With the current interest rates, high dividend-yielding assets could become crucial to portfolio construction.
High dividend stocks could become increasingly important to investors’ portfolios.
According to Adam Parker, founder and CEO of Trivariate Research, high-yield stocks outperformed the market when the dot-com bubble burst and the Federal Reserve lowered rates, the former Morgan Stanley chief equity strategist said in a recent note. With current higher interest rates, high-dividend assets could become crucial to portfolio construction, Parker said. “Over the long term, dividends account for 35% of all stock returns but have averaged only 16% over the past decade. Low 10-year government bond yields may be the reason,” Parker wrote. “We believe dividends may be more relevant to stock returns over the next decade than in the past, more in line with long-term averages.”
The research firm has provided a list of stocks that have increased their dividends for 10 consecutive years.
Energy company Chevron, the company with the largest market capitalization on the list, offers a 3.7% dividend yield. Chevron said it issued $2.8 billion in dividends and repurchased $4.4 billion in shares in the most recent quarter. According to Refinitiv, nearly 50% of analysts have a buy rating on the stock. Shares are down 9.4% year-to-date.
Telecommunication giant Verizon was also shortlisted. The company has a dividend yield of 7.6% and released mixed results for the second quarter. Verizon’s earnings per share (EPS) amounted to $1.21 versus analyst expectations of $1.17 per share, according to FactSet. Revenue of $32.6 billion was lower than the $33.3 billion forecasted. According to Refinitiv, 20 of the 29 analysts rate a "hold" for the stock. The average target price on the shares suggests a 21% upside potential. Stocks are down 13% in 2023.
Another name on Trivariate’s list, Philip Morris, could jump nearly 17% in the coming months, according to analysts polled by Refinitiv. The tobacco giant offers a 5.2% dividend yield. Three-quarters of analysts covering the company have a buy rating on the stock, according to Refinitiv. Philip Morris recently topped earnings forecasts in the most recent quarter, which CEO Jacek Olczak attributed to growth in smoke-free products. Shares are down 4% year-to-date.
IBM is another high-yielding stock picked by Trivariate, with a dividend yield of 4.7%. The company recently reported better-than-expected results in the second quarter but missed its revenue forecast. Shares have traded near the trendline in 2023.
Original article published on Money.it Italy 2023-08-11 08:15:00. Original title: Dividendi, ecco le azioni che rendono di più da 10 anni
