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Reinvested stock dividends have significantly influenced the total return of the S&P 500 since 1927.
This impact becomes especially apparent when U.S. bond yields decline. As interest rates drop, dividend-paying equities become more attractive, making their yields even more appealing.
In this scenario, investors benefit significantly. First, they gain from rising stock prices and lower interest rates, which boost dividends. Second, analysts at Bank of America have named 2024 the “year of the dividend.”
Anticipated declines in interest rates are expected to drive down yields in money-market funds. Bank of America predicts that once money-market rates fall below 5%, households will shift cash from money-market funds to stocks.
Among their preferences will be stocks offering attractive dividend yields. Here’s a look at some stocks to consider:
Bristol-Myers Squibb
Concerns about patent expirations, possible U.S. government-imposed price restrictions, and the expectation of higher interest rates, which reduce the future earnings value in valuation models, have lately put downward pressure on shares of big pharmaceutical companies, including Bristol-Myers Squibb (NYSE:BMY).
Despite these obstacles, value investor Buckingham believes Bristol-Myers Squibb (BMY) is a compelling investment choice.
In April 2024, the stock recorded a substantial loss, mostly due to one-time accounting write-offs linked with acquisitions. Buckingham notes, however, that this loss does not reflect the company’s performance.
Given its size and global prominence, Bristol-Myers Squibb recently reported a 6% increase in sales, a significant accomplishment. This revenue growth highlights the company’s durability and ability to generate long-term wealth.
Bristol-Myers Squibb pays stockholders $0.60 per share in dividends, resulting in an annual dividend yield of 5.97%.
Cisco Systems
Cisco Systems (NASDAQ:CSCO), a stalwart from the late 1990s tech boom, is positioning itself as a significant player in the AI sector with its recent acquisition of Splunk.
The software company focuses on gathering and evaluating machine-generated data. Although the purchase was expensive, Cisco expects it to be crucial in “powering and protecting the AI revolution,” its strategic objective.
Anticipating an 8.48% increase from the current levels, Barclays has recently set a 12-month price target of $50.00 for Cisco Systems. During the past year, 41 analyst companies have rated the company, representing a range of opinions on Cisco’s market performance and potential.
Civitas Resources
This year, Civitas Resources’ (NYSE:CIVI) strong performance has been supported by first-quarter sales and earnings projections exceeding expectations. The stock has appreciated noticeably despite trading close to its 52-week lows.
Civitas shares currently have a 2.7% yield. With a quarterly variable payout of $1, the effective yield increases to about 8%. However, investors should note that this dividend’s variable nature means the payout is not guaranteed and might be canceled.
With considerable capacity remaining in its repurchase program for the year, Civitas is also actively involved in stock buybacks at a single-digit price-to-earnings multiple.
Nike
Nike (NYSE:NKE) shares have fallen from their December highs of around $123, driven by soft demand in the sportswear market. Nevertheless, the business is still positioned for a comeback. Strong brand equity and dominance in athletic footwear across key markets and main categories help Nike generate a sizable competitive advantage.
Constant innovation, clever marketing campaigns, and supply chain enhancements contribute to the company’s potential for recovery and increase Nike’s chances of regaining momentum in the market.
Gilead Sciences
Promising research results from Gilead Sciences (GILD: NYSE), a biopharma behemoth now trading close to its 52-week lows, should drive stock increase from strategic acquisitions and the performance of its oncology medication pipeline. The company’s strong balance sheet provides investors with a significant margin of protection.
Gilead reported first-quarter revenue of $6.1 billion, a 5% annual increase over the previous year. The HIV medication Biktarvy, with $2.9 billion in sales and a 10% annual increase, highlighted this success. Biktarvy’s U.S. market share also grew from 46% to 49% compared to the same quarter last year.
Looking For Higher-Yield Opportunities?
The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through dividend stocks… Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider.
For instance, Basecamp Alpine Notes offers a target APY of 9% with a term of only three months, making it a powerful short-term cash management tool with incredible flexibility. EquityMultiple has issued 61 Alpine Notes Series and has met all payment and funding obligations with no missed or late interest payments. With a low minimum investment of just $1,000, Basecamp Alpine Notes makes it easier than ever to start building a high-yield portfolio.
Don’t miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga’s favorite high-yield offerings.
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This article The 5 Stocks Defining ‘The Year Of The Dividend’ In 2024 originally appeared on Benzinga.com
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