For Immediate Release
Chicago, IL – October 1, 2020 – Zacks Market Edge is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here:
Should You Buy Big Dividend-Paying Stocks?
Welcome to Episode #243 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is going solo to talk about the big dividend paying stocks, with a spotlight on Big Oil.
Some dividend paying companies have seen their yields rise in 2020.
For those looking for income, it’s a lure to see yields of 4% or 6%.
Big Oil Slide
The energy stocks got crushed in the March coronavirus sell-off as crude plunged to multi-decade lows as the economic lockdowns hit around the globe.
But they also had one of the largest rallies off those lows, with many stocks doubling and tripling into June on the recovery hopes.
Since June, however, the sector has been in another slide. And that slide picked up speed during the stock market’s September correction.
The Energy SPDR ETF fell 17% over the past 3 months and is now down 49% year-to-date.
Still Paying Dividends
The Big Oil companies, however, have one thing going for them.
They continue to pay dividends despite a steep decline in earnings for 2020 and a slow recovery expected in 2021.
Those dividends look pretty juicy for those looking for ways to generate income in an era with the 10-year treasury under 1%.
Chevron Corporation CVX, which was just upgraded to a Buy at Bank of America, is paying a dividend yielding 7.2%. Shares have fallen 16% over the past month which has pushed the yield even higher.
Exxon Mobil Corporation XOM is currently yielding nearly 10% but the shares have fallen 21% over the past 3 months and are threatening to test the March 2020 lows again.
BP p.l.c. BP is another Big Oil company whose shares have taken a hit. They’ve sunk 22% over the past 3 months and are staring at the March lows again as well. It pays a dividend yielding 6.8%.
Looking Outside of Energy
There are other sizable dividends outside of energy as well.
Pfizer Inc. PFE is paying a dividend yielding 4.2% but long-term investors haven’t made out. The 5-year return is just 9%, which is well under the return of the S&P 500 for the same time period, of 71%.
Shares are also down 8% year-to-date.
The big banks get a lot of criticism for being “bad” investments compared to hot technology but Bank of America Corporation BAC has a 5-year return of 54%.
That’s still underperforming the S&P 500, but it had been beating the index before COVID hit.
It’s back to paying more sizable dividends as well, with a yield of 3%.
Can it pay to buy the companies with really high dividend yields or will investors get burned?
Find out the answer to this and more on this week’s podcast.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Exxon Mobil Corporation (XOM): Free Stock Analysis Report
Bank of America Corporation (BAC): Free Stock Analysis Report
Chevron Corporation (CVX): Free Stock Analysis Report
Pfizer Inc. (PFE): Free Stock Analysis Report
BP p.l.c. (BP): Free Stock Analysis Report
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