Be sure to check out our detailed stock analysis (click here). With savings accounts and U.S. T-Bills yielding next to nothing, one has to be on the search for yield. One of the best ways to this is with dividend paying stocks. We have identified five stocks that are "buys," cheap and should be on every investor's watch list.
We have found five dividend payers that all have low volatility, making them solid picks amidst an uncertain economic backdrop, not to mention less dependent on the overall economy. The total realized return over the last five years stack up as follows for our five picks:
- Altria 25%
- AT&T 20%
- Verizon 27%
- American Capital Agency 26%
- Annaly Capital 8%
Meanwhile, over the same three-year period these companies have managed an impressively low beta.
- Altria (MO) 0.4
- AT&T (T) 0.4
- Verizon (VZ) 0.3
- American Capital Agency (AGNC) 0.2
- Annaly Capital (NLY) 0.1
1. Altria Group, Inc.
- Dividend Yield 5.30%
Altria Group manufactures Marlboro cigarettes; smokeless tobacco products Copenhagen, Skoal, Red Seal, Husky, and Marlboro Snus brands; Black & Mild cigars; and wines under Chateau Ste. Michelle and Columbia Crest brand. Altria Group is the ultimate sin stock, but it throws off plenty of cash. Tobacco and alcohol products are highly profitable. The company dominates the U.S. tobacco market. Tobacco sales are very consistent along with the company's dividends for almost a century now. Altria has a forward P/E of 13.15 and has operating margins of 41.72%. The company's return on equity is an amazing 120.91%. Altria is an extremely profitable and cheap stock based on the company's earning power and balance sheet. We also consider Altria as one of the best picks in the tobacco industry, along with British Tobacco (read the rest here).
The next two companies hale from the cash rich telecom industry. AT&T and Verizon have both managed to grow their dividends payments nicely over the last five years, AT&T at 2.3% annually and Verizon at 3.6% (read more about AT&T and Verizon head-to-head).