The U.S. economy has remained strong throughout 2019. With Federal tax cuts waning off recession fears and the yield curve returning to a positive slope, corporate earnings are expected to grow in the upcoming quarters. Also, with the President’s recent approval of the first phase of a trade deal with China, it finally appears that the United States and China are closer to resolving some major trade issues.
Market on the Move in 2019
The S&P 500 Index has increased nearly 25% so far this year. Dow Jones Industrial Average and NASDAQ Composite Index have managed to improve marginally by 96.34 and 20.69 points, respectively, year to date. Going by historical trends and banking on the above-mentioned favorable factors, experts believe that these indices have further room for improvement in 2020.
Why Focus on High-Yield Dividend Growth?
The above backdrop further instils hope for investors who are keener on investing in fundamentally stable and regular income-generating stocks. Investors are always attracted to stocks that have high dividend yields. In fact, for an investor, dividend growth is an immensely important statistic to focus on at any point of the economic cycle, as these stocks brace their portfolio from market volatility. Hence, considering the positive growth trajectory of the economy, picking dividend growth stocks appears to be a winning strategy.
We believe dividend-paying stocks are relatively low risk as these offer stable and predictable income for investors. These even cushion investors against economic or political uncertainty through stable and predictable returns.
A history of strong dividend growth mostly indicates that dividend is likely to increase in the future. Historically, these stocks have outperformed for a longer period than the broader stock market.
Considering the current market volatility and an expected economic acceleration in the foreseeable future, it will be a prudent move for investors to add some high-yield dividend stocks to their portfolio.
Choosing the Right Picks
We have taken the help of the Zacks Stock Screener to zero in on five stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and have a dividend yield of more than 5%. Also, each of these stocks have gained more than 30% year to date and have a Growth Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our first pick is Artisan Partners Asset Management Inc. APAM. This Zacks Rank #2 company is an independent investment management firm that provides a broad range of U.S., non-U.S. and global equity investment strategies. Artisan Partners has a dividend yield of 8.1% and its expected long-term earnings growth rate is projected at 11%. The stock has a Growth Score of B.
The stock has returned 67.1% compared with the industry’s 15.7% rally.
Next on our list is Barratt Developments PLC Unsponsored ADR BTDPY. This Zacks Rank #2 company engages in developing residential and nonresidential properties, primarily in the United Kingdom. Barratt Developments has a dividend yield of 9.2%. Its earnings are projected to grow 6.3% in 2020 and 5.7% in the next five years. The stock has a Growth Score of B.
The stock has returned 66.5% compared with the industry's 21.4% rally.
Zacks Rank #2 company Macquarie Infrastructure Company MIC is also a solid pick. The company owns and operates a portfolio of businesses that provide services to other firms, government agencies and individuals, primarily in the United States. It has a Growth Score of B. Also, the company’s earnings growth rate over the past five years has been 0.8% and it has a dividend yield of 9.2%.
The stock has returned 31.5% compared with the industry’s 31.9% rally.
Investors can also pick Vector Group Ltd. VGR. This Zacks Rank #2 stock has a Growth Score of A. The company is principally engaged in the manufacture and sale of cigarettes, and sale of information processing systems. Its earnings growth rate over the past five years has been 2.2%. The company has a dividend yield of 12.4%.
The stock has returned 60% compared with the industry’s 27.6% rally.
Lastly, Zacks Rank #1 stock Spark Energy, Inc. SPKE is also a profitable pick. This independent retail energy services company provides residential and commercial customers across the United States with an alternative choice for natural gas and electricity. The stock has a Growth Score A. The company’s earnings are projected to grow 122.2% in the fourth quarter. It has a dividend yield of 7.8%.
The stock has returned 33.2% compared with the industry’s 26.1% rally.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
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