Ok, so I am going to be talking about dividend stocks in this post, and the 4 that I will be buying in 2018, so for all of you people who want to buy a mutual fund and hold it for the next 50 years, this article may not be for you. I am going to cover 4 stocks that basically wrote the book on paying dividends.
So, if you are looking to invest in stocks that pay dividends, there are not too many of them right now, but there are some really good ones out there if you can find them. First thing I will be considering when buying a stock that pays a dividend is why that company are offering it. Just because a company is paying a high dividend, doesn’t mean it’s a good investment, for example, there is a company called Windstream and they are paying a 28% dividend each year to hold their stock! Their stock isn’t doing too well at the moment, it’s currently trading at $2.07 a stock. Companies like this offer high dividends to buyers to try and entice investors into buying the stock, while keeping their stock price afloat.
When buying a stock that pays a dividend, or any stock for that matter, I need to look into why the company is offering a dividend, and I want to find out how volatile that dividend they offer is. What I mean by that is I don’t want to be buying a stock that has a record of a 2% dividend, 7%, 29%, 14%… that is too volatile, I want to try and find a stock that has a stable dividend, after all, I am a long term investor. I also want to be looking at how volatile the actual stock price is, I don’t want to be investing in a stock that has huge price swings over a short time frame, and I want the stock to have a slow, steady growth.
So, the first company I am interested in is Verizon. Verizon have just recently bought Yahoo, so they own Yahoo Finance, Yahoo Sport and other Yahoo entities. They are currently creating a new division which they have called Oath Inc. Oath Inc is 50 media and tech brands that you have probably heard of before, like Huffington Post, Tumblr, AOL… They are hoping that by doing this, it will drive growth going into the future. Currently, Verizon pays a 5% dividend. Verizon have a long history of paying a dividend, so you are pretty much guaranteed that you will get it. They have lots of shares trading, and the stock is a pretty slow mover, with about a $7 monthly price change.
Annaly Capital Management – REIT
Annaly Capital Management is a real estate investment trust. Real estate investment trusts tend to pay quite a high dividend, it’s how they pay for the returns they get on the real estate. This company will go out and buy lets say a shopping mall, then get different companies to come in and rent floor space from them. The rent, or part of it, is usually paid out to investors in the form of a dividend. I don’t want to be investing in a real estate trust with all their eggs in the one basket, what I mean by this is, I don’t want to be buying stock of a company that has only investments in shopping malls, or investments in public housing. I want to be investing in a company with a diverse portfolio. Annaly Capital Management has investments in residential real estate, commercial real estate, some middle market business, and even agency mortgage-backed securities.
Annaly Capital Management currently pays a 9.9% dividend, which makes it a great stock to invest in.
You are bound to know who AT&T are, if not, they are a communications company. They have a long history of paying a really stable dividend, currently, they are paying 5.15%. They are well known for being a low and slow kind of stock that doesn’t move too much too quickly in either direction. AT&T are a very large company, and have a long history of being stable, and for these reasons, I am choosing to invest in them.
IBM are a huge computing firm, with dibs in technology, computer science and some other areas. Currently, they are paying out 4.16% on a stock. IBM, like AT&T are a big stock, that really doesn’t move too much. IBM have recently announced better than expected earnings, and their business prospects are clearly improving. The company also offers impressive quantitive metrics, in key areas such as dividend growth, stock buybacks and dividend yield. IBM has a long track record of paying out a great dividend each year since 1916, and those dividends have raised each year, over the past 22 years.
So, there you have it, the 4 dividend stocks I am going to buy in 2018. Comment below if you have any different opinions, or want to share what you are investing in.