The stock market has been steadily heading lower for most of the year. Because of that, many stocks are currently at or near their 52-week lows. One of the benefits of those lower share prices is that yields on dividend-paying stocks have risen to their highest levels in quite some time.
Three dividend stocks that have taken a beating this year are 3M (MMM 0.47%), Intel (INTC +5.51%), and Verizon (VZ +3.89%). That makes them look like bargain buys for income seekers these days.
Dividend royalty at a much lower price
Shares of 3M have tumbled more than 25% this year. That sell-off has pushed the industrial giant's dividend yield up to 4.6%. That's near its highest level this decade.
Key Data Points
3M has faced its share of headwinds this year. Sales were down 4% in the third quarter due to foreign exchange fluctuations, economic uncertainty, and asset sales. The company has also faced some legal issues.
However, 3M is taking action to improve its operations. It recently sold its food safety business and is in the process of spinning off its healthcare business. Meanwhile, despite its headwinds, the company continues to generate lots of free cash flow. Adjusted free cash flow was $1.4 billion in the third quarter. The company returned $1 billion of that money to investors via share repurchases and its dividend. The industrial company has increased its payout for 64 straight years, putting it in the elite class of Dividend Kings. With a cash-producing business, strong balance sheet, and refocused operations, 3M should be able to continue growing its high-yielding payout for years to come.
Slashing costs to protect its cash flow
Shares of Intel have tumbled about 40% this year. That shellacking has sent its dividend yield up to 5%, its highest level this decade.
NASDAQ: INTC
Key Data Points
Like 3M, Intel is facing several headwinds. Economic conditions worsened in the third quarter, causing revenue to slump by 20%. However, the company is taking steps to address that issue by cutting costs. It expects to reduce expenses by $3 billion by the end of next year, with cost savings rising to $8 billion-$10 billion by the end of 2025. That should help grow its free cash flow, putting Intel in an even stronger financial position to invest in building new manufacturing capacity.
The company is investing heavily in building new manufacturing complexes in the U.S. and elsewhere. It recently secured a funding partnership with Brookfield Infrastructure to cover half the $30 billion investment for two factories in Arizona. That will free up Intel's cash flow and balance sheet strength so that it can sustain and grow its dividend during this heavy investment phase.
Investing to cash in on 5G
Verizon's stock price has slumped 25% this year. That has driven the telecom giant's dividend yield up to 6.7%, the company's highest in the last decade.
NYSE: VZ
Key Data Points
This big-time payout is on a firm financial footing. Verizon has generated $28.2 billion in cash from operations this year. That covered its $15.8 billion of capital expenditures and $8.1 billion dividend outlay with room to spare, enabling Verizon to maintain a strong investment-grade balance sheet.
Verizon has been investing heavily to build out its faster 5G network, which will help drive growth in the coming years. That should help grow its free cash flow so Verizon can continue increasing its high-yielding dividend. The telecom giant has expanded its payout for 16 straight years, the longest current streak in the U.S. telecom space.
Attractive options for income-seeking investors
Shares of 3M, Intel, and Verizon have tumbled this year and are currently near their 52-week lows. While they face some headwinds, their dividends are on rock-solid ground. Because of that, they look like bargain buys for dividend-seeking investors since their dividend yields have gone in the opposite direction and are currently at their highest levels over the last decade.
