Latest news with #dividendstocks
Entrepreneur
10 hours ago
- Business
- Entrepreneur
Why Schwab US Dividend Equity ETF Could Lead the Rotation
There might be a new rotation happening in the market, away from cyclical and growth stocks to head into safety and dividend-yielding stocks. This story originally appeared on MarketBeat [content-module:CompanyOverview|NYSEARCA:SCHD] A market rotation is about to begin, and most investors would regret not knowing where capital is likely to shift over the coming months and quarters. As is typical in the financial world, everything has to be tied to a benchmark to judge whether an asset class or specific name is overvalued or undervalued, and that is exactly where investors can begin today. When it comes to dividend stocks, yield is the king of this sort of analysis, but the question remains where that benchmark is set. Dividend yields can (and should) be tied to the leader in the yield space, which is the U.S. ten-year Treasury bond yield, currently hovering between 4.4% and 4.5%. Anything above the ten-year might be considered cheap or attractive in terms of price and yield, and the opposite if it falls below the bond yield. Moreover, investors must also consider the future direction of the bond market in the coming months, which is closely tied to the broader economic landscape. Bond yields could be lower in the future as part of the current business cycle, making dividend stocks (with attractive yields) the preferred place for capital to rotate into. This is exactly where the Schwab US Dividend Equity ETF (NYSEARCA: SCHD) comes into play. Schwab Dividend ETF Investors Can Be Early This exchange-traded fund (ETF) has a dividend yield of roughly 4% today. While it is below the benchmarked ten-year yield, the future matters more in today's setup, considering that the ten-year has been flattish and trending for the past six months. There were no breakouts despite inflation fears and trade tariff volatility, which is good news for those looking to get into dividend stocks. This means that the upside in bond yields is capped at this point, and the next leg could be lower depending on the Federal Reserve's (Fed) reaction to possibly cutting interest rates. That being said, entering this dividend ETF today might be too early, but at least investors can lock in today's price and yield before bonds move. At this point, it might already be too late to consider entering dividend stocks. Some Moves Are Happening Now Recently, the broader market trend seems to favor stocks in the consumer staples sector, indicating a preference for safety due to current market volatility. This trend is mirrored in recent institutional purchasing of this dividend ETF. As of the most recent quarter, up to $1.4 billion worth of institutional buying occurred in this ETF, demonstrating support for the underlying thesis. Remembering that today's yield in the ETF compared to the ten-year is not a call for an obvious buy, investors can somewhat assume that the so-called 'smart money' is willing to be early on this call. Besides this recent buying, investors can add the $14 billion also bought in this ETF over the past quarter, creating a broader trend in the rotation headed into safety and dividend income connected to the overall uncertainty currently present in the S&P 500 index. Price Action Leaves Valuable Clues [content-module:DividendStats|NYSEARCA:SCHD] Another way to examine this potential rotation is by analyzing the price action between this ETF and the S&P 500 index, particularly over the past quarter. The two names had been closely matched during the first quarter of 2025. However, this dynamic changed significantly after the Liberation Day of April 2025. When the new tariffs were announced, the S&P 500 and the Schwab Dividend ETF fell sharply. However, what happened afterward tells investors all they need to know. The S&P 500 recovered all of Liberation Day's losses in record time, while the dividend ETF remains within the pullback levels. This lackluster performance and failure to catch up can be attributed to the markets shifting their focus to growth stocks in the technology sector rather than seeking safety, a reaction that is to be expected when the broader market is on such an aggressive run higher. However, this gap will eventually need to be filled, and that is where the rotation into safety or high-yield stocks will come in handy. As the stock market approaches potential resistance at its previous all-time highs, uncertainty is likely to prompt investors to seek safe havens, such as bonds and dividend stocks. In this manner, a rotation into bonds will lower their yields, making the yields and upside in the Schwab Dividend ETF seem more attractive than they do today. This way, investors can get the best of both worlds: the income from dividends, as well as the upside inherent in equity investing. Before you make your next trade, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list. They believe these five stocks are the five best companies for investors to buy now... See The Five Stocks Here
Yahoo
2 days ago
- Business
- Yahoo
2 Magnificent Dividend Stocks to Buy in June
