Advertisement
New Zealand markets closed
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NZD/USD

    0.5973
    -0.0002 (-0.04%)
     
  • NZD/EUR

    0.5540
    +0.0007 (+0.13%)
     
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD

    2,254.80
    +16.40 (+0.73%)
     
  • NASDAQ

    18,254.69
    -26.15 (-0.14%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • Dow Jones

    39,807.37
    +47.29 (+0.12%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,411.31
    +243.24 (+0.61%)
     
  • NZD/JPY

    90.3170
    -0.0760 (-0.08%)
     

7 Amazing Dividend Stocks to Buy for Steady Income in 2018

With markets trading at all-time highs, it's better to trade with caution. We give you seven stocks which will generate steady income for investors next year and beyond.

With a major overhaul in tax laws in more than 30 years, U.S. corporates are expected to see a significant increase in their cash pile. While the slashing of the corporate tax from 35% to 21% will lead to a rise in profit after tax, a cash repatriation window will allow multinational corporations to bring in cash stashed in foreign countries. Boosted by the surge in domestic cash, many companies may opt for mergers & acquisitions (M&A), share buybacks or dividend pay-out next year or beyond.

Here we will focus on stocks, which are expected to pay better dividends in 2018 than their industry peers and also have growth prospects. While the upside momentum of the market may continue amid strong manufacturing data, rising corporate profits and interest rates, risks of a downside remain. In such an environment, investors can add these stocks to their portfolio to enjoy a steady stream of cash

Generally, companies paying dividends are financially stable accruing profits in established markets. Share buyback programs and dividend payouts boost investor confidence in the company, thereby raising its market value. However, with interest rates rising in the United States, some amount of cash may flow to the debt market. However, this does not weaken the prospects of dividend investing. With investors getting worried about the Bull Run and many even expecting a correction, dividend paying companies are better bets for 2018.

7 Amazing Dividend Stocks

It is no easy task to select outperformers given the vast size of the market. Therefore, we are using the Zacks Rank to zero in on companies with strong fundamentals. In addition to a favorable Zacks Rank, we are also taking into account VGM Score. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. With our Style Score system, we have identified stocks that have potential to beat the market.

ADVERTISEMENT

The score allows one to streamline their search to select winners by eliminating the negative aspects. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score. Our research shows that stocks with an impressive  VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential.

Apart from a favorable Zacks Rank and a VGM score, we have chosen large-cap companies. This lowers the risk of the portfolio as these companies are less susceptible to market volatility. Moreover, the companies have seen EPS, sales and dividend payout increase in the last five years. Although, past growth is not an indicator of future movement, it helps to select companies that have a higher probability of paying dividends. The companies have also performed better than the S&P 500 this year. However, these have a low PEG ratio, which suggests room for upside.

Here are seven of the 18 stocks that fit the bill:

Intel Corporation INTC designs, manufactures, and sells computer, networking, and communications platforms worldwide. The Zacks Consensus Estimate for 2018 earnings rose 6.1% in the last 90 days. The company’s expected earnings growth rate for the current and next years are 19.51% and 1%, respectively. Intel offers a promising dividend yield of 2.4%. Its five-year average dividend yield is 4.7%. It has a VGM Score of A and sports a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Broadcom Limited AVGO is a global supplier of a broad range of semiconductor devices, especially CMOS-based devices. The Zacks Consensus Estimate for its 2018 earnings rose 14% in the last 90 days. The company’s expected earnings growth rate for 2018 is 20.68%. Broadcom offers a promising dividend yield of 2.71%. Its five-year average dividend yield is  44.77%. It has a VGM Score of B and sports a Zacks Rank #1.  

(Looking for the Best Stocks for 2018? Be among the first to see our Top Ten Stocks for 2018 portfolio here.)

BorgWarner Inc. BWA is a leading manufacturer of powertrain products for major automakers. The Zacks Consensus Estimate for its 2018 earnings rose 5.1% in the last 90 days. The company’s expected earnings growth rate for the current and next year is 16.94% and 7.19%, respectively. BorgWarner offers a promising dividend yield of 1.32%. Its five-year average dividend yield is 2.93%. It has a VGM Score of B and carries a Zacks Rank #2.

Huntington Ingalls Industries, Inc. HII designs, builds and maintains nuclear-powered ships as well as non-nuclear ships for the U.S. Navy and Coast Guard. The Zacks Consensus Estimate for its 2018 earnings rose 0.67% in the last 90 days. The company’s expected earnings growth rate for the current year is 19.14%. However, it is expected to fall 1.31% next year. Huntington Ingalls offers a promising dividend yield of 1.22%. Its five-year average dividend yield is 54.2%. It has a VGM Score of B and holds a Zacks Rank #2.

Lazard Ltd. LAZ is a leading manufacturer of powertrain products for major automakers. The Zacks Consensus Estimate for 2018 earnings increased 2.8% in the last 90 days. The company’s expected earnings growth rate for the current and the next year is 16.29% and 3.9%, respectively. Lazard offers a promising dividend yield of 3.19%. Its five-year average dividend yield is 15.1%. It has a VGM Style Score of A and carries a Zacks Rank #2.

Microsoft Corporation MSFT is one of the largest broad-based technology providers in the world today like software, hardware and online services. The Zacks Consensus Estimate for its 2018 earnings rose 3.6% over the last 90 days. The company’s expected earnings growth rate for 2018 is 2.21%. Microsoft offers a promising dividend yield of 1.97%. Its five-year average dividend yield is 13.41%. It has a VGM Style Score of B and holds a Zacks Rank #2.

Lam Research Corporation LRCX is a supplier of wafer fabrication equipment and services to the semiconductor industry. The Zacks Consensus Estimate for its 2018 earnings rose 15.79% in the last 90 days. The company’s expected earnings growth rate for 2018 is 47.7%. Lam Research offers a promising dividend yield of 1.09%. Its five-year average dividend yield is 38%. It has a VGM Score of A and a Zacks Rank #2.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report
 
BorgWarner Inc. (BWA) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Broadcom Limited (AVGO) : Free Stock Analysis Report
 
Lazard Ltd. (LAZ) : Free Stock Analysis Report
 
Intel Corporation (INTC) : Free Stock Analysis Report
 
Lam Research Corporation (LRCX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research