Breaking News
0

3 Large-Cap Dividend Stocks To Buy After Fed Cuts Interest Rates For Second Time

By Zacks Investment ResearchStock MarketsSep 18, 2019 04:20AM ET
www.investing.com/analysis/3-largecap-dividend-stocks-to-buy-after-fed-cuts-interest-rates-for-second-time-200465916
3 Large-Cap Dividend Stocks To Buy After Fed Cuts Interest Rates For Second Time
By Zacks Investment Research   |  Sep 18, 2019 04:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Markets have climbed back in September after a rough and volatile August. Despite the comeback, which has the S&P 500 near its highs, fears of a global economic slowdown remain. These worries, coupled with the uncertainty from the ongoing U.S. and Chinese trade war prompted the U.S. Federal Reserve to cut its benchmark interest rate for the second time since July on Wednesday.

The Fed concluded its two-day policy meeting early Wednesday afternoon and announced that it voted to drop interest rates by 25 basis points to between 1.75% and 2%. Wall Street and traders had largely priced-in this rate cut, which the U.S. central bank made to help boost a slowing U.S. economy and fight off broader worldwide fears. Overall, seven out of 10 officials voted to cut the short-term benchmark rate.

Looking ahead, Fed Chairman Jerome Powell remains committed to his seemingly more pragmatic approach, as U.S. consumer spending remains strong. This means additional rate cuts are not guaranteed, even though many, including President Trump, have pushed for larger cuts. Trump tweeted shortly after the announcement: “Jay Powell and the Federal Reserve Fail Again. No “guts,” no sense, no vision! A terrible communicator!”

Trump and others have cited negative interest rates in countries such as Germany and Japan, as reason enough for the Fed to take a more dovish tone. Nonetheless, yields on the 10-year U.S. Treasury sat at roughly 1.78% through late afternoon trading.

With this in mind, we looked for strong, stable companies. We then added a dividend yield above the current 10-year U.S. Treasury’s payout to our criteria using the Zacks Stock Screener to help investors find stocks that look like solid buys given our current rate environment and economic picture.

1. Lockheed Martin (NYSE:LMT)

Lockheed Martin, like all three companies on this list, needs little preamble. The firm posted impressive second quarter 2019 results, which included a record $137 billion backlog, and upped its full-year guidance across all financial metrics. The Bethesda, Maryland-based global security and aerospace company is also set to benefit from increased U.S. government spending on next-generation technology, such as hypersonic missiles. Shares of LMT have soared 51% in 2019 to crush its industry’s 31% (Northrop Grumman (NYSE:NOC) , General Dynamics (NYSE:GD) , and others) average climb, as well as Boeing’s (NYSE:BA) 19%.

LMT is trading at 16.4X forward 12-month Zacks Consensus earnings estimates, which marks a discount against its industry’s 18.8X and its own three-year median of 19.7X. Along with its solid valuation, our estimates call for the firm’s adjusted full-year fiscal 2019 earnings to pop 20.5% on 10.3% higher revenue.

The company’s 2020 EPS figure is then expected to come in 18.3% above our 2019 estimate, on 4.4% stronger sales. Lockheed Martin has also seen some strong earnings estimate revision activity recently to help it earn a Zacks Rank #2 (Buy). Lastly, LMT currently pays an annualized dividend of $8.80 per share, for a 2.23% yield that rests firmly above the 10-year U.S. Treasury note’s 1.78%.

2. Procter & Gamble (NYSE:PG)

Procter & Gamble is one of the world’s largest makers of household goods, from Febreze and Swiffer to Head & Shoulders and Pampers—Fabric & Home Care accounts for 33% of sales, with Baby, Feminine & Family Care making up 27%. The consumer packed goods powerhouse has kept pace with the broader market over the last three years, despite facing encroachment from upstart and digital-first brands that have grabbed market share in the Amazon (NASDAQ:AMZN) and social media age, where consumers now shop directly from Instagram (NASDAQ:FB) . Nonetheless, Procter & Gamble continues to innovate and find new revenue streams, which includes a chain of Tide-branded dry cleaners.

PG shares have soared 45% during the last 12 months, against its industry’s 25% climb and the S&P 500’s 2%. This makes its 2.46% dividend yield all the more impressive since it is not artificially inflated by a falling stock price. With that said, Procter & Gamble’s outsized climb has stretched its valuation a bit, but PG stock still trades in line with its industry in terms of forward P/E.

Looking ahead, PG’s fiscal 2020 (current year) and 2021 revenues are projected to pop 4% and 3.4%, respectively. Meanwhile, the firm’s full-year earnings are expected to climb 7% this year and 6.3% above our 2020 estimate next year. Procter & Gamble is a Zacks Rank #2 (Buy) that also rocks an “A” grade for Growth in our Style scores system.

3. Coca-Cola (NYSE:KO)

Coca-Cola is the most well-known name on this list and is one of the most recognizable brands in the world. The soft drink giant came in at No. 6 on Forbes’ most valuable brands list, behind only tech names such as Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) . KO raised its full-year organic revenue outlook last quarter, and its non-sugary segment has grown at an impressive clip. The company is also poised to expand through acquisitions and investments. This includes its purchase of potential Starbucks (NASDAQ:SBUX) rival Costa Coffee and investment in Gatorade (NASDAQ:PEP) rival BodyArmor.

The Atlanta-based firm also recently rolled out of its first energy drink under the Coca-Cola brand. KO shares are up 17% in the past 12 months and 28% over the last three years, which comes in well above the Beverages Market’s 7% climb. Similar to PG, KO’s valuation picture is a tad extended right now as its shares rest near their 52-week highs.

Yet, Coca-Cola’s forward P/E remains just above its industry’s average, where it almost always trades. Coca-Cola’s growth outlook appears strong and its longer-term earnings estimate revision activity helps the stock hold a Zacks Rank #2 (Buy) at the moment. Along with its “B” grade for Growth, KO boasts the highest dividend yield on the list at 2.95%.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.

See 7 breakthrough stocks now>>



Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Facebook, Inc. (FB): Free Stock Analysis Report

The Boeing Company (BA): Free Stock Analysis Report

Lockheed Martin Corporation (LMT): Free Stock Analysis Report

Northrop Grumman Corporation (NOC): Free Stock Analysis Report

General Dynamics Corporation (GD): Free Stock Analysis Report

Coca-Cola Company (The) (KO): Free Stock Analysis Report

Pepsico, Inc. (PEP): Free Stock Analysis Report

Apple Inc. (AAPL): Free Stock Analysis Report

Microsoft Corporation (MSFT): Free Stock Analysis Report

Starbucks Corporation (SBUX): Free Stock Analysis Report

Procter & Gamble Company (The) (PG): Free Stock Analysis Report

Original post

Zacks Investment Research
3 Large-Cap Dividend Stocks To Buy After Fed Cuts Interest Rates For Second Time
 
3 Large-Cap Dividend Stocks To Buy After Fed Cuts Interest Rates For Second Time

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email