May 26, 2022
It’s a scary time for stock market investors. Both the S&P 500 and the Dow have entered correction territory. Meanwhile, the Nasdaq Composite is already in a bear market.
But you don’t necessarily need a rallying market to make money in stocks — you can also collect dividends.
Advertisement
Healthy dividend stocks have the potential to:
- Offer a plump income stream in both good times and bad times.
- Provide much-needed diversification to growth-oriented portfolios.
- Outperform the S&P 500 over the long haul.
While the prevailing sentiment is far from bullish, Wall Street still likes dividend stocks. Here are three that analysts find particularly attractive.
AT&T (T)
Let’s start with a household name.
AT&T is one of the largest telecommunications companies in the world. More than 100 million consumers in the U.S. use its mobile and broadband services. At the same time, the company also serves nearly all of the Fortune 1000 companies with connectivity and smart solutions.
And because wireless and Internet services are necessities for the modern economy, AT&T generates a recurring business through thick and thin.
The company pays quarterly dividends of 27.75 cents per share, translating to an annual yield of 5.2%. To put things in perspective, the average S&P 500 company yields just 1.6%.
Last month, Goldman Sachs analyst Brett Feldman reinstated coverage of AT&T with a ‘buy’ rating. He also set a price target of $23 — roughly 8% above where the stock sits today.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — are you doing the same?
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Robert Kiyosaki says this 1 asset will surge 400% in a year and begs investors not to miss this ‘explosion’
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Simon Property Group (SPG)
Real estate has been a popular inflation hedge throughout history. Not only do real estate prices tend to increase in an inflationary environment, but rental properties can also generate a stable income stream for investors.
Advertisement
These days, you don’t need to be a landlord to collect rent checks. Publicly traded real estate investment trusts own and operate income-producing properties on investors’ behalf.
Simon Property, for instance, owns commercial real estate — shopping malls, outlet centers, and community/lifestyle centers — across North America, Europe, and Asia.
Simon Property’s board of directors recently approved a 3% increase to the company’s quarterly dividend payment to $1.70 per share, giving the stock an annual yield of 6.1% at the current price.
Earlier this month, Stifel analyst Simon Yarmak reiterated a ‘buy’ rating on Simon Property. His price target of $165 implies a potential upside of 43%.
Plains All American Pipeline (PAA)
For investors looking for oversized yield in today’s market, the energy sector simply can’t be ignored.
Advertisement
With strong oil and gas prices, producers are making money hand over fist. But when it comes to returning cash to investors, midstream operators might do an even better job.
Check out Plains All American Pipeline, a master limited partnership with an extensive network of pipeline gathering and transportation systems. The partnership says that its goal is to “increase its distribution to Unitholders over time through a combination of organic and acquisition-oriented growth.”
Management recently raised PAA’s quarterly distribution by 21% to $0.2175 per unit. At the current unit price, the stock yields a generous 7.7%.
While the broad market is deep in the red year to date, PAA climbed 11% in 2022.
Morgan Stanley expects the uptrend to continue. Its analyst Robert Kad recently raised the price target on Plains All American Pipeline from $14 to $15 — implying a potential upside of 33% from the current levels.
Sign up for our Moneywise newsletter to receive a steady flow of actionable ideas from Wall Street's top firms.
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- Inside a $1B real estate fund offering access to thousands of income-producing rental properties — with flexible minimums starting at $10
- Vanguard’s outlook on U.S. stocks is raising alarm bells for retirees. Here’s why and how to protect yourself
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
