7 Best Dividend Stocks to Buy Now
By: Jonathan Wolfgram,
The 7 best dividend stocks to buy now have a history of long-term rising payouts and superior total returns for extended periods compared to their non-dividend-paying peers.
Investors seeking a steady income for their portfolios should consider equities with a history of reliable returns — namely, those offering both strong dividend income and potential asset appreciation. Income investors may be tempted to fill their portfolios with only high-yield dividend stocks in an effort to maximize their returns but doing so subjects them to a disproportionate amount of risk.
Income investors often fail to look past the main performance metrics — namely dividend yield — in which a seemingly high payout rate may be due to a sudden drop in share price and be indicative of deeper financial problems.
Rather than subject themselves to this risk, savvy investors can stabilize their portfolios by taking positions in dividend stocks focused on both growth and regular dividend distributions. These companies offer consistent dividend payments but also maintain growing share prices, allowing investors to collect returns from receiving both dividend payments and value appreciation.
The seven best dividend stocks to buy now were chosen individually and selected from seven different sources. Each of the first five is either a current or recent recommendation from one of the investment experts at Eagle Financial Publications, which offers subscription newsletters and exclusive trading services.
The final two recommendations were selected by using two different screening tools. The first is the dividend screener on DividendInvestor.com, where I found 47 five-star dividend all-stars that met a rigorous process to identify those ranked the highest by a proprietary rating system.
The final dividend stock to buy now was found through our affiliate partner, StockRover.com. Using its screening tool, we isolated the stocks ranked in the 99th percentile for all of valuation, efficiency and dividends. All of the charts and figures seen below were also generated using Stock Rover. You can start a free trial of the Stock Rover research tools by clicking here.
Here are the 7 best dividend stocks to buy now.
7 Best Dividend Stocks to Buy Now #1
General Mills (NYSE:GIS)
Our first pick was originally recommended by Hilary Kramer, a seasoned portfolio manager and investment analyst with more than 30 years of experience working on Wall Street. More of her stock picks can be found through GameChangers, Value Authority, High Octane Trader, Turbo Trader, 2-Day Trader, IPO Edge and Inner Circle.
General Mills (NYSE:GIS) is one of the world’s largest food companies, producing everything from snacks and cereal to pet food and premium ice cream. Although the company operates worldwide, in 2020 over 76% of its revenue was generated in the United States.
The company’s returns have been remarkably stable in the trailing 12-month period, having grown a healthy 14.6% since February 2020. General Mills significantly outperformed its competitors in the consumer defensive industry. Although it undershot the S&P 500, GIS’s returns were considerably more level throughout the year than the index. While the S&P 500 index and other competitors took a severe loss in March 2020, General Mills was quick to recover, notching meaningful growth during the brief market recession. The company’s dividend-adjusted returns for the past year are plotted below:
Chart provided by StockRover.com. Create a Stock Rover account by clicking here.
The regular and sizable dividend payments that make General Mills a safe buy have been uninterrupted for over 120 years. The company paid out its first dividend in 1898 and has continued to do so since then, with a powerful upward trend and very few decreases in the dividend distribution along the way. Currently, the company pays a quarterly dividend of $0.51 per share, yielding 3.5%. General Mills announced its next dividend payment will be in May 2021, and its ex-dividend date is April 8, 2021 — meaning investors interested in receiving the next dividend distribution must purchase the stock before then.
7 Best Dividend Stocks to Buy Now #2
Compass Diversified Holdings (NYSE:CODI)
Compass Diversified Holdings (NYSE:CODI) was a previous — albeit recent — recommendation by Mark Skousen, Ph.D. Mark Skousen is a Presidential Fellow in economics at Chapman University, as well as a former professor of economics at Columbia University. He also has been identified as one of the 20 most influential economists alive today. While his income investment recommendations usually are reserved for subscribers to Forecasts & Strategies investment newsletter, the following dividend-paying position in his Home Run Trader premium service recently closed out a 24.57% profit from the share price alone.
The diversified company specializes in branded consumer businesses, as well as niche industrial businesses. Some of its companies include Ergobaby, Velocity Outdoor, Foam Fabricators, Sterno and several more.
Compass Diversified Holdings is a strong investment largely for its growth patterns. The company is in the 98th percentile for total growth potential, ranking it first among its peers in the conglomerates industry group. Also when compared to its peers, Compass Diversified Holdings has an earnings before interest, taxes, depreciation and amortization (EBITDA) in the 95th percentile, total revenue in the 90th percentile and expected earnings growth in the 98th percentile.
Chart provided by StockRover.com. To create an account, click here.
The company has paid a flat quarterly dividend of $0.36 per share every quarter since 2011, making its annual dividend distribution $1.44 and its dividend yield 6.4%. While it lacks dividend growth, CODI is demonstrating financial stability to continue a high and level payout whilst investing in its own growth as a company.
This growth has resulted in a 5.2% gain in CODI stock value in the trailing 12-month period. In the trailing three and five years, the company has performed even better by gaining 75.4% and 141.1%, respectively.
