Now is the time for investors to load up on dividend stocks. Yields are high, valuations are low, and investors who add income-generating stocks to their portfolios today could be setting themselves up for some terrific returns in the years ahead. Not only could the stocks on this list deliver profits from their share prices, but they can also provide solid dividend income for the foreseeable future.
Shares of Novartis (NVS 1.93%), Enbridge (ENB 2.83%), and Verizon Communications (VZ 0.90%) are all down this year. But with solid fundamentals, these are stocks that investors shouldn't hesitate to buy on the dip right now.
1. Novartis
A top healthcare company like Novartis can be a pillar for long-term investors. Its business is profitable and growing, and the stock also pays a high dividend yield of 4.3%. The company makes a wide range of treatments, with oncology being a big part of its business and generating $15.5 billion in revenue last year. That accounts for close to one-third of the company's top line, which was just under $53 billion.
The company possesses a promising pipeline full of drugs that could be blockbusters, with Novartis identifying 20 products that could obtain approval by 2026 and have the potential to hit peak annual sales of at least $1 billion. That, combined with some healthy operating margins of around 20%, puts the company in solid shape to continue growing and paying an impressive dividend.
For long-term investors, Novartis balances both growth and dividend, which is why this is a stock you can safely buy and hold for a long time to come. The healthcare company has increased its dividend for 25 straight years.
2. Enbridge
A dividend stock that should be on all investors' radar is Enbridge. The pipeline company provides investors with some terrific consistency. Even though its revenue may have fluctuated over the years, its operating profits have been relatively stable:
ENB Operating Income (Annual) data by YCharts.
The oil and gas company has stability through long-term contracts, which is why investors won't see much volatility in the business' fundamentals even though oil prices haven't been nearly as consistent in recent years. Enbridge projects that its distributable cash flow (an adjusted cash flow metric that helps the company assess the safety of its dividend) will increase at a compound annual growth rate between 5% and 7% until 2024.
That increases the likelihood that the company can continue its already impressive streak of raising dividend payments for 27 consecutive years.
Although the stock's dividend yield of nearly 7% may spook some investors, the payout is a lot safer than it looks. And with the stock trading just a few dollars away from its 52-week low, now may be an opportune time for investors to buy shares of Enbridge.
3. Verizon Communications
Verizon Communications isn't getting much love these days. The top telecom company has raised prices, and it isn't signing up new customers as quickly as some of its rivals are. In its most recent quarter (ended in September), Verizon's sales were relatively strong at $34.2 billion and rose 4% year over year. Net income of $5 billion fell by 23%.
But one-time items such as adjustments to pension liabilities and intangible asset amortizations related to acquisitions weighed down the bottom line. On an adjusted basis, the company's earnings per share of $1.32 beat analyst expectations of $1.29.
In its consumer business, Verizon lost 189,000 postpaid wireless subscribers, which could be what made investors bearish on the stock, sending shares of Verizon down on the earnings numbers. But churn is a regular occurrence in the telecom industry that shouldn't be a worry to investors, especially given that the company raised its prices this year.
The overreaction in the markets to Verizon's subscriber losses is overblown; the top and bottom lines are what matter. And with Verizon beating expectations last quarter and still doing well, its 7.3% dividend yield could be a steal of a deal right now. Verizon is a top dividend stock to own, and it's likely to stay that way for the long haul. Earlier this year, the company announced its 16th consecutive rate hike to its dividend -- the longest such streak in the U.S. telecom industry.