Coca-Cola is one of the most resilient stocks to hold for the long term, having paid a growing dividend for 63 years. Home Depot has ample opportunities to grow earnings and dividends by serving a $1 trillion home improvement market. 10 stocks we like better than Coca-Cola › Dividend stocks can be a great antidote to market volatility. While these stocks can still experience dips with the broader market, the regular cash deposits made into your account can help you stay optimistic about your financial future. If you're thinking about adding reliable dividend payers to your portfolio right now, here are two industry-leading businesses that could potentially pay you for the rest of your life. Coca-Cola (NYSE: KO) is a staple brand for many households. While it doesn't offer a lot of growth, the stock has held up relatively well against market volatility in recent years. It has an excellent dividend payment record and currently offers an attractive yield that is double the S&P 500 average. At the current quarterly payout of $0.51, the stock's forward dividend yield is 2.85%. The company just raised the quarterly payment for the 63rd consecutive year, indicating a resilient business through economic cycles. Coca-Cola is more than its namesake brand. It owns dozens of brands across juices, tea, energy, and water, so it offers a beverage product for just about any consumer preference. Its product diversity also helps the business generate steady sales year to year. Despite economic uncertainty in the first quarter, Coca-Cola's adjusted revenue grew 6% year over year, with unit case volume up 2%. Tariffs could affect Coca-Cola's financial results this year, but only marginally. Based on what management has seen so far, it expects adjusted earnings to increase 7% to 9% in 2025. Given its trailing 12-month payout ratio of 77%, more earnings growth should support further increases in the dividend. This rate of growth is consistent with management's long-term expectations. While Coca-Cola is a global brand, it still has significant opportunities in emerging markets, where people consume fewer commercial beverage products than in developed countries. The company raised the dividend by 5% this year, and that's a reasonable expectation for its long-term growth in revenue, earnings, and dividends. Coca-Cola stock has been a favorite holding of Warren Buffett for many years and can certainly help you grow your savings. Home Depot (NYSE: HD) is the leading home improvement retailer. Favorable homeownership trends have driven rising demand for its services over the years. This has made the stock a rewarding investment. A $10,000 investment 20 years ago would be worth $151,000 today, including dividend reinvestment. Home Depot has been a solid dividend payer, and it currently offers an attractive yield. Its quarterly payment currently stands at $2.30, bringing the forward dividend yield to an above-average 2.49%. While the housing market can swing with the economy and interest rates, Home Depot has weathered these cycles well. The housing market has been relatively weak the past few years, but Home Depot has maintained steady sales and earnings. Over the past year, it paid out 61% of its earnings in dividends, providing plenty of wiggle room to sustain the dividend in a soft year. Another quality that makes Home Depot a solid income investment is that its average customer earns an average annual income of $110,000, with 80% of its customers owning their home. This can explain why Home Depot reported healthy demand for small home projects last quarter, despite economic uncertainty. The company reported a slight increase in U.S. comparable store sales over the year-ago quarter. Management expects full-year adjusted earnings to be down approximately 2% over fiscal 2024. But in the long term, investors can expect Home Depot to deliver respectable returns. The opportunity in the home improvement market is worth $1 trillion, which leaves a lot of room for growth for a business with annual sales of $162 billion. Returns over the next 20 years will likely be more modest than in the previous few decades, but Home Depot has plenty of opportunities to grow sales and pay dividends for many years. Before you buy stock in Coca-Cola, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Coca-Cola wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot. The Motley Fool has a disclosure policy. 2 Magnificent Dividend Stocks to Buy in June was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
2 days ago
- Business
- Globe and Mail
3 Top High-Yield Dividend Stocks I Can't Wait to Buy in June to Boost My Passive Income
I'd love to be able to retire early. It's not that I don't want to work; I don't want the stress of having to earn income to cover my living expenses. My desire to become financially independent drives my investment strategy. My goal is to grow my passive investment income so that it will eventually cover my basic living expenses. That way, I won't have to worry about working to pay the bills. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » I strive to make progress toward my passive income target each month by investing in additional cash-flowing investments. A top priority of mine is buying high-quality, high-yielding dividend stocks. Three that I can't wait to purchase more of this June are PepsiCo (NASDAQ: PEP), Rexford Industrial Realty (NYSE: REXR), and W.P. Carey (NYSE: WPC). Taking another sip of this satisfying dividend stock PepsiCo stock currently yields more than 4%, roughly three times more than the S&P 500 's less than 1.5% yield. The food and drink giant's yield has been steadily rising over the past year. That's due to the company's continued dividend increases and a more than 25% slump in its stock price caused by the potential impact of tariffs and concerns about changing consumer tastes. PepsiCo recently raised its payment by another 5%, extending its growth streak to 53 years in a row. That's kept it in the dividend nobility. It's a Dividend King, a company with 50 or more years of annual dividend increases. I love investing in high-yielding dividend stocks that grow their payouts, because they can help me reach my