2 Top Dividend Stocks Soar Amid Market Crash Recovery
By: Paul Dykewicz,
Two top dividend stocks are soaring amid the ongoing market crash recovery and are worth strong consideration by income-loving investors.
One of the two top dividend stocks is a health care giant that is teaming up with a German biotech partner to develop a vaccine for the deadly coronavirus, also known as COVID-19. The other of the two top dividend stocks is a cell tower company that should boost its revenue and profits strongly from the rollout of high-speed 5G services.
The opportunity to invest in dividend-paying stocks that offer strong growth potential includes the chance to buy them at reduced prices after the stock market crashed roughly 30 percent in six weeks from Feb. 24 to March 16 as coronavirus cases spread from China and Europe to the United States. Specifically, between Feb. 24 and the close of trading on Monday, March 16, the Dow Jones Industrial Average (DJIA) tumbled 31%, the S&P 500 dove 29% and the Nasdaq tanked 30%.
Despite the Recent Market Crash, 2 Top Dividend Stocks Shine
Of course, the coronavirus crisis has caused government leaders around the world to order people to stay indoors with limited exceptions as the number of cases and deaths zoomed to 2,223,086 and 126,600, respectively, as of April 17. The United States has the dubious distinction of being the country with the most COVID-19 cases, totaling 690,900, and the biggest death toll of 35,955, also as of April 17.
However, President Trump announced new guidelines on April 16 to allow individual states to reopen activities in phases, using data and measures recommended by top medical experts. The guidelines set benchmarks on a reduction in new cases, testing requirements and hospital resources for states to meet before starting a phased reopening that could reopen now-closed businesses and put unemployed people back to work.
The S&P 500, a broad measure of the domestic stock market, shows that since falling to its closing low of 2,237.40 on March 23, the market has come roaring back more than 25% through the close on April 16 of 2,799.55. In a normal market, that remarkable run would signal a “raging bull” that’s trading at all-time highs, said Jim Woods, who leads the Successful Investing and Bullseye Stock Trader advisory services.
“But of course, this is no normal market,” Woods said. “In fact, despite that big market surge off the lows, the S&P 500 is still 17.32% off its all-time high set on Feb. 19.”
2 Top Dividend Stocks Include a COVID-19 Vaccine Development Dream Team
“Dividend stocks can be a good way to play this volatile market downturn,” said Woods, who also chooses recommendations for the Fast Money Alert advisory service that include option recommendations. “However, you must purchase the right dividend stocks. The reason why is because the likely very deep recession caused by the COVID-19 shutdown of the economy could pressure many good companies into either not raising their dividends this year or even cutting their dividends just to survive the massive loss of revenue.”
Two dividend stocks Woods recommends are ones he tells me are “largely immune” to the coronavirus. They feature diversified health care giant Johnson & Johnson (NYSE:JNJ), of New Brunswick, N.J., offering a new annualized dividend yield of 2.89%, and Boston-based cell phone and data tower real estate investment trust (REIT) American Tower REIT (NYSE:AMT), with a 1.73% dividend yield.
Johnson & Johnson ranks as one of 30 companies known as Dividend Kings that have boosted their annual payout for at least the past 50 years. Johnson & Johnson announced on April 14 that it raised its dividend from 95 cents a share to $1.01, up 6.3%, beating Wall Street’s earnings and revenue expectations, while scaling back its full-year 2020 financial guidance to adjusted earnings per share of $7.50-$7.90 from $8.95-$9.10.
Johnson & Johnson Ranks as One of Investment Guru’s 2 Top Dividend Stocks
The company is among those in the pharmaceutical industry that are vying to develop a vaccine to combat COVID-19. Officials at Johnson & Johnson announced that the company already has a prospective vaccine for the coronavirus and expects to begin Phase 1 Human Clinical Studies by September 2020, possibly leading to use as soon as 2021 if testing convinces regulators at the Food and Drug Administration (FDA) to approve it as an “emergency” pandemic treatment on a not-for-profit basis.
“With Johnson & Johnson’s century-plus history of leading in times of great challenge, we are mobilizing our resources across the company in the fight against the COVID-19 pandemic,” said Alex Gorsky, its chairman and chief executive officer. “Johnson & Johnson is built for times like this, and we are leveraging our scientific expertise, operational scale and financial strength in the effort to advance the work on our lead COVID-19 vaccine candidate.”
Despite the company’s stock receiving a lowered price target of $150 from $165 from Wells Fargo on April 2 and of $153 from $161 from Raymond James on April 9, those pre-earnings downgrades did not stop the share price from rising $6.48, or 4.48%, to $146.03 on April 14 after it reported first-quarter 2020 net earnings of $5.8 billion, jumping 54.6%, and revenues of $20.7 billion, up 3.3%, from the same quarter a year ago.
Chart courtesy of www.StockCharts.com
Cell Tower Company Receives Expert’s Nod as One of 2 Top Dividend Stocks
American Tower has been a stalwart performer for years, yet in mid-March, AMT saw its share price tumble — and it wasn’t just the wider market selloff that prompted the decline, Woods told me. Instead, traders negatively reacted to the rather abrupt resignation by its Chief Executive Officer Jim Taiclet on March 16, 2020. He made the move to take the CEO position at Lockheed Martin (NYSE:LMT), and that created understandable angst on the part of AMT shareholders, Woods opined.
“The reason why is because in addition to having a business model perfectly positioned for future growth — cell phone companies enter into long-term leases with real estate companies that include rent escalators — along with ever-increasing demand for mobile data, AMT also was considered the best-run company in the business,” Woods said.
Yet AMT’s board is filled with “very smart people,” Woods continued. They knew continuity was key to calm investor fears and to continue to run the company in the same winning manner as Taiclet led it.
“So, AMT’s board immediately named longtime CFO Tom Bartlett as new permanent CEO,” Woods said. “That decisive move calmed investors, and along with the wider risk-on bid in stocks, allowed AMT shares to recoup all of its post-Taiclet losses.”
Both JNJ and AMT have been long-time recommendations in the Intelligence Report advisory service’s Income Multipliers portfolio that Woods leads.
Chart courtesy of www.StockCharts.com
The stock market crash recovery is drawing attention to two top dividend-paying stocks that are worth weighing for potential purchase by investors who seek income and share-price appreciation. In an age of sacrificial service from health care providers caring for coronavirus patients, Johnson & Johnson and American Tower offer investors a chance to buy shares of two top dividend stocks that are vital to helping people, particularly in emergencies
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. Endorsements for the book come from Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Dick Vitale and others. Follow Paul on Twitter @PaulDykewicz.