When the markets get volatile, it’s good to stop looking at the fast moving waters in the middle of river and find the relative security of the shoreline.
That’s where income and total return stocks dwell. And that’s where these seven A-rated dividend stocks shine.
Knowing you have a rock-solid return on a company that can endure the market’s and economy’s gyrations is important for piece of mind. The other nice thing is, these companies usually have been overlooked in the heady activity of the broad stock market.
Key to picking solid dividend stocks is making sure the companies they represent are prepared for the global and domestic economy that is developing in 2016.
For example, are they structured well enough to deal with the strong dollar’s pressure on international earnings, or have they shifted their growth strategy in particular sectors to gain more than they lose abroad?
These seven companies answer “yes” to these questions.
Let’s take a look.
7 A Rated Dividend Stocks: General Electric Company (GE)
Dividend Yield: 3.27%
General Electric Company (GE) has been around a very long time. Started by none other than Thomas Edison in 1892, there are few blue chips that can match its durability and breadth.
Its Q4 earnings were just reported and it beat by a few pennies, but revenue was down. However, that was expected due to its large exposure in the oil and gas industries.
The encouraging news moving forward is its aircraft engines business is expanding, as well as its energy management revenue. Last month GE booked a 20 wind turbine order with seven different countries.
It’s also continued to sell off its financial division and completed the merger with French rail giant Alstom, all of which are helping the company focus on it core industrial and digital strengths.
7 A Rated Dividend Stocks: McDonald’s Corporation (MCD)
Dividend Yield: 3.02%
McDonald’s Corporation (MCD) was in a lot of trouble in 2015. But at this point, it’s up more than 30% in the past year.
Granted, in 2014 and 2015, the stock was down because it looked like it was very likely MCD had overextended itself and was tone deaf to upgrading its menu to take on the competition.
The question was if management was incompetent or simply sticking to a gradualism that was killing revenue.
Either way, MCD made a change at the top and things are turning around. It seems that many McDonalds customers were happy to stay at the restaurant, but wanted some better options. And MCD’s new management has done a very good job making big changes in a short time.
And it’s paying off. But this is just the beginning. There’s still plenty of growth left, plus its solid 3% dividend. Just this month two big firms upgraded MCD from “neutral” to “buy.”
Get in before the crowd runs up the price.
7 A Rated Dividend Stocks: Reynolds American, Inc. (RAI)
Dividend Yield: 3.1%
Reynolds American, Inc. (RAI) is up 38% in the past 12 months and it’s still kicking off a 3% plus dividend.
This seems somewhat bizarre given the fact that its core market – smokers – are on the decline. In 1997, 25% of the US population smoked. Last year that number fell just below 15%.
So it thrives in a market that has lost about 40% of its customers.
How? Well, it has pricing power for one thing. It can raise the price of its products to offset the decline in smokers. That helps. And it has grown by acquiring another major tobacco company, adding to its product line, including the No. 2 cigarette in the marketplace.
It’s other growth sector is its e-cigarette and smokeless division. RAI’s Vuse line of e-cigs is the big dog in the sector, controlling 36% of the U.S. market. With its distribution channels, its growth is virtually assured.
7 A Rated Dividend Stocks: Lockheed Martin Corporation (LMT)
Dividend Yield: 3.1%
Lockheed Martin Corporation (LMT) is one of the top three defense contractors in the world.
And if you’ve looked around recently, the world is likely to get messier in coming years. As a result, defense stocks are coming back. LMT is certainly going to be a beneficiary of the trend because it is so dominant not just in the U,S., but scores of the U.S. global partners as well.
LMT is also making significant headway in simplifying its business as well. A recent 5% sale of it IT division to Leidos will allow it to concentrate its efforts on advanced weapons systems and equipment.
LMT was the largest government IT services provider but the sector is getting increasingly competitive, so consolidating the sector is a wise move and the money will help pay off some of the debt from LMT’s purchase of legendary helicopter firm Sikorsky.
LMT is the most generous dividend stock in the defense sector and has solid history of raising dividends in good times and bad.
7 A Rated Dividend Stocks: Valero Energy Corporation (VLO)
Dividend Yield: 2.93%
Valero Energy Corporation (VLO) is an oil and gas refiner. This would seem an odd company to pick given the utter chaos in the energy markets.
However, refiners are one of the few sectors in the energy patch that will continue to do well because of lower energy prices. As a matter of fact, it recently announced it was raising its dividend 20%, from 50 cents a share to 60 cents a share, payable on Feb. 9.
You see, cheap gas will continue to draw demand, at least at the consumer level. Industrial use may be slow, but people will be far less concerned about driving a few more miles when gas is solidly below $2 a gallon.
VLO also runs 7,400 gas stations and other outlets for its fuels.
7 A Rated Dividend Stocks: CVR Refining LP (CVRR)
Dividend Yield: 18.1%
CVR Refining LP (CVRR) is small refiner that’s set up as a master limited partnership. That means as an investor, you’re technically a partner (a unit holder) that gets a specific distribution from the company’s revenues.
In simple terms, MLPs usually kick off big dividends.
MLPs were very compelling stocks when the shale boom began, and the U.S. government encouraged companies to use the MLP structure to get public funding for oil and gas exploration. These firms were throwing off massive dividends in the glory days, and some to biggest and best still have healthy yields.
But the oil crash sent most of the MLPs down, whether they deserved it or not.
As a refiner, CVR is less exposed than other sectors in the energy markets and it operates a very unique niche as a low-cost refiner and distributor.
Most compelling of all, it has an 18% dividend.
7 A Rated Dividend Stocks: Public Storage (PSA)
Dividend Yield: 2.73%
Public Storage (PSA) runs self-storage units across North America and Western Europe, and it’s the best in the business.
It has industry-leading occupancy rates — 95.4% — and staggering margins that continue to expand — 74%. Also, it has the size and wherewithal to move into the best new markets and get the best locations, if it’s not already there.
PSA is set up as a real estate investment trust, which means that its valued for its property portfolio and how much value it’s realizing off the property. By law, REITs have to distribute 90% of their income to shareholders.
PSA’s current 2.7% dividend may not get your heart racing, but given its strong growth during these challenging economic times — it’s up 132% in the past five years — the rock-solid dividend belies some impressive growth.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
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