passive income goal faster. PepsiCo is in an excellent position to continue increasing its payout. The company expects its heavy capital investments (it reinvests more than 5% of its net revenue each year) to drive 4%-6% organic revenue growth and mid-to-high single-digit earnings-per-share growth. The company is also investing in inorganic growth to accelerate its transformation into a healthier food and beverage company. It recently bought low-calorie drink maker Poppi for nearly $1.7 billion. It also acquired Siete and Sabra to help better align its portfolio with consumers' changing tastes for more wellness-focused products. The company's growth investments put it in a solid position to continue increasing its shareholder payout. A short-term speed bump Rexford Industrial Realty's dividend yield is approaching 5% following a more than 30% slump in its stock price from its 52-week high. The industrial-focused real estate investment trust (REIT) has been under pressure due to rising interest rates and slowing demand for warehouse space in Southern California. The slowdown in Southern California drove anemic growth in the net operating income (NOI) generated by its same-property portfolio in the first quarter (0.7% increase). However, new investments (acquisitions and redevelopment projects) helped drive a nearly 7% increase in its funds from operations (FFO) per share in the period. While Rexford is facing some near-term growth headwinds, the longer-term outlook is much brighter. The REIT estimates that a combination of annual embedded rental rate increases, in-process repositioning and redevelopment projects, and rent growth as legacy leases expire and reprice to market rates will drive a 34% increase in its NOI over the next few years. That positions Rexford to continue increasing its dividend. The REIT has grown its payout at a 16% compound annual rate over the past five years, much faster than the sector average of 3%. A steady dividend grower W.P. Carey's dividend yield is getting closer to 6%. The diversified REIT's payout has risen due to its falling share price (nearly 5% decline) and steady dividend increases. It bumps up its payment a little bit each quarter. The REIT invests in single-tenant industrial, warehouse, retail, and other properties across North America and Europe secured by long-term net leases with built-in rent escalations that raise rents at either a fixed rate or one tied to inflation. Because of that, its portfolio provides it with very stable and steadily rising rental income. W.P. Carey routinely invests in additional income-producing net lease properties. It's targeting to invest $1 billion to $1.5 billion into new properties this year. Those growth drivers should enable it to steadily increase its payout. Ideal passive income stocks PepsiCo, Rexford Industrial Realty, and W.P. Carey fit my investment strategy. They pay high-yielding dividends that they aim to steadily increase and have strong businesses. Because of that, they can supply me with more income now and in the future, which should help me reach my early retirement goal even faster. Should you invest $1,000 in PepsiCo right now? Before you buy stock in PepsiCo, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and PepsiCo wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor 's total average return is979% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025
Yahoo
2 days ago
- Business
- Yahoo
The FTSE 250 looks to be stuffed full of dividend stocks!
In my opinion, investing in dividend stocks is a great way of creating an additional income stream. But they can also play a part in building wealth. To do this, it's necessary to reinvest any cash received and buy more shares. This is a process known as compounding. And in my opinion, it's an effective way of increasing the value of a portfolio. This is best illustrated by way of an example. Let's assume an investor has £10,000 of shares yielding 3.6%. Each year, this would provide income of £360. Over 30 years, this would generate £10,800 of dividends and, assuming there was no capital growth (or losses), the original £10,000 would remain. Alternatively, if the £360 received in year one was reinvested, in the second year it would grow to £373. Repeat this again and, in year three, the income received would increase to £386. And so on… After 30 years, the investment pot would be £28,893. Okay, the investor has sacrificed income of £10,800. But the end result is much better. Of course, this analysis is a little simplistic. Dividends are never guaranteed and share prices can go up and down. However, it does illustrate the potential of dividend stocks. In my example, I used a yield of 3.6%. This is the same rate currently (30 May) available from the FTSE 250. In fact, the index presently offers a higher return than the FTSE 100, its more famous cousin. Look closer and there are many stocks currently yielding more than the average. According to Dividend Data, there are 17 with a yield above 8%. The average of these is 10.2%. Plug this figure into our example above, and £10,000 would grow to £184,267 over 30 years. Interestingly, 13 of the 17 operate in the energy sector, including oil, gas and renewables. Nine are investment trusts. Falling energy prices have impacted industry share prices and helped push yields higher. One example of this is Harbour Energy (LSE:HBR). Its share price has fallen 30% since the start of 2025 and the stock's currently yielding 10.6%. In January, it was close to 6%. The government's 'windfall tax' means profits made from the North Sea are taxed at 78%. This has prompted the group to announce plans to cut its workforce by a quarter and slash