Source: Pictures of Money via Flickr.
The past month has been wild for investors, with the stock market demonstrating volatility not seen since the Great Recession. For some traders -- those with short-term time frames, or who are trading on margin -- the stock market correction has been an unwelcome sight. However, for the long-term investor a correction is often a welcome opportunity to pick up high-quality, dividend-paying stocks on the cheap.
Of course, choosing a dividend stock isn't exactly like finding a needle in a haystack. Out of more than 7,100 publicly traded companies on U.S. exchanges, something in the neighborhood of 40% paid a dividend (either special or regular) at some point over the trailing 12-month period. This just makes picking a quality dividend stock that much tougher.
With that in mind, today we'll take a brief look at three of the top dividend stocks you might consider buying in September. As always, understand that these suggestions should be construed as starting points for your own research and not the conclusion.
Wynn Palace rendering in Macau. Source: Wynn Resorts.
Wynn Resorts (WYNN -1.42%)
Casino and resort operators may not be the first place you look when the stock market is in a funk, but Wynn offers one major advantage over its foes: its target audience.
Wynn Resorts has been plagued in recent quarters by sluggish growth in Macau, while its peer Las Vegas Sands has generally performed well. Las Vegas Sands' strategy in Macau has involved balancing its target audience between wealthy consumers and China's burgeoning middle class. Wynn, on the other hand, targets middle-class consumers, but is widely known for really focusing on more affluent consumers. Wynn and its peers still feel some of the negative effects of market downturns, but less than others might -- their core clientele, the wealthy, are less affected by swings in the stock market.
Although Wynn's dividend will vary based on the current market conditions, its projected annual payout of $2 per share (good enough for a 2.6% dividend yield), its affinity for handing over special dividends to investors, and its expected growth rate of nearly 8% per year over the next five years make this a top dividend stock worthy of your consideration.
Source: Union Pacific.
Union Pacific (UNP 0.25%)
Throw around the idea of an economic slowdown in China or the United States and you're bound to worry investors in large logistics companies. Railroad operator Union Pacific is one such company, having seen close to a third of its valuation disappear in six months. Market weakness is partly to blame, but a persistent weakness in commodity prices and slowing demand for coal have been big culprits as well.
However, there's good news, too! Union Pacific has survived countless pullbacks before, and it'll likely motor ahead following this one. The interesting aspect of the railroad industry is that when you consider weight transported per mile, it's considerably more efficient than shipping by truck. Also, Union Pacific has generally done a good job keeping its costs under control, which has allowed it to grow its EPS in the high single digits most years.
But here's the real hook: if you think about Union Pacific as a true long-term investor should, there's little reason not to own it. Demand for energy products and agriculture should naturally improve over time as the U.S. population grows, and these are core products that Union Pacific transports. It's simple math that works in investors' favor and should help improve Union Pacific's pricing power.
Sporting a 2.5% yield and a reasonable forward P/E below 14, I suspect Union Pacific is a top dividend stock that has the tools needed to keep most income investors happy.
Source: Wal-Mart.
Wal-Mart (WMT -0.65%)
It may be hard to believe, but retail giant Wal-Mart is actually at its lowest levels since 2012. On top of recent market weakness, Wal-Mart hasn't met Wall Street's sales growth and profit expectations in recent quarters, which has added cement weights to its stock price.
But there could be good news right around the corner, as we've seen a lot of encouraging signs out of Wal-Mart. The company has seen encouraging growth from its Neighborhood Market stores, which are smaller locations focused on the small-town consumer who might otherwise avoid larger corporations. Additionally, Wal-Mart has seen strength in its grocery segment in Q2, possibly implying that its product initiatives and focus on the cost-conscious consumer are again paying off.
It's also important to keep in mind that regardless of how the stock market is performing there will always be cost-conscious consumers, and those eager for shopping convenience, for whom Wal-Mart is still appealing.
With the incredible pricing power and clout that Wal-Mart can throw around in the retail world, its dividend yield crossing 3% could be the dangling carrot that finally buoys its ailing stock.
