Buying stocks that go up is always going to be the clearest path to making a ton of money in the market, but don't snooze on investment income. Dividends can be a game changer, even if you're not necessarily counting on the quarterly distributions. Successful companies with healthy and sustainable payouts can pad returns and provide some downside protection when the markets cool.
AT&T (T 0.38%), GameStop (GME -5.40%), Verizon (VZ 0.16%), and Six Flags Entertainment (SIX -2.06%) are four companies worth your attention. They are all trading at compelling price points with potential catalysts to lift them higher in the coming months and years. More importantly for our purposes, all four command yields north of 4%. Let's see why they can deliver market-besting returns with a combination of capital appreciation and quarterly dividend checks.
AT&T: 6.3% yield
The telecom giant that started it all has come under selling pressure lately, recently hitting six-year lows. AT&T has spent the past couple of years making meaty acquisitions including DIRECTV and now Time Warner. Some of AT&T's businesses are doing well, most notably its thriving wireless business and some of its acquired Time Warner assets. However, gains there are coming at the expense of the inevitable fade of its legacy landline business, shrinking subscribers for its DIRECTV satellite television service, and weakness in Latin America.
The good news is that pro forma revenue finally inched higher in its latest quarter, something investors haven't seen in nearly two years. It's earning more than enough to keep pushing its dividend higher, something that it should do later this month to extend its streak of annual hikes to 35 years.
GameStop: 11% yield
The chunkiest yield in this list belongs to a retailer that die-hard gamers know all too well. GameStop watches over its empire of more than 7,100 small-box stores that specialize in video gaming products. It also dabbles in collectibles, mobile, and PC retail.
The stock has been beaten down -- and its yield lifted higher -- on the narrative that brick-and-mortar retail is dead when it comes to gaming. The popularity of online games and digital delivery makes GameStop less necessary in the ecosystem, particularly bad news for its high-margin resale business.
GameStop is holding up better than you would think for a company that gets it obituary written over and over. Total global sales rose 5% and adjusted earnings jumped 24% in the fiscal third quarter, reported last week. Its guidance for the pivotal holiday-containing quarter wasn't pretty, but announcing two weeks ago that it's selling its Spring Mobile wireless business in a $700 million deal suggests that there's more value to this very profitable company than meets the eye of the naysayer.
Verizon: 4.1% yield
AT&T isn't the only telecom giant with a bountiful payout rate. Verizon is the country's largest wireless service provider, with AT&T huffing and puffing down its neck as a close second. Verizon is growing faster than AT&T with gains in its wireless stronghold more than offsetting the slide in its wireless business. The bottom line is growing even faster, making it easy for Verizon to boost its dividend -- for the 12th year in a row -- back in September.
The growth catalyst for Verizon and AT&T as we head into 2019 is 5G. Both telco giants are making the big investments to start rolling out the high-speed network in select markets in the coming months. It's fair to say that once consumers get a taste of the substantially faster connections that they will want to stick around, giving the wireless leaders the perfect backdrop to hold subscribers close and benefit from pricing elasticity.
Six Flags Entertainment: 5.5% yield
Amusement parks attract white-knuckled thrill seekers, but the thick payouts of the country's two largest regional operators draw income investors who don't necessarily care for the ups and downs.
Six Flags operates 25 parks across North America. The stock took a big hit after posting disappointing quarterly results last time out. A 7% increase in revenue that was largely the handiwork of acquired attractions and a weaker-than-expected 2% increase in earnings held the stock back.
It's rough that it should pull up lame in its most seasonally significant quarter, but there are reasons to stay hopeful as we head into 2019. Six Flags is getting better at selling annual passes in a membership model that will keep loyal parkgoers close, and the active pass base (the number of visitors who hold season passes or have company memberships) has risen 9% through the first nine months of 2018. We're heading into the seasonal lull for most of its parks, but the ingredients are in place for Six Flags to come back to life when the amusement park season kicks back into high gear in the spring.