Breaking News
0

3 Stocks To Consider As Fed Rate Cuts Resume

By Investing.com (Jesse Cohen/Investing.com)Stock MarketsAug 07, 2019 04:10AM ET
www.investing.com/analysis/3-stocks-to-consider-as-fed-rate-cuts-resume-200451991
3 Stocks To Consider As Fed Rate Cuts Resume
By Investing.com (Jesse Cohen/Investing.com)   |  Aug 07, 2019 04:10AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The Federal Reserve cut interest rates for the first time in more than a decade last month, lowering its Fed funds target range by 25 basis points, citing worries over “global developments” such as the U.S.-China trade war.

The U.S. central bank may not be done lowering interest rates, either. Futures traders are betting on another quarter-point cut being put in place in September.

Investing.com Fed Rate Monitor Tool
Investing.com Fed Rate Monitor Tool

As the Fed eases, these three stocks have the potential to provide some of the best returns in the market.

1. AT&T: Rich Dividend Yield

AT&T (NYSE:T) doesn’t need an introduction. Shares of the world's largest telecommunications corporation are up nearly 19% this year. The stock closed at $33.96 on Tuesday, within sight of a 52-week high of $34.64 touched on July 30, giving it a market cap of almost $247 billion.

T Chart
T Chart

Good quality blue-chip dividend stocks tend to perform well in an environment of low or falling interest rates. The telecom and media giant announced a quarterly dividend of $0.51 per share, which implies an annualized dividend of $2.04 per share. AT&T stock’s dividend yield is currently 5.97%, almost triple the implied yield for the S&P 500, which is 2.04%.

The Dallas, Texas-based giant posted upbeat second quarter results on July 24. AT&T reported earnings per share (EPS) of $0.89, matching expectations. Sales in the quarter were $44.96 billion, up 15% from the same period a year earlier, and just ahead of expectations for revenue of $44.89 billion.

AT&T now expects to generate $28 billion in free cash flow, $2 billion more than its previous guidance of $26 billion.

The company, which has been focused on reducing its debt load after its $85 million purchase of media and entertainment conglomerate Time Warner in June last year, spent $6.8 billion on paying off debt in the second quarter. It added that it was on track to cut its net debt load to about $150 billion by the end of the year.

“The debt we have will be at a very reasonable place as we exit this year, (and) I fully expect that we’ll be buying some stocks back as we go on this year and (expect) cash flows to continue,” Chief Executive Randall Stephenson said.

2. Duke Energy: Attractive Dividend-Oriented Utility

As interest rates fall, Duke Energy (NYSE:DUK)—one of the largest electric and natural gas utilities in the U.S.—is the second big name to watch. Utility stocks tend to outperform in low interest rate environments due to their attractive dividend yield.

Shares of the Charlotte, North Carolina-based corporation ended at $88.92 last night, not far from their recent 52-week high of $90.27 reached on July 9, giving it a market cap of $64.7 billion.

DUK Chart
DUK Chart

In July, Duke Energy declared that it was increasing its quarterly cash dividend by almost 2% to $0.945 per share. This represents an annualized dividend of $3.78 and a yield of 4.29%, one of the highest in the utilities sector.

The company beat estimates on both the top and bottom lines when it released second quarter earnings on Tuesday. Earnings per share totaled $1.12, surpassing expectations for EPS of $0.98 and up from $0.93 in the same period a year earlier. Revenue climbed to $5.8 billion, above forecasts of $5.77 billion and compared to sales of $5.61 billion a year earlier.

“So far this year, we’ve grown earnings and increased our dividend. We remain on track to meet our commitments and have reaffirmed our 2019 earnings guidance range and our long-term 4 to 6 percent earnings growth rate,” chairman and CEO Lynn Good said in a statement.

3. Eldorado Gold: Explosive QoQ Growth

The final name to consider buying as the Fed cuts interest rates hails from the gold mining sector. Expectations of monetary stimulus and lower interest rates tend to benefit gold, which is currently trading at its highest level since May 2013.

Eldorado Gold (NYSE:EGO), headquartered in Vancouver, British Columbia, Canada, has seen its shares outperform its peers in recent weeks, with the stock surging 175% since late May. It settled at $8.57 yesterday, after touching a fresh 52-week high of $8.99 earlier in the session.

EGO Chart
EGO Chart

The gold miner reported second quarter revenue of $173.7 million when it released its latest quarterly results on August 1, which represented explosive quarter-over-quarter (QoQ) revenue growth of 117%.

The company has benefitted from both a sharp increase in gold prices as well as higher sales volumes. Eldorado’s Q2 gold sales increased 21% year-over-year (YoY) to 113,685 ounces, while average realized gold prices rose 2.6% from the year-ago period to $1,321 per ounce.

Looking ahead, Eldorado reiterated its full-year 2019 production target of 390,000-420,000 ounces of gold at all-in sustaining cost (AISC) of $900-1000 per ounce sold.

Eldorado Gold’s robust performance looks set to continue as long as gold prices keep appreciating.

3 Stocks To Consider As Fed Rate Cuts Resume
 
3 Stocks To Consider As Fed Rate Cuts Resume

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