The following first appeared on Kiplinger’s as 13 High-Yield Dividend Stocks to Watch
High-yield dividend stocks have gained even more allure lately in the face of shrinking bond yields. However, while a handful are ready buys right now, several more sport alluring yields – at least 5%, and up into the double digits – but need a little more time to simmer before it’s time to dip in.
Patience is a virtue in life. That’s particularly true in the investing world. It’s even true across investing disciplines. Sober value investors wait for their price before buying, but disciplined market technicians also know to wait for the proper setup before trading.
Sometimes, you need to wait for a fundamental catalyst to make your trade worth making. Other times, it’s simply a matter of waiting for the right price. But the key is having the self-control to wait for your moment. Lack of patience can be a portfolio killer.
“We tell our clients during the onboarding process that we won’t be investing their entire portfolio on day one,” explains Chase Robertson, Managing Partner of Houston-based RIA Robertson Wealth Management. “We tend to average into our portfolios over time as market conditions warrant, and we’re not opposed to having large cash positions. Our clients thank us in the end.”
Today, we’re going to look at 13 high-yield dividend stocks to keep on your watch list. All are stocks yielding over 5% that you probably could buy today, but all have their own unique quirks that might make it more prudent to watch them a little longer rather than jump in with both feet.
The high-yield dividend stocks of the tobacco industry have been resilient survivors during the past 50 years. While smoking rates have plummeted around the world, the major brands have managed to stay relevant by raising prices and cutting costs.
The best-run operators, such as Marlboro maker Altria (MO), have managed to chug along despite a difficult environment and have managed to reward their patient shareholders with regular dividend hikes. Altria has hiked its dividend every year without interruption for nearly half a century, and the shares yield an attractive 7% at current prices.
All the same, the popularity of vaping has come as a new shock to the industry. Nielsen reported annualized volume declines of 3.5% to 5% throughout 2018. But the declines have accelerated this year, and recent Nielsen data saw volumes declining at an 11.5% rate during one four-week stretch this past spring.
Big Tobacco benefits from the popularity of vaping, but margins tend to be smaller than on traditional cigarettes. Furthermore, there is a growing concern that much of the growth in vaping is due to underage smokers picking up the habit. The U.S. Food and Drug Administration has stepped up its regulation and has gone so far as to order some vaping products removed from store shelves.
It remains to be seen how hard the regulators crack down or if traditional cigarette volumes continue to shrink at an accelerated pace. Like Ford, Goldman likes Altria right now. But it might make sense to watch Altria and the other Big Tobacco players for another quarter or two before committing. The shares have been in near-continuous decline since 2017, and trying to catch a proverbial falling knife is a good way to cut your hands.
The continue reading, see 13 High-Yield Dividend Stocks to Watch