7 Best Dividend Stocks to Buy Now #3
Arbor Realty Trust (NYSE:ABR)
Our third pick for the 7 best dividend stocks to buy now comes from Bryan Perry, a financial expert with more than 30 years of experience on Wall Street. Perry has worked at Bear Stearns, Paine Webber and Lehman Brothers as well as hosted weekly financial news shows on the Bloomberg radio network. You can learn more about his flagship, high-yield investment newsletter, Cash Machine, by clicking here.
Arbor Realty Trust, Inc. (NYSE:ABR) is a nationwide real estate investment trust that originates and services loans for multifamily, seniors housing, health care and other diverse commercial real estate assets.
As the economy begins to recover in 2021 from the pandemic, Perry forecasts the rotation of capital into value sectors will dominate the investing landscape. In fact, there is evidence this shift has already started to occur following the elections — but it’s still early in the cycle. Real estate is on the receiving end of this sector rotation out of stay-at-home, work-from-anywhere stocks, including big-cap tech growth, and into value assets, he added.
Arbor manages a multibillion-dollar servicing portfolio, specializing in government-sponsored enterprise products. The company is a Fannie Mae DUS(R) lender and Freddie Mac Optigo Seller/Servicer. Arbor’s product platform also includes CMBS, bridge, mezzanine and preferred equity lending.
For third-quarter 2020, Arbor posted earnings per share of 50 cents, beating the 32 cents consensus analysts’ estimate and 37 cents from the year-ago quarter. Third-quarter net interest income jumped 35.19% to $43.8 million from $32.4 million. The company’s earnings per share over the last 10 years is charted below:
Chart provided by StockRover.com. Create a new account by clicking here.
Additionally, Arbor completed a 7 million share secondary stock offering on Nov. 10 to raise $94.5 million for business-related investments. Shares of ABR have pulled back from $14.40 to just prior to the stock offering and trade today right around $13. Earnings are forecast to come in at $1.01 for 2020 and increase sharply in 2021 to $1.52 per share.
Arbor pays an annual dividend of $1.28 per share, translating to an 8.3% current yield. Perry projected the stock has a “very good chance” to deliver a 20%-plus total return in the next 12 months.
7 Best Dividend Stocks to Buy Now #4
iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG)
The fourth pick on our list is courtesy of Jim Woods, a Wall Street veteran with more than 20 years of experience in positions ranging from hedge fund trader to financial writer and author. He is the author of Billion Dollar Green: Profit from the Eco Revolution and The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse. More information about his top strategies and stock picks can be found at: Successful Investing, Intelligence Report and BullsEye Stock Trader.
The iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG) is not a stock, but it is a fast-growing equity with regular dividend payments poised for success in the near future. The ETF tracks the MSCI Emerging Markets Investable Market Index and will invest at least 90% of its assets in the underlying equities. The index tied to IEMG measures small-, mid- and large-cap equities in emerging markets around the world, with only 30% of the fund’s assets invested in developed nations.
The ETF’s returns have been continuously trending upward for the last several periods, with its gains in the trailing 12 months totaling 33.5%. Total returns have been higher still in the long term, having grown 123.2% in the last five years and trending upward still.
IEMG suffered in early 2020 due to the coronavirus pandemic, but it had fully recovered its losses by July to bring sizable returns to investors by year’s end. Charted below is the ETF’s price per share for the trailing 12-month period plotted alongside a 50-day moving average to show the general upward trend:
Chart provided by StockRover.com. To create a Stock Rover account, click here.
The fund’s primary draw is its growth potential, but it supplements its capital appreciation with consistent semiannual dividend payments. IEMG currently pays a dividend of $0.72 per share and paid a total annual dividend of $1.16 for the year 2020 — giving it a trailing dividend yield of 1.7% with a forward yield to match.
7 Best Dividend Stocks to Buy Now #5
Schnitzer Steel Industries (NASDAQ:SCHN)
The fifth equity in our list of the 7 best dividend stocks to buy now is recommended by Jon Johnson, editor of Investment House Daily, Technical Traders Alert and Success Trading Group. Johnson has been featured in the Washington Post, Wall Street Journal, Bloomberg, Money Magazine and several other notable publications. More of his expert recommendations can be found by clicking here.
Schnitzer Steel Industries (NASDAQ:SCHN) is a massive scrap metal recycling company that deals in everything from auto bodies to construction demolition and simple appliances. The company also profits off its auto-parts business, where it harvests useful parts from obsolete vehicles and sells them to retail customers. In addition to recycling, the company operates a large steelmaking business working primarily with customers on the West Coast.
The company’s upward trend in capital gains has been astronomical, growing an impressive 103.2% in value in the past year, doubling the value of shareholders’ investments. This uptick is not an isolated incident either, as the company has maintained stronger returns still in the long-term — in the trailing five-year period, Schnitzer Steel Industries grew its share price 217.9%.
