- Franklin Resources (BEN): Asset management giant with a forward yield of 4.41%.
- First Interstate Bancsystem (FIBK): Under-the-radar banking play with a 4.76% dividend yield. It could see big earnings growth next year.
- Leggett & Platt (LEG): Hit hard in the past year, despite a 50-year track record of raising its annual dividend.
- LyondellBasell Industries (LYB): A great commodities play with a 4.45% forward yield.
- Southern Copper (SCCO): Booming demand for copper will enable it to maintain its quarterly dividend of $1 per share.
- Walgreens Boots Alliance (WBA): Recession-resistant stock yielding 4.21%.
- Western Union (WU): Beaten down due to “disruption” fears, the money transfer giant currently yields nearly 5%.
With interest rates continuing to rise, the market pullback that took a pause in March has started back up. The market, after bouncing back a bit in mid-to-late March, so far in April has resumed moving lower. But as fear, uncertainty and doubt (FUD) starts to ratchet up again, it may be the perfect time to add dividend stocks to your portfolio.
Why? As concerns loom that soaring interest rates will cause an economic slowdown (or worse, a recession), it hasn’t just been no-earnings, high-growth stocks that have been under pressure. Even many of the less speculative names have experienced a downward slide during the month.
There is, however, a silver lining to this pullback. With this recent weakness, you have the opportunity to load up on some of the highest-quality, highest-yielding dividend stocks out there. These seven, for example, have an “A” rating in my Dividend Grader.
|FIBK||First Interstate Bancsystem||$34.47|
|LEG||Leggett & Platt||$35.56|
|WBA||Walgreens Boots Alliance||$44.59|
Dividend Stocks: Franklin Resources (BEN)
One of the largest investment managers in the world, Franklin Resources (NYSE:BEN), has around $1.5 trillion in assets under management (AUM). The firm is best known for its series of mutual funds under the Franklin Templeton brand.
For 25 years in a row, Franklin Resources has raised its dividend. Annual dividend growth over the past five years has averaged 8.45%. Lately, there has been some concern about the company. Namely, the slight declines in its AUM figure so far in 2022.
But while seeing this move lower is certainly not a positive, at the same time, investors have likely overreacted to this news. Shares have taken a 24% plunge year-to-date. As a result, the stock hasn’t only become cheap valuation-wise (a forward price-to-earnings ratio of 7.1x), but it has become a high-yielder as well.
At today’s prices, BEN stock sports a high yield of 4.41%.
First Interstate Bancsystem (FIBK)
Outside of the six states in which it operates, First Interstate Bancsystem (NASDAQ:FIBK) may not be a household name. Yet this more under-the-radar financial institution definitely belongs on any list of high-quality, high-yield dividend stocks.
Currently, FIBK stock sports a forward yield of 4.76%. It may have room to grow this dividend further in the years ahead, due to two factors. First, rising interest rates will improve this bank’s profitability. Second, its recently completed merger with Great Western Bancorp could also help with earnings growth.
When this deal was announced last fall, management touted that consolidating Great Western into its existing system would result in major cost savings by 2023. Next year, it expects earnings-per-share growth of 20%.
Knocked down due to uncertainty about its recent mergers and acquisitions (M&A) deal, now may be a great time to add this high-yield banking stock to your portfolio.
Leggett & Platt (LEG)
Bedding and furniture maker Leggett & Platt (NYSE:LEG) took off in the first half of last year. However, since last May, it has experienced a severe drop in price. Due to both company-specific and market-wide concerns, the stock has slid from nearly $60 per share, to around $35 per share today.
But while investors were buying (then selling) it based on near-term factors, keep in mind the long-term approach works best with a name like LEG stock.
Raising its annual dividend 50 years in a row, it has been a great choice over a long timeframe for income-focused investors. For those who don’t own it, today may be a great time to initiate a position. Fears of an economic slowdown/recession have become overly reflected in shares.
This has resulted in the stock moving down to a price that gives it both a low forward multiple (13x) and a high-yield (4.72%).
Dividend Stocks: LyondellBasell Industries (LYB)
Headquartered in the Netherlands, LyondellBasell Industries (NYSE:LYB) is one of the large petrochemical companies in the world. The recent geopolitical chaos, and its impact on commodity prices, has this stock in the green year-to-date in 2022.
Even so, at 6.6x forward earnings, and with a 4.45% forward yield, it’s not too late to buy. Thanks to robust demand for chemicals and plastics, this company stands to generate big profits this year and the next.
With its dividend payout ratio at just 26.46%, management has plenty of room to raise its current dividend. The company is also consistently buying back stock through a share repurchase plan.
Put it all together, and LYB stock has a strong chance of delivering solid returns. From both further price appreciation, as well as from its return of capital efforts. If you’re looking for a dividend stock with commodities exposure, consider it a buy.
Southern Copper (SCCO)
Southern Copper (NYSE:SCCO) is another of the commodities-focused dividend stocks you should consider. As copper prices have gone through the roof since 2020, this mining play has seen big appreciation since then.
Over the past year, however, enthusiasm for SCCO stock has calmed down considerably. In fact, it’s down almost 2% over the past twelve months. The market is worried that copper prices will fall back. In turn, that would lower this company’s profits, and cause it to slash its high dividend (5.42% forward yield).
Even so, it’s possible the market is being overly cautious. Demand remains high. In large part, due to demand stemming from EV proliferation. With supply levels low, analysts at Goldman Sachs believe copper could hit a new all-time high by mid-year.
With signs that the copper boom is far from peaking, buying SCCO stock and collecting its $1 per quarter dividend may be the way to play it.
Walgreens Boots Alliance (WBA)
With this, it’s not surprising that the market hasn’t been overly excited about WBA stock lately. Although it saw a spike in price from December through January, since then it has given back these gains.
But now, back near its 52-week lows, may be the time to dive into this recession-resistant stock. Despite the likely stability of its business during an economic downturn, the stock trades at what some may say is a fire sale forward valuation (9x earnings).
Not only that, this stock offers a high dividend yield of 4.21%. Walgreens has grown this dividend an average of 5.05% per year over the past five years. With a payout ratio of just 32.65%, this dividend is well-covered, with room for further expansion.
Dividend Stocks: Western Union (WU)
Founded more than 170 years ago, to say Western Union (NYSE:WU) is an old-school company is an understatement. Yet don’t let its age fool you. Jumping to conclusions that this money transfer giant is a “dinosaur” could result in missing out on this fantastic dividend stock.
Due to pessimism about the risk fintech “disruptors” disrupt it right out of business, WU stock has been pushed to a super-low valuation. At today’s prices, it trades for only 9.7x this year’s estimated earnings. At today’s prices, it also has a dividend yield nearing 5%.
Concerns about “disruption,” however, may be exaggerated. The company is expected to deliver steady earnings in 2022 and 2023. It’s also at work adapting its business for the fintech era.
Add in its 13-year history of dividend growth, and moderate payout ratio (42.92%), and there’s plenty to make a case this is a great name for income-focused investors.
On the date of publication, Louis Navellier has no positions in the stocks in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.