Global markets rebounded for a day before dropping again. During unpredictable movements in the markets, bonds can provide a “cushion.” But historically low-interest rates are keeping bond yields unattractive. Moreover, market volatility is anticipated to spike as the US presidential election approaches. Hence, high dividend-paying stocks appear to be a better investment now…
Dividend payments fell by $42.5 billion in the second quarter compared to the year-ago quarter. Many companies were forced to cut or suspend their payouts because of weak sales and cash-flows. Consequently, for S&P 500 large-cap companies, dividends totaled $119 billion for the quarter, compared to the record $127 billion issued in the first quarter. However, some companies were able to survive this unprecedented time due to their robust financial and business strength, and are still yielding more than 5%, compared to S&P 500’s mere 1.63% yield.
AbbVie Inc. (ABBV – Get Rating), International Business Machines Corporation (IBM – Get Rating), Altria Group, Inc. (MO – Get Rating), International Paper Company (IP – Get Rating), and The Gap, Inc. (GPS – Get Rating) are five stocks that could be a steady source of income for you due to their exceptional dividend yields and ability to sustain payments.
AbbVie Inc. (ABBV)
ABBV discovers, develops, and markets pharmaceutical therapies that address a range of diseases. It operates in the United States and internationally under seven segments – Immunology, Oncology, Aesthetics, Neuroscience, Eye Care, Women’s Health, and Other Key segments like Gastroenterology.
ABBV pays an annual dividend of $4.72, which translates into a yield of 5.26%. The company has a four-year average dividend yield of 4.26%. During the past five years, the average dividends per share growth rate for ABBV was 20.9% per year. The company pays quarterly dividends and has been consistently increasing its dividend each year. The most recent payout was a cash dividend of $1.18 in July 2020.
The company generated free cash flow of $2.9 billion in the last reported quarter, improving 24% year-over-year. It also reported $3.09 billion in cash flow from operations. It returned $1.75 billion back to its shareholders in the form of dividends. ABBV also delivered a solid top-line of $10.43 billion, increasing 26.3% year-over-year with a strong recovery in the aesthetics portfolio. Global net revenues from the neuroscience portfolio doubled year-over-year to $734 million.
EPS for the quarter came in $2.34, beating the consensus estimate by 6.8%. The company completed its acquisition of Allergan in May, significantly expanding and diversifying its revenue base with new therapeutic areas, enhancing long-term growth potential, and enabling investment in innovation for each of its therapeutic categories. The street expects EPS to grow 31.2% in the next quarter to $2.9.
ABBV closed yesterday’s trading session at $89.65, gaining 1.25% year-to-date. The stock has grown more than 30% since its March low.
How does ABBV stack up for the POWR Ratings?
B for Trade Grade
B for Buy & Hold Grade
A for Peer Grade
B for Industry Rank
B for Overall POWR Rating
The stock is also ranked #17 out of 232 stocks in the Medical – Pharmaceuticals industry.
International Business Machines Corporation (IBM)
IBM operates as an integrated solutions company that provides information technology (IT) products and services worldwide. Its Cloud & Cognitive Software segment offers software for vertical and domain-specific solutions in health, financial services, and Internet of Things (IoT), and other services application areas.
While the four-year average dividend yield for IBM is…
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