There’s nothing easy about selecting a dividend stock, especially when the market is trading near all-time highs, as it is now. But if you dig deep enough, you can find some great opportunities that combine high yields and compelling investment opportunities. Three that you should be looking at right now, according to these three Motley Fool contributors, are cellphone giant…
Verizon(NYSE:VZ), global drugmaker AbbVie (NYSE:ABBV), and utility bellwether Southern Company(NYSE:SO). They aren’t exactly set-and-forget investments, but for a little extra work, you’ll get a lot of extra yield.
A big payout from a market leader
Brian Stoffel (Verizon): While I don’t own shares of Verizon myself, that’s largely because I still have over three decades until retirement comes calling. But if my golden years were right around the corner, this company would be at the top of my list.
There are three very simple reasons for this. First, only a few players dominate the telecom space because the costs of building the infrastructure to connect the country are massive. The chance of an upstart disrupting the field — while possible — is very slim. By keeping an eye on AT&T and T-Mobile, you can have a pretty good idea where Verizon stands.
Which brings me to my second point: Verizon is the leader in its industry. It has the highest market share of mobile plans in America, and it was the first to market with 5G technology. As a result, it will likely be able to charge more for its plans, and open the door to more Internet of Things (IoT) revenue.
And third, the dividend is big and sustainable. Currently yielding 4.2%, Verizon’s dividend has only eaten up 54% of the company’s free cash flow over the past year. That means the payout is very safe, and there’s even room for it to go up in the long run.
A falling knife worth catching
George Budwell (AbbVie): AbbVie, a dividend aristocrat, has suddenly turned into a falling knife. The loss of exclusivity for its flagship anti-inflammatory medication Humira in Europe, a major setback in immuno-oncology with Rova-T, and the steady decline in its hepatitis C franchise have all conspired to drive the drugmaker’s shares down by a whopping 30% over the last 12 months. However, this steep sell-off might represent an extremely attractive entry point for income and value investors alike.
After this sharp downturn, AbbVie’s shares now sport a ginormous…
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