Buy these high-yielding stocks that have grown dividends for 10 years, Trivariate Research says
Stocks paying high dividend yields could become “increasingly important” for investors’ portfolios, according to Trivariate Research founder and CEO Adam Parker. High-yielding stocks outperformed the market as the dot-com bubble burst and the Federal Reserve cut rates, the former Morgan Stanley chief equity strategist said in a recent note. With the current higher interest rate environment, dividend-yielding assets may become key to portfolio construction, Parker said. “Over the long-term, dividends represent 35% of all equity returns but in the last decade have only averaged 16%. Low 10-year government bond yields are potentially the reason,” Parker wrote. “We suspect dividends could matter more for equity returns in the next decade than the last, more in line with long-term averages.” The research firm gave a list of stocks that have grown their dividends for 10 straight years and are in the top half of its quantitative model. Take a look at some of the names, and where analysts see them going forward. Energy company Chevron , the largest market-cap company on the list, offers a dividend yield of 3.7%. The company released preliminary second-quarter earnings results ahead of its actual announcement on Friday. Chevron said it issued $2.8 billion in dividends and share repurchases of $4.4 billion in the latest quarter. Almost 50% of analysts covering the stock have either a strong buy or buy rating on shares, according to Refinitiv. Shares are down 9.4% year to date. Telecommunications giant Verizon also made the cut. The telecom giant has a dividend yield of 7.6%. The company posted mixed results for the second quarter, posting $1.21 in earnings per share, excluding items, compared to analysts’ forecast for $1.17 per share, according to FactSet. Revenue of $32.6 billion was below expectations for $33.3 billion. To be sure, 20 of the 29 analysts covering the stock rate it a hold, according to Refinitiv. The average price target on shares suggests about 21% upside. Shares are down 13% in 2023. Another name on Trivariate’s list, Philip Morris , could rally almost 17% in the coming months, according to analysts polled by Refinitiv. The tobacco giant pays a dividend yield of 5.2%. Three-quarters of analysts covering the company have either a strong buy or buy rating on shares, per Refinitiv. Philip Morris recently posted an earnings beat in the latest quarter, which CEO Jacek Olczak attributed to smoke-free product growth. The stock has declined 4% year to date. IBM is another high and steady yielding stock named by Trivariate, with a dividend yield of 4.7%. The company recently reported an earnings beat in the second quarter, but missed on revenue. Shares have traded near the flatline in 2023. —CNBC’s Michael Bloom contributed to this report.
