Dividend stocks are typically added to a portfolio during recessions because even if the stock price drops, you could offset the losses by getting paid each quarter. Depending on the yield, you could even offset the yearly inflation with some stocks.
Given ongoing economic uncertainty and stock market volatility, Finbold analyzed on September 8 the best dividend stocks in terms of yield, value, and company quality and selected the top three.
AT&T (NYSE: T)
AT&T (NYSE: T) is a holding company that provides telecommunications and tech services globally via its subsidiaries. It has two segments: Communications and Latin America. The first provides wireless and wireline telecom and broadband services in the US and globally, while the second provides the same services only in Mexico.
This stock comes with one of the highest dividend yields of 7.6% annually while trading below its fair value estimate, according to Morningstar’s analyst equity report. Based on that, the T stock is undervalued by 57% while holding the highest 5-star Morningstar rating, which makes it a stock worth considering.
Morningstar analysts expect that AT&T will increase its wireless revenue by 3% to 4% through 2027, as well as remain a strong wireless competitor over the long term.
Chicago Atlantic Real Estate Finance, Inc. (NYSE: REFI)
Chicago Atlantic Real Estate Finance, Inc. (NYSE: REFI) is a commercial real estate finance company that provides risk-adjusted returns for stockholders over time through dividend income and other distributions.
The company offers a high dividend yield of 12.29% annually, making it a strong pick for a yield-bearing portfolio.
Morningstar’s analyst equity report places a fair value of $18.09 per share for the stock. Given that REFI trades at $15.3 per share, Morningstar’s fair value makes it undervalued by 18%.
Crispin Love, an analyst at Piper Sandler, recently gave the company a “neutral” rating with a price of $16.00.
Devon Energy Corporation (NYSE: DVN)
Devon Energy Corporation (NYSE: DVN) is an energy company engaged in the exploration, development, and production of oil, natural gas, and natural gas liquids in the US.
With a dividend yield of 9.52% annually, this is one of the highest dividend stocks in the energy sector.
TipRanks analysts have rated the stock as a ‘moderate buy’ with an average price target of $60.29 based on 14 analysts in the past three months. That’s 14% above the current market price of $52.5 per share.
With the oil prices trading above $90, Devon Energy Corporation could see strong earnings this quarter. This is an important factor, given the company aims to distribute 50% of its free cash flow to stockholders in the form of dividends.
Devon Energy Corporation is down 9% year-to-date and, AT&T is down 22%, and REFI is up 2%. The dividend yield could offset some of these losses. For comparison, the S&P 500 returned 16% within the same period.
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