After a strong year on the markets in 2019 that saw the S&P 500 rise by 30%, many stocks are trading at relatively high valuations and could be due for corrections this year. Finding a good, fairly valued dividend stock can be challenging this year. However, the stocks listed below all trade at reasonable valuation multiples, have good financials, and can deliver strong dividend income for your portfolio for many years to come.
1. BCE
BCE (BCE -0.82%) is a top Canadian telecom stock that currently pays investors a quarterly dividend of approximately $0.60 every quarter, depending on the exchange rate. That equates to a dividend yield of more than 5.2% per year. The company has increased its dividend every year since 2009, and although it doesn't have as long a track record as a Dividend Aristocrat may have, BCE is a safe bet to continue raising its payouts for the foreseeable future.
Strong free cash flow totaling 3.8 billion Canadian dollars over the trailing twelve months and annual profits over the past three years consistently hovering around CA$3 billion make the stock a very safe buy for investors, as there is a great deal of predictability in its future earnings. BCE had a solid 2019 with its share price climbing 17% during the year, although that was still shy of the S&P 500's impressive performance.
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With the stock trading at a forward price-to-earnings (P/E) of 16, BCE is an attractive long-term buy for value-oriented investors. BCE is among the industry leaders in the telecom industry in Canada, and there's little danger of this stock or its dividend being in any trouble anytime soon.
2. GlaxoSmithKline
GlaxoSmithKline (GSK 0.49%) offers investors a more modest dividend yield of 4.2%. Investors in the U.K.-based drug manufacturer will also see variations in their dividend payments, depending on the effect of foreign exchange. GlaxoSmithKline doesn't offer the same payout every quarter, but over the course of a full year, U.S. investors can expect to earn around $2 per share. The company has not increased its dividend payments in recent years, but it can still be a good pillar for dividend investors to put in their portfolios, as its business is also very stable.
With 41 different medicines that the company is developing and its profits coming in at 4.5 billion pounds over the past 12 months, it's likely to remain a top healthcare stock for many years. Trading at a forward P/E of just 15, like BCE, GlaxoSmithKline is also an attractive option for price-conscious investors, despite currently being near its 52-week high.
3. CenterPoint Energy
CenterPoint Energy (CNP -1.67%) is a Texas-based utility company, and investors won't have to worry about their dividend payments fluctuating due to foreign exchange. Currently, the company pays a quarterly dividend of $0.2875, and it has increased its payments annually since 2006. Another increase may be right around the corner as the company has typically increased its payouts at the beginning of the year. Currently, the stock's dividend payments yield around 4.3%.
With a strong 140-year history and operating in a stable industry, CenterPoint could be an ideal investment for risk-averse investors who are looking to collect a recurring dividend without having to worry about much else.
The stock is coming off a disappointing 2019, where its share price fell by 2.6%. However, CenterPoint is only a few dollars away from its 52-week low and it's valued at a forward P/E of 16. The utility stock has low volatility and can be a good investment to hold if you're worried about a dip in the markets or some challenging economic conditions ahead.
All three offer investors diversification and stability
The stocks listed above may not have the best growth prospects, but they make up for that with stability and dividend income. If you're looking for a high-yielding stock, BCE could be the best of the three to buy today, with its superior payouts. However, after a strong performance in 2019 and the company having many new products in the works, GlaxoSmithKline is more optimal for investors who want to maximize any potential for capital appreciation in 2020. CenterPoint, meanwhile, is more suitable for bargain hunters or investors who want consistency in their payouts.
