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Will Rescue Deal Impact Last? 4 Coronavirus-Proof Dividend Picks
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The $2-trillion economic rescue deal has halted the coronavirus-driven bloodbath in the market. In fact, the buzz around this largest-ever rescue deal boosted market sentiments so much so that on the day before the announcement, all major benchmark indices notched significant single-day gain. The market has, since then, continued with its upward rally, although it’s a big question whether or not the trend would last long.
Stock Prices Going Haywire
A number of market watchers take this uptrend as a temporary halt, observing the price surges of certain stocks, which have no solid reason to rebound in the present scenario. We may take the example of casino stocks like Wynn Resorts (WYNN - Free Report) , which recently announced foregoing significant portions of salaries of its board of directors and top executives following the share-price slump in the near past. Post the announcement of the economic stimulus, the stock rallied 12.7% on Mar 25.
The travel and tourism company, Norwegian Cruise Line (NCLH - Free Report) , another firm to be hit hard by the pandemic, gained 23.3% on Mar 25and was one of the best performing S&P 500 stocks that day.
Meanwhile, with the worldwide adoption of stay-at-home guidelines, Facebook is another stock investors have been closely observing. The firm too is taking a number of initiatives, the latest being the launch of the Coronavirus Community Hub for Messenger users to curb the spread of pandemic-related rumors. Surprisingly, the stock fell 2.9% on Mar 25.
How to Manage Your Portfolio?
While many market watchers believe that this fiscal stimulus-led correction might disappear soon, once again pushing the market to the bear territory, a number of them see a silver lining to it. Stephen Innes, chief global markets strategist at AxiCorp, stated "The market is running with the assumption that while this tumult will be the deepest recession in modern-day financial history, it will also be the shortest." (as reported in CNN Business)
Nevertheless, it’s prudent for investors to pick dividend-paying stocks as a regular source of income. Such stocks hold longer-term appeal and to some extent, weigh the impact of the coronavirus crisis. Market strategist Jim Cramer recently suggested to particularly bag a few “accidentally high yielders” which have a dividend payout ratio of 4% or higher and robust balance sheets.
Here we pick four such stocks.
AbbVie Inc. (ABBV - Free Report) : This Zacks Rank #2 (Buy) pharma stock can be treated as one of the finest “accidentally high yielders” right now.AbbVie has been successful in expanding approvals for its cancer drugs, Imbruvica and Venclexta. The stock has a strong 19.8% long-term historical growth rate and a five-year expected growth rate of 12.4%.The company’s current-year dividend yield is 6.4% and payout ratio is 52.8%.
Medtronic plc. (MDT - Free Report) : Another stock which promises long-term gain for investors, right now, is medical device stalwart Medtronic. This Zacks Rank #2 stock has a long-term historical growth rate of 5.7% and a long-term expected growth rate of 7.1%. The company’s fiscal 2021 dividend yield is 2.4% and payout ratio is at 38.9%.
QUALCOMM Incorporated (QCOM - Free Report) : This global manufacturer of digital communication products is currently faring better compared to other firms, thanks to the sudden coronavirus-led spike in demand for its products. This Zacks Rank #2 stock also holds a strong long-term growth potential as it has a long-term historical growth rate of 18.9%.Meanwhile, the stock has a dividend yield of 3.6% and a payout ratio of 74.3% for 2020.
Constellation Brands Inc. (STZ - Free Report) : Investors may hold on to this producer and marketer of beer, wine and spirits, with a solid 18.4% long-term historical growth rate and a five-year expected growth rate of 5.8%. This Zacks Rank #3 (Hold) stock has a dividend yield of 2.1% and a payout ratio of 33.7% for 2020.
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Will Rescue Deal Impact Last? 4 Coronavirus-Proof Dividend Picks
The $2-trillion economic rescue deal has halted the coronavirus-driven bloodbath in the market. In fact, the buzz around this largest-ever rescue deal boosted market sentiments so much so that on the day before the announcement, all major benchmark indices notched significant single-day gain. The market has, since then, continued with its upward rally, although it’s a big question whether or not the trend would last long.
Stock Prices Going Haywire
A number of market watchers take this uptrend as a temporary halt, observing the price surges of certain stocks, which have no solid reason to rebound in the present scenario. We may take the example of casino stocks like Wynn Resorts (WYNN - Free Report) , which recently announced foregoing significant portions of salaries of its board of directors and top executives following the share-price slump in the near past. Post the announcement of the economic stimulus, the stock rallied 12.7% on Mar 25.
The travel and tourism company, Norwegian Cruise Line (NCLH - Free Report) , another firm to be hit hard by the pandemic, gained 23.3% on Mar 25and was one of the best performing S&P 500 stocks that day.
Meanwhile, with the worldwide adoption of stay-at-home guidelines, Facebook is another stock investors have been closely observing. The firm too is taking a number of initiatives, the latest being the launch of the Coronavirus Community Hub for Messenger users to curb the spread of pandemic-related rumors. Surprisingly, the stock fell 2.9% on Mar 25.
How to Manage Your Portfolio?
While many market watchers believe that this fiscal stimulus-led correction might disappear soon, once again pushing the market to the bear territory, a number of them see a silver lining to it. Stephen Innes, chief global markets strategist at AxiCorp, stated "The market is running with the assumption that while this tumult will be the deepest recession in modern-day financial history, it will also be the shortest." (as reported in CNN Business)
Nevertheless, it’s prudent for investors to pick dividend-paying stocks as a regular source of income. Such stocks hold longer-term appeal and to some extent, weigh the impact of the coronavirus crisis. Market strategist Jim Cramer recently suggested to particularly bag a few “accidentally high yielders” which have a dividend payout ratio of 4% or higher and robust balance sheets.
Here we pick four such stocks.
AbbVie Inc. (ABBV - Free Report) : This Zacks Rank #2 (Buy) pharma stock can be treated as one of the finest “accidentally high yielders” right now.AbbVie has been successful in expanding approvals for its cancer drugs, Imbruvica and Venclexta. The stock has a strong 19.8% long-term historical growth rate and a five-year expected growth rate of 12.4%.The company’s current-year dividend yield is 6.4% and payout ratio is 52.8%.
AbbVie Inc. Price
AbbVie Inc. price | AbbVie Inc. Quote
Medtronic plc. (MDT - Free Report) : Another stock which promises long-term gain for investors, right now, is medical device stalwart Medtronic. This Zacks Rank #2 stock has a long-term historical growth rate of 5.7% and a long-term expected growth rate of 7.1%. The company’s fiscal 2021 dividend yield is 2.4% and payout ratio is at 38.9%.
Medtronic PLC Price
Medtronic PLC price | Medtronic PLC Quote
QUALCOMM Incorporated (QCOM - Free Report) : This global manufacturer of digital communication products is currently faring better compared to other firms, thanks to the sudden coronavirus-led spike in demand for its products. This Zacks Rank #2 stock also holds a strong long-term growth potential as it has a long-term historical growth rate of 18.9%.Meanwhile, the stock has a dividend yield of 3.6% and a payout ratio of 74.3% for 2020.
QUALCOMM Incorporated Price
QUALCOMM Incorporated price | QUALCOMM Incorporated Quote
Constellation Brands Inc. (STZ - Free Report) : Investors may hold on to this producer and marketer of beer, wine and spirits, with a solid 18.4% long-term historical growth rate and a five-year expected growth rate of 5.8%. This Zacks Rank #3 (Hold) stock has a dividend yield of 2.1% and a payout ratio of 33.7% for 2020.
Constellation Brands Inc Price
Constellation Brands Inc price | Constellation Brands Inc Quote
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>