After a record 2019, when the stock market grew higher than expected, this year could be more volatile and unpredictable. For this reason, many analysts advice to browse the stock market for reliable and stable companies that pay high dividends.
Dividend stocks are popular since they provide a steady and reliable level of income, unlike the growth stocks that burst higher, but are also more vulnerable to any stock market corrections. Since the stock market may pull back in 2020, investors are searching for the best dividend stocks to hedge against the growth stocks.
“Dividend strategies have increasingly become top of mind for investors that want to participate in the up market that continues but they want to be prepared for the volatility that feels like is around the corner,”said Todd Rosenbluth, head of ETF & mutual fund research at CFRA.
Here we prepared a list of three dividend stocks to buy for in 2020.
Johnson & Johnson
Johnson & Johnson (J&J), the pharma giant, is considered to be one of the best-performing companies in the world, all things considered. The company registered another strong year in 2019, and due to its impressive pharmaceutical portfolio, looks well-positioned to continue performing well.
The dividend growth percent over the previous 5 years is 36.70%, which is high given the market cap of more than $380 billion. While there are many companies out there that pay higher dividends, J&J is attractive since it is well-equipped to go through potential turmoil of the global stock market.
Out of 19 analysts covering Johnson & Johnson, 13 have upgraded its stock to either Buy or Overweight. J&J has a current yield of nearly 2.6%, which is higher than the ~2% current yield of the broader S&P 500 Index.
Pepsico, a US-based food, snack, and beverage corporation, is also known as the dividend king among stock market investors. The previous year was the company’s 47th consecutive in which it increased annual dividend paid to its shareholders.
The 5-year yield growth stands at an impressive 60%. For the previous quarter the company paid a dividend of $0.955 per share of PepsiCo common stock, an increase of 3% compared to the previous year.
Pepsico pays even more than J&J on an annual basis as its current yield is 2.8%.
Amgen, one of the world’s largest independent biotech companies, has an amazing 5-year dividend growth of 180%. Last month, the company announced its decision to hike the quarterly dividend by 10%, hence paying out $1.60 per share to its shareholders in the previous quarter.
Amgen is widely-recognized as a must-have stock. The annual yield is 2.7%, in the range of J&N and Pepsi and again, significantly higher than the current yield of the broader S&P 500 Index. Similarly to J&J, Amgen has the pieces in place to overcome potential industry-wide headwinds and continue to provide steady income on an annual basis.
The current year is expected to bring more volatility and potential stock market correction. While growth stocks were those that generated profits in 2019, the current year should shift the focus back on high-yield dividend stocks. For this reason, Pepsico, J&J, and Amgen look well-positioned to deliver in 2020, despite the potential headwinds.