Investors should hold dividend stocks in their portfolios. In fact, in times of volatility, these are some of the safest stocks to own for healthy cash inflows, meaningful capital gains, and attractive valuations. Moreover, with the current market volatility, investing in the best dividend stocks to buy at attractive valuations makes sense, potentially delivering robust gains over the long term. Furthermore, dividend stocks can provide an effective hedge against rampant inflation. Unfortunately, recent data shows consumer spending is unlikely to slow as fast as experts hoped. Therefore, wagering on high-yielding dividend stocks is arguably the best investing strategy to minimize risks and grow your portfolio even in these testing times.
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New York Community (NYCB)
New York Community (NYSE:NYCB) is a leading regional bank offering an enticing dividend yield of over 7.9%. Its yield is more than 1% higher than the current inflation rate and more than 150% higher than the sector average. Moreover, the firm has benefitted from higher interest rates, resulting in a net income margin of over 48% for the year. With higher rates expected this year as well, it’s safe to assume another strong bottom-line performance.
In addition, NYCB recently acquired Flagstar Bancorp, expecting to produce synergies driving higher earnings. Following the acquisition, the company’s revenues were up 71% from the prior-year period in its fourth quarter. As we advance, combining both companies will likely result in robust revenue growth in the upcoming quarters.
Philip Morris (PM)
Philip Morris (NYSE:PM) is one of the top tobacco businesses in the world. Its revenues have grown at a steady pace over the years, consistently rewarding its shareholders in the process. However, the PM stock slid, as smoking rates continue to fall. Helping, we are seeing the firm pivot into the fast-evolving new tobacco sphere, which grows rapidly each quarter. Its Reduced-Risk-Products division accounts for 32.1% of its total sales, generating an 82% jump in sales from 2019.
Furthermore, its acquisition of Swedish Match and full control of IQOS in the U.S. by 2024 are two of the biggest milestones for the firm in its smoke-free transition. Perhaps more importantly for its investors, the company still offers a handsome dividend yield of 5%, with 14 consecutive years of payout expansion.
Star Bulk (SBLK)
Shipping giant Star Bulk (NASDAQ:SBLK) benefitted from the pandemic-led tailwinds when supply-chain disruptions increased demand for shipping services. The surge in demand led to robust freight rates and improved profitability. The company’s gross profit and EBIT margins are above the 40% mark over the past 12 months, along with a 40% increase in free cash flow margins.
With an A-graded profitability profile, the firm is in a significantly better position to weather the current economic challenges. Furthermore, it boasts an enviable dividend yield of roughly 21.5%, which dwarfs its 5-year average at 4.6%. Its president, Hamish Norton, noted that after racking up $2.1 million cash per vessel quarterly, the excess cash is distributed as dividends. Additionally, with China and India looking to increase their hold on the worldwide economy, SBLK to benefit from the greater demand for commodities and raw materials.
CVR Partners (UAN)
CVR Partners (NYSE:UAN) witnessed double-digit growth in its profitability margins from its historical averages following a surge in fertilizer prices. The war between Ukraine and Russia pushed fertilizer prices to multi-year highs last year. However, the fertilizer price index is down over 50% from the highs achieved in April last year. Fertilizer exports from Russia are still growing, with export revenues up 70% in 2022. Consequently, UAN stock shed 8.2% of its value last year.
The fertilizer giant’s top-line performance will feel the string of lower prices. However, reducing natural gas, one of its key input costs, could help offset the lack of gains on its top-line front. Moreover, it boasts a monster dividend yield of roughly 24%, bolstered by massive quarterly payouts of $10 and above in two of the past three quarters.
Pfizer (NYSE:PFE) was among the top pandemic stocks, which saw its shares skyrocket to new highs with the monster success of its Covid vaccine. However, Pfizer’s cash cow is quickly fading away with the pandemic in the rear-view mirror and billions of shots given worldwide.
Nevertheless, Pfizer’s Covid vaccine allowed the firm to build its massive cash war chest, which has soared over a whopping $22.7 billion. Naturally, it’s making it rain, acquiring multiple biotech businesses, including Array BioPharma, ReViral, Biohaven Pharmaceutical, Therachon, and more. Moreover, its Seagen acquisition has the pharma space buzzing, which provides millions in new revenue for Pfizer from its promising cancer drugs pipeline.
Its management guides non-Covid sales of up to $84 billion by 2030, indicating a normalized CAGR of almost 7% from fiscal 2019 to fiscal 2030. Moreover, its stock trades at just 3.3 times forward sales estimates, yielding 3.9%, growing its payouts in the past 12 consecutive quarters.
Rio Tinto (RIO)
Rio Tinto (NYSE:RIO) is one of the biggest names in the metals and mining space. It has had a track record of steady expansion in its business and adding value for its shareholders. RIO stock has gained over 60% in value in the past three years, with a 5-year average dividend yield of over 7%.
Perhaps the most attractive element about the company is its wide footprint and resources with a wide range of applications. With a focus on copper, lithium, and other powerful base metals, its outlook remains largely positive over the next several years. These metals will remain in high demand following the push toward green energy. For instance, it is likely to become the largest supplier of lithium in Europe over the next 15 years.
It finished the year with a massive $7.4 billion in free cash flows, returning over $10.7 billion of its cash as dividends to its shareholders. With the likely demand boom with China’s reopening and a stretched demand/supply balance, expect the firm to continue growing rapidly.
Chevron (NYSE:CVX) is one of the top oil majors that boast an excellent track record of rewarding its shareholders. It racked up record profits last year, and the windfall was passed on to its shareholders.
The company raised its payouts by 6% to $1.50 in March and recently announced a new $75 billion buyback program effective in April. With a robust operating environment, it’s plausible to assume that this Dividend King will continue rewarding its shareholders and then some.
Most recently, Chevron held its Investor Day, reiterating its commitment to delivering excellent shareholder returns by leveraging its rock-solid balance sheet, effective capital allocation, and strong asset portfolio. If Brent crude could average $70 a barrel for the next five years, Chevron could continue raising its dividend at accelerated rates and buy back 25% of its outstanding shares.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.