Rather than occurring in a single spike, the growth of SCHN stock has been gradual and consistent in the last 12 months:
Chart provided by StockRover.com, create an account here.
During its ride through 2020, the company kept its dividend payment at $0.19 per quarter, corresponding to an annual dividend distribution of $0.75 and a forward yield of 2.2%. The dividend has remained unbroken and unchanged since 2013 after the company increased its payout by 637.5%, and then again by another 28.8% to the current $0.19 distribution it remains at today.
7 Best Dividend Stocks to Buy Now #6
Emerson Electric (NYSE:EMR)
Sourced from our very own Dividend Screener on DividendInvestor.com, St. Louis-based Emerson Electric (NYSE:EMR) is a Dividend Allstar — a prestigious rank given to the equities we deem the most worthwhile investments based on consecutive dividend increases, dividend yield and several additional metrics.
With 64 years of consecutive dividend increases, Emerson Electric is a Dividend Aristocrat, meaning it is one of the select S&P 500 companies with more than 25 years of consecutive dividend increases. The company also sits among the Dividend Kings, an even more exclusive group of equities that have maintained at least 50 consecutive years of dividend hikes. Alongside Emerson Electric, there are only 28 additional Dividend Kings.
Currently, Emerson Electric pays a quarterly dividend of $0.50 and just announced its next payment for early March 2021. While this payout presently corresponds to an annual distribution of $2.02 and a yield of 2.4%, the company has already announced its plans to increase its dividend by an additional 2% this year.
The chart below overlays the company’s dividend payments for the last 15 years with its change in stock price, showing the consistent increase in dividend payout despite fluctuations in the share price’s performance.
Chart provided by StockRover.com. Create an account here.
Emerson Electric had a successful fourth quarter to close out 2020 — its free cash flow totaled $1.02 billion, a 2% increase over Q4 last year, and $2.55 billion for the year, an increase of 6% compared to 2019. This extra cash availability enables the company to resume share repurchases while still having plenty of cash left over to acquire smaller companies weakened by the pandemic. Management has announced it intends to repurchase shares in 2021 in amounts as high as $1 billion, likely to drive up the stock price in the near future.
The recent performance of the company’s share price has been excellent. In the trailing 12-month period, Emerson Electric has returned more than 17.3% to its investors. In the last five years, its share price has more than doubled, growing 116%.
7 Best Dividend Stocks to Buy Now #7
DHT Holdings (NYSE:DHT)
DHT Holdings (NYSE:DHT) was isolated through use of our affiliate partner, Stock Rover. We used the platform’s rating and valuation system to identify stocks scoring in the 99th percentile for overall quality, valuation, efficiency and dividends. More detailed screens still can be built on Stock Rover. If interested in doing so, sign up for a free trial here.
DHT Holdings is a crude oil tanker company operating on an international scale with its primary business split between Norway, Singapore, Oslo and Monaco. The company generates revenue off a fleet of carriers ranging in size from 200,000 to 320,000 deadweight tons.
Based on the company’s fundamentals and financial strength, it is undervalued by at least 9%. Its price-to-earnings (P/E) ratio of 3.7 and forward price-over-earnings-to-growth (PEG) ratio of 5.7 are both in the 97th percentile for the Oil & Gas industry Group, placing it first in the rankings among a whopping 391 of its peers.
Chart provided by StockRover.com. Create an account by clicking here.
DHT Holdings scores remarkably well in the efficiency category, and for good reason. It stands in the 99th percentile and operates as the third most efficient agent in the group of 392 Oil & Gas companies. The company’s return on invested capital (ROIC), a ratio used in finance, valuation and accounting to measure profitability and value-creating potential relative to capital invested by shareholders and debtholders, is an impressive 21.6%, beating the industry norm of 4.1% and the S&P 500 average of 15.4%.
Financial metrics this strong have allowed the company to pay out a remarkable dividend, with its annual distribution for 2020 totaling $1.35. This brings the trailing yield to 22.7%, and with a forward yield of 18.2% — the highest on our list — its dividend payments are bound to stay high.
What makes these yield numbers more impressive is they have been deflated by robust share price growth. Shares of DHT Holdings grew 27.3% in the trailing 12-month period and 111.0% in the trailing 3-year period. These high numbers mean the company’s dividend yield, while impressive, does not fully capture the payout strength of this efficient, undervalued company.
Dividend increases and dividend decreases, new dividend announcements, dividend suspensions and other dividend changes occur daily. To make sure you don’t miss any important announcements, sign up for our E-mail Alerts. Let us do the hard work of gathering the data and sending the relevant information directly to your inbox.
In addition to E-mail Alerts, you will have access to our powerful dividend research tools. Take a quick video tour of the tools suite.
Jonathan Wolfgram is an editorial staffer who writes website content at Eagle Financial Publications. He graduated from the University of Minnesota with Bachelor’s degrees in Finance and Philosophy. Jonathan writes for www.DividendInvestor.com and www.StockInvestor.com.