In this article, we will take a look at the 10 No-Brainer Dividend Stocks to Buy.
On June 1, CNBC reported that investors seeking stability during periods of market volatility should consider maintaining a diversified portfolio of dividend-paying stocks, according to ClearBridge Investments portfolio manager Michael Clarfeld.
Against the current geopolitical backdrop, Clarfeld argued that dividends can offer investors a more predictable source of returns, particularly after the market’s strong run. He also noted that dividend-paying stocks can help limit downside risk by giving investors a tangible source of value during uncertain periods. He made the following remark:
“The case for dividends is as strong as it’s ever been, given the volatility in the markets, given the uncertainty about what the future looks like, and also given the importance of dividend growth as an offset to inflation that’s stickier and higher.”
Inflation remains above the Federal Reserve’s 2% target. According to data released by the Commerce Department, the personal consumption expenditures price index, the Fed’s preferred inflation measure, rose 3.8% in April and 3.3% excluding food and energy prices.“If dividends can continue to grow at a healthy rate, which we think they can, it can keep investors ahead of inflation,” Clarfeld said.
Clarfeld manages the ClearBridge Dividend Strategy Fund (SOPAX), which focuses on high-quality companies with attractive or improving dividend profiles. He also stressed the importance of diversification in helping investors navigate market swings. In his view, diversification is valuable not only from a risk-management perspective but also from an opportunity standpoint. He further said:
“The risk perspective is obvious: We always think don’t put all your eggs in one basket. The opportunity perspective is you never know where performance is going to come from, so you want to make sure you have exposure everywhere.”
Given this, we will take a look at some of the best no-brainer stocks to buy that pay dividends.
Photo by nathan dumlao on Unsplash
Our Methodology:
For this list, we screened for companies that have maintained stable dividend policies over the years and have strong financials and a sound cash position to maintain their dividend policies in the future. We finally picked companies that have recently reported noteworthy developments likely to impact investor sentiment. These companies are also popular among elite funds and analysts.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
10. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 32
On June 1, Jefferies initiated coverage of Realty Income Corporation (NYSE:O) with a Buy rating and a $69 price target, compared with its previous target of $75. The firm began coverage of retail net lease real estate investment trusts with a favorable view of the sector. According to the analyst, the successful execution of investment pipelines could help drive a re-rating toward historical valuation multiples.
In a research note, Jefferies said the net lease sector is trading at the third-largest discount to its 10-year average valuation within the REIT space. The firm noted that net lease REITs are being grouped with “the same cohort as secular challenged sectors” such as office and lab properties, despite what it described as “intact fundamentals.”
Earlier, on May 13, Mizuho lowered its price recommendation on Realty Income to $66 from $68. It reiterated a Neutral rating on the stock. The firm pointed to ongoing macroeconomic and interest rate uncertainty affecting triple-net real estate investment trusts.
Realty Income Corporation (NYSE:O) is a real estate investment trust focused on acquiring, owning, and managing freestanding commercial properties. These properties are leased under long-term net lease agreements to a diversified group of tenants, including investment-grade, investment-grade-equivalent, and other operators.
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 59
On June 3, Citi analyst Fatima Boolani raised her price recommendation on International Business Machines Corporation (NYSE:IBM) to $375 from $285. She reiterated a Buy rating on the shares. The move followed IBM’s announcement that it plans to invest an additional $10 billion over the next five years to strengthen its position in quantum computing and advance its long-term strategy in the field. According to Boolani, committing $10 billion in new investment so soon after securing a significant CHIPS Act grant “signals high confidence and preparedness” toward capturing what she described as an approximately $850 billion quantum market that is likely to receive strong federal support. The analyst also said IBM remains “underappreciated” and “misunderstood.”
A few days earlier, on June 1, Barclays initiated coverage of IBM with an Overweight rating. It also set a $350 price target on the stock. In a research note, the firm said IBM has built a “stable growth engine around its very defensible software portfolio.” Barclays believes that the foundation should support “solid” future growth and improved margins. The firm also views quantum computing as a “very interesting option value” and considers IBM an early leader in the space.
International Business Machines Corporation (NYSE:IBM) provides hybrid cloud, artificial intelligence (AI), and consulting services worldwide. The company operates through three main business segments: Software, Consulting, and Infrastructure, along with a Financing segment.
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