet-Of-Things.

This is part of a general long-term strategy for the future.

Other than this, the company has expanded into predictive maintenance, cloud services for businesses, usage-based motor insurance and software for carrier networking customers.

It has a very strong market-beating growth in the stock price of 6.1% this year.

Analysts have predicted very strong future growth and PTE ratio (Price-To-Earnings) higher than the previous prediction of around 12.

It is adding a million devices a month, mostly cars, to its Internet-Of-Things platform since acquiring it in February.

Verizon Communications: Yield of 4.2%

The telecommunications giant Verizon is a rare thing: a high dividend yield in the telecoms industry.

The industry’s big players are grappling with many issues that are currently stifling development: the saturation of wireless, the decline of broadband and low prices due to competition, but most importantly the death of landlines across the board.

Verizon aims to defeat these obstacles by switching focus to mobile and video advertising, using its vast network to achieve this.

With AOL already under its belt, and various reports indicating AOL’s old rival Yahoo may be another acquisition, the potential to carve out a new role for itself is there and growth prospects should not be underestimated.

AT&T: Yield of 4.6%

Another telecommunications giant, this is a must-buy for the dividend yield junkie.

It is branching out, like Verizon, to deal with the setbacks that are being experienced by the telecommunications industry as a whole.

An example of this branching out is the acquisition of DirecTV last year, which saw its revenue grow drastically, even though stock fell in 2015.

AT&T also represents a safe buy as it has a very low five-year beta, of only 0.27.

This figure represents stability and consistency compared to most of the AT&T 500.

Its returns over the last ten years are also impressive, representing a 155% rate.

This is, in contrast, the broader telecommunications industry which has seen weak growth and returns.

Ford: Yield of 4.5%

A household name emblematic of the motor industry’s history and significance, Ford also sports a fantastically high dividend yield.

Even without this, we would advise it as a target for investment.

Although motor sales slowed last month after the recent buying thanks to cheap oil, the industry’s sales have still been the highest seen for over ten years.

This includes its China operations, which are still rocketing ahead despite the economy’s slowing growth.

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Higher-margin vehicles and trucks are those largely responsible for this strong performance, and their Van range saw its best figures for almost 40 years!

Share prices have seen reduced growth due to concern over the industry as a whole, but this is one to be recommended regardless.

General Motors: Yield of 5.2%

No list of must-have dividend stocks would be complete without General Motors.

The motor industry giant is a world-famous name, and its reputation ensures its prospects.

Similar to Ford, the discounts to its stock are disproportionate when considering the risk it varies.

The generous yield is delicious for investors.

In the second quarter of 2016, it has seen a doubling of its earnings north of Mexico and, like Ford, has seen strong growth in China.

That cheap oil is doing the automation industry a world of good.

It also broke even in Europe, which is good considering it has never been strong in that market.

Another weak market for them, which is particularly weak right now, is South America.

Even there, losses were narrowed.

Many expect the boom for the motor industry to have reached its peak, and so shares are pretty stagnant.

This makes them a good buy.

GM stock is two-thirds cheaper than the S&P 500 and it well below its five-year average.

Final Word

The list you’ve just read contains a strong mix of pharmaceuticals, telecommunications, and motor industry big players.

Each industry faces its particular set of obstacles and hurdles to growth, but the companies in this list are weathering any storms that come their way, and can expect to see strong growth and generous dividend payments for a long time yet.

For the patient investor, these are virtually sure things if long-term dividend results are being sought, and a portfolio with a combination of these stocks would be a strong choice for the savvy investor.

 

 

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