The relative safety of dividend stocks makes them a compelling choice at any time. However, at times when many equities (and entire indexes) are posting negative growth, safe dividend stocks really shine. That’s because these stocks generate regular income that investors can reinvest. This boosts the total return of an investment.
Dividend stocks are usually stable companies with reliable earnings that they reinvest for the benefit of shareholders. In bullish times, this dividend can help to bring a stock’s total return on par with higher growth stocks. And in bearish times, this can help to mitigate losses.
One frequently referenced component of dividend stocks is the dividend yield. In general, a higher yield is better than a lower one. But there are other factors, such as the sector a company is in, that provide context for its yield. What many investors find more important is a company that has solid fundamentals that support the current dividend and offer an opportunity for the dividend to increase over time.
With that in mind here are seven safe dividend stocks with a high yield that can boost your total return.
|GILD||Gilead Sciences, Inc.||$64.01|
|ET||Energy Transfer LP||$11.76|
|HDV||iShares Core High Dividend ETF||$108.81|
Safe Dividend Stocks to Buy Now: Dow (DOW)
The first of the safe dividend stocks to consider is Dow (NYSE:DOW). The stock price for the Michigan-based company is up 22% in 2022. And the stock has held those gains in May while the broader market is undergoing a correction. Plus, by many fundamental metrics including price-to-earnings (P/E), forward P/E and Price-to-Earnings for Growth (PEG), DOW stock looks undervalued.
In its first-quarter earnings report, the company reported 28% year-over-year revenue growth that was spread across all of its verticals. This was despite some concern that the company would be weakened by its exposure to Russia.
Currently, the company pays an annual dividend of $2.80 that calculates to a dividend yield of 4.13%. That’s more than twice the sector average. And if safety is your primary concern, it doesn’t get much safer than a company that has paid a dividend for 442 consecutive quarters.
Gilead Sciences (GILD)
In the last two years, Gilead Sciences (NASDAQ:GILD) has shown volatility that is inherent in the biopharmaceutical industry. For example, in the early days of the pandemic, GILD stock soared because its existing drug, remdesivir, was found to have some effectiveness in treating Covid-19. However, as vaccines became available, the stock was left behind.
In fact, the stock is down about 11% in 2022. And the consensus opinion of analysts is that GILD stock will essentially make up its lost gains and no more.
That’s where a reliable dividend comes in. And Gilead has an annual dividend of $2.92, meaning a dividend yield of 4.51%. Plus, the company has been increasing its dividend for each of the last seven years.
Plus, Gilead has a range of drugs including a robust pipeline that are used in treatment of ailments ranging from HIV, hepatitis and cancer. This means it will have many bites at the apple.
Safe Dividend Stocks to Buy Now: Chevron (CVX)
If you’re looking at safe dividend stocks, the energy sector — particularly the oil and gas sector, is a good place to start. Stocks like Chevron (NYSE:CVX) are cyclical in terms of their price movement. However, many of these companies have solid fundamentals that allow them to pay a dividend in any economic climate. So whether your concern is inflation or recession or both, Chevron looks like a solid choice.
CVX stock is up 52% in 2022. This is the outlier from the last five years in which the stock had not done that much prior to the beginning of the pandemic. And while the company’s growth is still expected to decline on a year-over-year basis for the next five years, it’s likely to remain at or above 2021 levels.
Plus, the company pays out a $5.68 annual dividend which calculates to a 3.19% dividend yield. The company has increased its dividend in each of its last 35 years.
Semiconductor stocks were among the biggest winners during the pandemic. Intel (NASDAQ:INTC) didn’t enjoy as robust of a gain as many of its competitors. That isn’t because of any fundamental weakness in the company. And as investors are finding out, that may be a benefit. The stock is “only” down 14% in 2022. That’s a bit better than some of the other stocks in the sector. And analysts give the stock a 16% upside from its current price.
From a fundamental standpoint, Intel looks to be a bit undervalued. Its earnings growth may be at lower levels than prior to the pandemic, but the growth should be more than sufficient to cover its dividend. And right now that dividend pays out $1.46 on an annual basis and yields 3.28%. The company has increased its dividend in each of the last eight years.
Safe Dividend Stocks to Buy Now: AT&T (T)
Is the worst over for AT&T (NYSE:T)? It appears that it may be. The company’s stock was under pressure when it completed its spinoff of its WarnerMedia unit. Conventional wisdom was that many investors would flee from T stock after it cut its dividend in half. However, as of this writing, the stock still has a dividend yield above 5%.
This leaves investors free to start looking at the overall narrative for T stock. And with the stock up 12% in the last month, investors may like what they see. It starts with the company’s focus on 5G. Investors may also be encouraged by the amount of cash the WarnerMedia sale put on the company’s balance sheet. Money that can be applied to the debt on its balance sheet.
Energy Transfer (ET)
The next of the safe dividend stocks on this list is the one with the highest dividend yield. As of this writing, Energy Transfer (NYSE:ET) has a dividend yield of 6.87%. Some of this has to do with the fact that the company is a master limited partnership. As such, it is able to pass along most of its free cash flow as tax-deferred distributions to investors, often in the form of a dividend.
Energy Transfer already has a long history of developing infrastructure projects and plans to spend over $2 billion in 2002 to expand its network. Energy Transfer is an undervalued stock in the energy sector. However, with 73% year-over-year revenue growth, the stock is beginning to draw the attention of investors. In fact, ET stock is up 43% for the year. However, analysts believe there is still an approximate 31% upside for the stock.
Safe Dividend Stocks to Buy Now: iShares Core High Dividend ETF (HDV)
When it comes to safe dividend stocks, an exchange-traded fund (ETF) that focuses on high-yield dividend stocks makes a lot of sense. Investors have many choices, but for the purposes of this article, one to consider is the iShares Core High Dividend ETF (NYSEARCA:HDV).
This fund focuses on developed markets in North America. At the time of this writing, the three sectors with the heaviest weighting in the fund are health care, energy, and consumer staples. So it’s no surprise that Exxon Mobil (NYSE:XOM), AbbVie (NYSE:ABBV) and Johnson & Johnson (NYSE:JNJ) were the top three holdings (by percentage) in the fund as of April 30, 2022.
The overall dividend yield for the fund is 3.28% and it features a very low net expense ratio of just 0.08%.
On the date of publication, Chris Markoch 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.