Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
Income-minded investors are always on the lookout for the best dividend stocks. When shopping around for this type of stock however, there are several key considerations you need to keep in mind.
Investors be warned: there are lots of overvalued stocks right now. However, investing in reliable dividend stocks is another option to consider. The benefit of dividend investing is that these type of stocks offer a solid, quarterly payout.
As the world becomes greatly affected by various black swan events, time is of the essence. Dividend stocks can help protect your portfolio in the interim. In the current environment, we should look at investing as a long-term game plan.
5 Best Dividend Stocks in July 2020
Based on my findings, the best dividend stocks that offer long-term dividend growth opportunities are American Express (NYSE:AXP), Brookfield Infrastructure (NYSE:BIP), Clearway Energy (NYSE:CWEN), Essential Utilities (NYSE:WTRG), and Microsoft (NASDAQ:MSFT).
1. American Express (NYSE:AXP)
American Express shares are down in 2020. Since the company faces the risks of more borrowers not being able to pay up, a fantastic investment opportunity has arisen. AmEx shares are down 29% from the pre-crash high.
The dividend yield near 1.7% at recent prices, is substantially above the average yield over the last 10 years. This is a clear signal that shares are undervalued, and investors should take notice.
2. Brookfield Infrastructure (NYSE:BIP)
Brookfield Infrastructure provides indispensable services that we rely on daily. They include heating, phone and internet services. The company owns more than 1,300 miles of electrical transmission lines, 12,000 miles of fiber data lines, 11,000 miles of gas pipelines, and 20,000 miles of rail lines that are strategically located around the world.
The company relies on its $77 billion dollar assets to churn out a 12%-15% long-term return on equity, which is used to fund a 4.7% payout. Management is optimistic and is expecting that payout to grow between 5% and 9% annually.
3. Clearway Energy (NYSE:CWEN)
For dividend investors, Clearway Energy is an excellent choice. The renewable energy producer currently yields 3.5%, which is above average.
Since Clearway Energy uses 54% of its stable cash flow, most of which is backed by long-term contracts, investors can rely on that steady payout.
4. Essential Utilities (NYSE:WTRG)
The Essential Utilities stock is also expected to perform well in the market. Management has confirmed that the company has approval from regulatory bodies to invest $2.8 billion to upgrade its gas and water services through 2022. Investors can expect annual rate increases of 7%-9% for its water business and 8% to 10% for its gas distribution.
The Microsoft dividend is a safe bet and would be a wise investment in July 2020. Microsoft’s free cash flow is growing rapidly as cloud services grow and business services like LinkedIn and Office continue to improve steadily.
Microsoft dividends would provide long-term growth and the opportunity to grow the dividend at a strong rate in the long run.
Outlook on Dividend Investing in July 2020
Incredibly enough, the market has recovered well during the last three months. There are several uncertainties and no one knows for sure what will happen. The threat of a second wave of the coronavirus lurks like a shadow.
Will there be a vaccine to deal with the rising cases? And what about the current political climate and social unrest? How will these circumstances affect your future as an investor?
To make matters more confusing, the current situation has brought a massive wave of millennial-spurred day trading. With a number of leading stock trading apps accessible through a smartphone, trading has quickly gone from complex to easy.
How it all will end however, is anybody’s guess.