Investing in a good dividend stock has become tougher these days. Due to the coronavirus outbreak, most of the companies are cutting their payouts. It is highly important for the dividend-focused investors to lookout the stocks that will pay good returns in the long-term. Finding out a stock that could offer a high level of security becomes challenging these days.
Below is the list of 3 stocks with high dividends which one should consider for the long term.
At the end of Q1 2020, IBM has declared a quarterly dividend of $1.63. The company has marked the twenty-fifth year in a row to increase its quarterly cash dividend. IBM remains committed to keeping up its promise to pay out the dividends to its shareholders.
The company has generated a free cash flow of about $1.4 billion according to the Q1 2020 report. The quarterly sales were $17.6 billion which was tumbled by 3% Y-o-Y. Most importantly, the company holds $12B of cash which is considered to be a good amount to run the business smoothly even after the impact of coronavirus.
The company has been actively working on quantum computing projects for the last few years and constantly focusing on the R&D of emerging technologies. This might lead the business in the future and turn out to be profitable for the company, hence it’s shareholders.
After the announcement of Q1 results, the stock price of IBM closed in red following Wall Street. At the time of press, the share price of the company is floating at 121.87 per share.
Looking at the fundamentals, IBM is constantly making good profits. The company has a net revenue of 77.15 billion and a net income of 9.43 billion.
Market capitalization: $108.21 billion
Net Income: $9.43 billion
Dividend yield: 5.19%
Payout ratio: 62.69
1 Year Price Target: $130 per share
2. Cisco Systems Inc.
How one can miss Cisco Systems Inc. when it comes to high dividend stocks. The company reports a dividend yield of 3.4%. Cisco’s stock price showed a positive signal to the investors before the coronavirus outbreak. Hence, a good sign for the investors to consider buying the stock as a long term investment. The stock price crossed $50 per share last year because of the huge demand for its products and services.
Moreover, the company also owns Duo Security which provides secure access to systems for remote users. Cisco earns most of the profits from its network switches and routing hardware business. This will continue to rise in the near future.
Cisco Systems is focusing on selling more software and subscriptions. The company wants its software business to account for more than 30% of its total revenue this year.
As more companies have been focusing on moving towards working from home which could increase the demand for Webex and Duo (owned by Cisco). This might help the company to achieve the sales target.
Moreover, Cisco has $27.1 billion of cash on hand that might be beneficial for the company to expand its business in the near future.
Market capitalization: 173.54 billion
Net Income: 11.62 billion
Dividend yield: 3.40%
Payout ratio: 50.40
1 Year Price Target: $48 per share
3. Kohl Corporation
Due to the coronavirus outbreak, Kohl’s stock price have been in the bearish trend. Kohl’s stock price has been falling drastically after the lockdown. At press time, the stock price is trading at $17.64 per share and constantly hitting the bottom. This brings a great opportunity for long term investors to invest in the stock for the long term.
The bearish trend is normal for the retail store business as the sales drop. The stock has the potential to outperform after the lockdown eases and consumers start to jump to stores after things get normal.
Kohl’s stock recovered post the recession of 2008, to levels of about $38 in early 2010, jumped more than 50% b/w Mar 2009 and Jan 2010. Considering history, Kohl’s stock might follow the same bullish trend and could jump more than 35%.
Market capitalization: $2.74 billion
Net Income: $691 million
Dividend yield: 15.25%
Payout ratio: 62.08
1 Year Price Target: $24 per share
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