4 Cheap Dividend Stocks To Consider Adding To Your Long-Term Portfolio
Dividend stocks have been a great vehicle for investors who like predictable income along with good long-term growth potential. If you’re a long-term investor, then finding the right dividend stocks to buy in the stock market in 2021 could make a significant difference in your portfolio returns. Some might be asking “how do I buy dividend stocks”… The first step to take is to use financial sites to screen for stocks that pay dividends. The general rule of thumb to find the best dividend stocks is to compare a company’s dividend yield among its industry peers.
If a company’s dividend yield is much higher than that of similar companies, it’s worth putting additional research into the company to understand the safety of the dividend. After all, you don’t want to be investing in stocks that pay a 7% dividend yield this year and 2% next. Income investors want a steady and reliable recurring source of income. For more conservative investors, this would be a likely strategy given the current state of the stock market. While growth investors brave the volatility in the latest trends such as cryptocurrency, income investors build their wealth on dividends.
If you’re not sure which stocks to buy, why not take cues from the investing legend Warren Buffet. The Oracle of Omaha is big on dividends. Evidently, Buffett’s Berkshire Hathaway (NYSE: BRK.A) portfolio boasts over 30 dividend-paying securities. And the dividends the company receives are in the billions annually. Of course, regular investors are not trading at the same volumes as Berkshire Hathaway. But, investing in the top dividend stocks now could appeal to investors looking to bolster their portfolios with defensive plays. With all that in mind, would you be watching these four dividend stocks in the stock market today?
Top Dividend Stocks To Consider Buying Now
First up, Constellation Brands is a leading international producer and marketer of alcoholic beverages. The beverage company turned in better-than-expected quarterly results last month. Despite weak demand at bars and restaurants, the alcoholic beverage giant announced solid growth in its beer portfolio. For the 3 months ended February 28, 2021, net sales rose 3% year-over-year to $1.95 billion. In addition, cash generation trends are also strong, with free cash flow reaching as high as $1.5 billion. For this reason, there isn’t a big hurdle for Constellation Brands to maintain or boost its dividend yield.
The company’s management is optimistic about growth for the coming year. In particular, Constellation Brands expects net sales in this segment to increase by 7% to 9%. It’s worth pointing out that the company has developed plans to invest in additional capacity in Mexico. This will provide the long-term flexibility needed to support the future growth of the core, high-end Mexican beer portfolio. Besides, management is also anticipating a strong operating cash flow of $2.4 billion and $2.6 billion in fiscal 2022. Considering the financial strength of the company, would you be adding STZ stock to your watchlist?
Next up, AT&T needs no introduction. Besides being one of the largest providers of mobile and fixed telephone services in the U.S., it is also the parent company of mass media conglomerate WarnerMedia. This would make it the largest media and entertainment company globally in terms of revenue as well. It also operates hallmark entertainment services HBO Max and AT&T TV. This combination of services complements each other and could be the key to the company’s success moving forward. T stock currently has a dividend yield above 6%.
Now, AT&T has yet to raise its dividend in 2021. But it still has an average dividend yield of over 5% for the past 10 years. It is unlikely AT&T would break its streak. Perhaps, investors might see a dividend raise later this year. A potential push for AT&T to propel forward would be the rollout of 5G networks. As consumers and businesses looking to upgrade their wireless devices, the boost in data download speed would play to AT&T’s benefit. With that in mind, could it be rewarding for investors to hold on to T stock for the long term?
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Pfizer has been in the spotlight in the stock market and we all know that has to do with its COVID-19 vaccine. The company has been a long-time favorite for income investors. The drugmaker’s dividend yield currently stands at 3.9%. This week, the company received the authorization from FDA to administer the company’s vaccine for adolescents aged between 12 and 15 years. Separately, Pfizer has also announced its first-quarter financials recently.
To start things off, Pfizer posted quarterly revenue of $14.58 billion, a 45% increase year-over-year. A chunk of this revenue came from its vaccines segment, at $4.89 billion. Net income for the quarter was a cool $4.87 billion, also a 45% increase year-over-year. With the coronavirus pandemic remaining a pressing issue for the world, I wouldn’t be surprised if the vaccine sales are going to be even higher over the next couple of years. If anything, the company appears to be in a great position to deliver strong growth over the coming years. Given all of this, is PFE stock worth adding to your portfolio?
[Read More] Best Communication Stocks To Watch Right Now
Previously known as CenturyLink, Lumen Technologies is a telecommunications company that pays a big dividend yield. As it stands, the company has a dividend yield of more than 7%. The company has been struggling with its legacy internet landline services. As a result, this has prompted Lumen to invest in high-performance fiber-optics networks. And the great news is that the new investment is generating strong cash flows. Following this momentum, there’s a chance that margins could significantly improve as the company continues its pivot to fiber and enterprise services.
Recently, the company hosted an Analyst Day presentation, where it showcased exciting company developments to shareholders. From the presentation, the company highlighted partnerships with VMWare (NYSE: VMW), IBM Cloud (NYSE: IBM), and T-Mobile (NASDAQ: TMUS). Admittedly, no one can be sure what the future holds for the company with these strings of partnerships. But things certainly could play out well if Lumen hits off with one of these partners. If you believe that the company could bump up its revenue growth through these partnerships, would you include LUMN stock on your watchlist today?