The article covers three dividend-paying large-cap stocks to buy this month
- Pfizer (NYSE:PFE): Massive growth runway for its coronavirus vaccine and pill after two blockbuster years
- Vornado Realty Trust (NYSE:VNO): Office occupancy rates are rising, leading to robust profits
- International Business Machines (NYSE:IBM): Hybrid cloud offers incredible upside potential
- Simon Property Group (NYSE:SPG): Cash flow generating machine with a stellar profitability profile
- Kinder Morgan (NYSE:KMI): Committed towards expanding shareholder rewards
- Altria (NYSE:MO): Stable business with healthy profitability
- Lumen Technologies (NYSE:LUMN): Enticing quantum fiber business, which could be a huge money-spinner down the line
The equity market has taken a hammering amidst multiple debilitating headwinds. The result is a “risk-off” environment, where fixed-income investments have become highly attractive for investors. For instance, 10-year Treasury bonds are paying roughly a 2.8% yield, almost double the yield from last summer.
Nevertheless, investing in dividend-paying large-cap stocks offering healthy dividend yields could be a savvy strategy at this time. Moreover, many of these stocks have pulled back considerably and are now trading at beaten-down valuations.
Dividend stocks make regular distributions to stockholders and can be a useful source of stable income. The best dividend stocks may offer a way for investors to increase their wealth over the long term rapidly.
However, some reliable dividend stocks are struggling, so it’s best to be careful while stock-picking in today’s volatile environment.
|VNO||Vornado Realty Trust||$36.86|
|IBM||International Business Machines||$135.41|
|SPG||Simon Property Group||$121.58|
Pfizer (NYSE:PFE) is one of the leading pharmaceutical companies which have been at the forefront in battling the coronavirus pandemic. Cominarty, its Covid-19 vaccine developed in conjunction with BioNTech (NASDAQ:BNTX), helped bump revenues by 94% last year. Moreover, the company’s net income improved by an incredible 128.6% in 2021.
After a strong performance in the stock market in the past couple of years, PFE stock has been struggling of late. Investors feel that its Comirnaty sales have peaked, resulting in significantly lower revenues in 2022. However, Pfizer is already guiding for a whopping $26 billion in Comirnaty sales this year, and its Covid-19 pill Paxlovid could be the cherry on top.
More importantly for income investors, Pfizer’s dividend scorecard is highly impressive, with a 3.31% forward yield. Moreover, it boasts 12 years of growth in dividend payouts which is an extraordinary feat.
Vornado Realty Trust (VNO)
Vornado Realty Trust (NYSE:VNO) is one of the most popular real estate investment trusts (REIT) which leases and owns commercial properties in New York. It boasts an enviable list of tenants and company offices across New York, generating more than 80% of its net operating income.
The pandemic-led headwinds have hurt office REITs such as Vornado, with the new variants pushing back return to offices for employees. Hence, occupancy rates are well below pre-pandemic rates.
Nevertheless, we have seen a resurgence in his metric which has led to a 90% improvement in profits from the prior-year period to a loss of $209 million.
Due to the challenging macroeconomic conditions, VNO stock trades at just 4.68 times forward sales, which is well below the industry average. That hasn’t deterred the company from paying dividends, though, offering a spectacular 5.48% yield.
International Business Machines (IBM)
International Business Machines (NYSE:IBM) is a new-look company from the one operating before the pandemic. With its new CEO and streamlined organization focusing on AI and cloud computing, it offers sound reasons to invest.
Moreover, it’s been a dividend aristocrat, growing its dividends in the past 25 years. Though its performance has ebbed and flowed over the years, its dividend record remains unblemished, with over a 4.8% yield.
Its recently released first-quarter results were better-than-expected on the earnings and revenue front. Sales rose 8% from the prior-year period, led by a strong showing in its software and consulting segment. Its hybrid cloud revenues shot up 14% to $5 billion, with an annual run rate of over $20 billion. It made a whopping $1.2 billion in free cash flows to top it all off. Hence, the business is in excellent shape to finish the year off with poise.
Simon Property Group (SPG)
Simon Property Group (NYSE:SPG) is a blue-chip mall REIT that has been a mainstay in the portfolios of income stockholders.
Though predominantly a mall REIT, it operates a more diversified portfolio of assets, including apartments, hotels, and mixed-use products. With an annual payout of $7.50 in dividends and a 5.30% yield, SPG stock presents itself as an exceptional dividend stock.
Simon Property is producing industry-leading earnings and cash flows when the U.S. is experiencing record levels of inflation. Though the business relies on a lot of debt, its cash flows have more than offset its sizeable finance costs.
Its free cash flow per share came in at an astonishing $9.64 last year, a 69.4% increase from 2020. During the same period, its debt to equity ratio went down 14%, a testament to the stellar year in 2021.
Kinder Morgan (KMI)
Kinder Morgan (NYSE:KMI) is one of the top oil and gas midstream businesses globally, with over $30 billion in market capitalization. The company has built a robust asset portfolio that ensures consistent shareholder rewards.
Some of these assets include the largest gas transmission network and terminal operations. Moreover, it offers its investors a high and growing dividend, yielding over 6% with over a 100% payout ratio.
Kinder Morgan has been improving its financial strength at a rapid clip. Over the past five years, its adjusted EBITDA and cash flow from operations have risen by 9% and 11%, respectively. Also, Net debt has dropped 18%, saving substantial interest expenses.
With its massive cash balance, the company has plenty of margins to generate tremendous shareholder rewards. Apart from dividend payouts, it recently announced plans for $750 million in share buybacks, which is indicative of its commitment to its stockholders.
Altria (NYSE:MO) is a global producer and seller of smokeable and oral tobacco products. The company has been in business for exactly 200 years and is considered a juggernaut in its industry.
Moreover, it operates an immensely profitable enterprise, with virtually every profitability metric firmly in the green. Its margins have improved consistently in the past five years, along with free cash flows.
Conditions have been tough for Altria with the popularity of Vapor. However, its business remains stable despite the competitive pressures. It re-iterated its 2022 full-year adjusted EPS range of $4.79 to $4.93 compared to the $4.84 consensus. Moreover, margins from last year came in over its 5-year averages.
Furthermore, Altria has an unmatched dividend record in its sector, with 14 consecutive years of growth. It offers an amazing 6.55% yield with over a 75% payout ratio.
Lumen Technologies (LUMN)
Lumen Technologies (NYSE:LUMN) is a communication services provider which caters to residential and business customers in close to 60 countries across the globe.
Its margins have been remarkably strong despite relatively shaky revenues for the past several years. Moreover, the company offers a stunning 9.61% yield with over a 50% payout ratio in terms of shareholder rewards.
Furthermore, the company is looking to usher in a new era of growth with its quantum fiber business. It aims to ramp up quantum fiber installations from 400,000 to 1 million units every year. Additionally, quantum fiber offers high growth potential, generating significantly higher average revenues per unit and greater customer stickiness. Despite limited marketing, Lumen has effectively penetrated multiple states in the U.S.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.