In Choppy Market, 3 Picks Offering Attractive Dividends
As the markets seesaw day to day, investors are looking for companies that offer safety in addition to generating a return. Investing in well-researched companies with attractive dividends can offer stability amid market volatility, said one asset manager.
"Dividends are important, but it’s also just a fundamental research on the company to make sure it’s a good long-term investment play, and diversification, of course, is important," said Jill Cuniff, president of Edge Asset Management. "So even if you find a stock that’s paying a high dividend, you want to have a diversified approach."
Cuniff cautioned investors to perform fundamental research in order to avoid a "dividend trap," or a dividend that is not secure. She highlighted Barnes and Noble , which was paying an attractive dividend to attract investors, although the company did not have the resources to back it up, she said.
"Investors are looking for safety," Cuniff said. "They're looking for safety, and they're looking for yield."
Cuniff offered three picks for stocks that post attractive dividends:
With a 10 percent, five-year dividend growth rate, and a 3.8 percent dividend yield, Abbott Labs has a "great management team" and is "very solid," Cuniff said.
She added that although many investors previously ran from pharmaceutical stocks amid concerns about drug pipelines, she believes that was a good time to get into pharma stocks.
Although the technology sector has experienced a lot of volatility in the past month, Cuniff likes Intel, which has had a 14 percent, five-year dividend growth rate, and offers a 4.2 percent dividend yield.
"Tech hasn’t normally been a sector that’s really been big on paying dividends, but there’s so much cash on corporate balance sheets now that we believe it’s going to come back to investors and shareholders through dividends," she said.
Digital Realty Trust
Cuniff's last selection is Digital Realty Trust, a real estate investment trust that focuses on data centers that do cloud computing and has "offered great long-term value to investors."
The trust has shown a 18.4 percent, five-year growth rate and a 4.6 percent dividend yield.
Cuniff added that she recommends investors diversify using a fund approach rather than focus on picking individual stocks.
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Disclosure information was not available for Jill Cuniff or his company.