domestic investment. To mitigate the impact, in September 2024, Harbour Energy acquired the assets of Wintershall Dea. The majority of its earnings now come from outside UK waters. But a falling oil price affects all regions. The group's now expecting free cash flow (FCF) in 2025 of $900m. This is $100m lower than its previous guidance. Prudently, it assumes a Brent crude price of $65 and a European gas price of $12/msfc (million standard cubic feet) for the remainder of the year. Both are currently trading around these levels. However, volatile energy prices are a risk associated with investing in the sector. But crucially, FCF of $900m is comfortably more than the $455m the group has pledged to return to shareholders this year. Despite the challenges facing the sector, Harbour Energy's dividend looks secure, for now. On this basis, it could be a FTSE 250 income stock for investors to consider. The post The FTSE 250 looks to be stuffed full of dividend stocks! appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool James Beard has positions in Harbour Energy Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
How Dividend Stocks Can Supercharge Your Retirement Income
Retirement should be about keeping your income steady and stress-free. The secret? Make smart financial moves that maximize returns while minimizing taxes. Trending Now: Try This: Dividend stocks pay regular income to investors from a company's profits, offering retirees a steady cash flow. GOBankingRates spoke with Gil Baumgarten, wealth expert and president of Segment Wealth Management, to learn why dividend stocks can be a game-changer for retirement income. Dividend stocks can offer stability, but selecting the right ones is essential. 'High dividend stocks (over 4% annualized yield) tend to be more stable in price and lower in overall return than other stocks,' Baumgarten said. However, high yields can sometimes signal corporate stress, so yield alone shouldn't be the primary focus. Instead, Baumgarten suggested looking for companies with 'low but rising dividends,' which often signal strong financial health and better growth potential over the long term. These stocks can offer both stability and favorable after-tax returns. Up Next: When it comes to taxes, dividend stocks hold a distinct advantage for retirees. Blue-chip stocks (those issued by prominent, well-established companies) or exchange-traded funds (ETFs) made up of blue-chip stocks 'tend to offer rising dividend payments to shareholders and compound the gains in share price over time,' Baumgarten said. The real advantage comes with what's known as 'unrealized' gains. These are gains that accrue as the stock price rises but are not taxed until sold. Under current U.S. tax laws, stocks held until death often qualify for a tax-free 'step-up in basis,' eliminating accumulated capital gains over decades. For retirees, holding onto these investments for the long haul can result in significant tax savings. Unlike some other income strategies, where gains may be taxed at each transaction, dividend stocks allow retirees to defer and minimize taxes. One major tax advantage of dividend stocks is their capped tax rate. Ordinary dividends are taxed at a maximum of 23.8%, roughly half the top tax bracket rate. However, the real benefit is the potential for tax-free growth. Baumgarten warns against frequent stock trading or portfolio churn, 'Transactional methods to swap one stock for another can render much higher taxes.' He adds that this strategy also risks triggering taxes on gains that might otherwise be avoided, creating 'a hurdle to overcome, arguing for extreme patience.' By holding onto dividend stocks and letting the share price grow over time, retirees can avoid paying unnecessary taxes and allow their investments to compound. The key is to resist the urge to frequently trade or cash in dividends for short-term gains. Some retirees might find comfort in regular dividend checks, but Baumgarten suggests reinvesting these dividends as the smarter long-term approach. 'Many investors find comfort in big mailbox checks that get re-deposited and never spent,' he said. However, this cycle can generate more overall taxes. In other words, opting for lower-yield stocks from healthy companies and holding onto them for the long term can lead to greater wealth accumulation. The potential tax savings from long-term stock growth, combined with lower dividend payouts, can ultimately provide more financial security in retirement. Dividend taxes are often debated, with critics claiming that lower rates mostly benefit the wealthy. Baumgarten counters that dividends are taxed twice: 'Companies pay corporate income tax of 21% on the same dollars before they are distributed to shareholders.' Add in the personal tax on dividends, and these profits can be hit with a total tax rate of over 40%. Baumgarten's solution? Advocate for more people to become shareholders. While dividend stocks offer undeniable tax benefits for those who invest, the bigger picture involves educating more people about these opportunities to grow wealth for the long term. For retirees seeking income growth and tax management, dividend stocks are a smart strategy for stability, growth and tax efficiency. With the right dividend stocks and a patient approach, retirees can strengthen their financial outlook while minimizing tax burdens. More From GOBankingRates Surprising Items People Are Stocking Up On Before Tariff Pains Hit: Is It Smart? The 5 Car Brands Named the Least Reliable of 2025 This article originally appeared on How Dividend Stocks Can Supercharge Your Retirement Income Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
