Ongoing recession and the national health crisis become more stressful for retired people, and interest rates continue to remain low since the last economic slowdown. There are a few options for investors to look for income to make sure their investment portfolios can create sufficient cash flow. But if you’re looking for an investment for a better retirement, you must consider this trio of high-yield dividend stocks. They may be out-of-favor industries, but each one of them has proven themselves through hard times before.
1. Love the unloved tech giant- International Business Machines
The name International Business Machines (NYSE: IBM) might make some investors restless. The technology giant is still working on converting its business from older, lower-margin lines to newer, higher-margin ones like converting a computer to a cloud, AI, and security. The problem with this is that it sells mature businesses that generate a lot of revenue to invest in operations that are already growing. That is the highlight of this consideration in the downtrend for years, but the newer businesses make up around 50% of the company’s revenue with a closer inflection point.
Investors must note a couple of important things here. First of all, IBM continued to increase its dividend throughout this downturn process, with the impressive increases now up from the last 25 consecutive years. The other thing is the payout ratio, which is around 64%; it may be a material number but not so high that an investor should neglect. The company’s debt load is significant here. It has increased following the acquisition of Red Hat (a bold and expensive move to accelerate its repositioning efforts). IBM reduced its debt load by 10% from its recent high, so the financial debt to equity ratio is now approx. 66%. Again, worth noticing.
With a dividend yield of 5.3%, we suggest waiting for IBM to come back to normal after this long transition. You need to remember one of the most important things here: IBM is a business-to-business company with its list of customers over 100-years-old. Its pay is slow like a tortoise hiding in the background, ensuring customers’ successes. In the end, it’s moving exactly how it is supposed to act, including paying well.
2. A North American banking giant- Toronto-Dominion Bank
The second is Toronto-Dominion Bank (NYSE: TD), with a 5% yield. This Canadian bank has increased its dividend and held its return steady for at least two decades. Investors are worried about the impact of an ongoing recession on financial institutions, but this bank has shown improvements through periods like this before without missing a beat. In fact, during the deep, financial-led recession of 2007-2009, it was one of the few North American banks that didn’t suffer much and cut its disbursement.
There are so many reasons that prove investors should prefer TD today. The first is that this bank’s core operations, almost 55% of its earnings, are in Canada. In a highly stabilized market, this bank is one of the most prominent players. This bank deals with the regulations ensuring a stable market position, which forces it to operate conservatively, giving TD a solid back to grow.
At this point, the U.S. business’s role comes into play at around 30% of earnings. In the market, this bank is amongst the top-10 bank, even when it is the only one operating on the East Coast (that means this bank has ample space to expand). The rest of the earnings come from an ownership stake in TD Ameritrade and a wholesale business (both of these guarantee potential growth engines.
TD Bank has put a lot of money in the fiscal second quarter to handle the expected rise in troubled loans, which increased its earnings to a noticeable extent. This may not be good news, but it is essential to understand that this was a conservative step to help the TD Bank deal with the economic crises’ fallout to slow down the spread of COVID-19.
3. Energy stock- Enterprise Products Partners
The third high-yield dividend stock on my list is the master limited partnership Enterprise Products Partners (NYSE: EPD). It is one of the largest and most diversified markets in North America. The only problem here is that this Enterprise operates only in the energy sector, which is not liked by most investors today due to the massive supply/demand imbalance created by the COVID-19-related economic slowdown. Now that the oil prices are expected to remain low for a long time, fuel slowly fades into obsolescence as the world moves to cleaner alternatives. Those are some real concerns.
But don’t get too attracted to this glossy mood because this type of fuel transition has taken a long time. For example, It took 100 years for oil to replace coal. Energy demand continues to grow globally, and there are chances that this demand will continue to rise. They must start looking for renewable power to build. This is where Enterprise Products Partners can rule the world. It has a massive collection of pipelines, storage, processing facilities, and transportation assets based on a hefty fee. This means the price of the commodities moving through its system is less important than its volume.
The economic slowdown due to COVID-19 has impacted the partnership’s business as well. This has reduced the demand for its assets and a need to look for growth plans, but with a 9% distribution yield, investors are getting good pay, but they need to wait until this rough patch is cleared. The oil connection may harm, but it looks like this Enterprise is one of the most conservative ways to invest in at this moment.
It is essential to be picky.
If you want to make your retirement a good one, supported by a steady flow of income from dividends in your investment portfolio, you must be careful. It would help if you spent some time thinking about what to buy — all stocks aren’t equal. IBM, TD Bank, and Enterprise have proven records and long-benefit investors with a steady income flow. They have some drawbacks, but when you look closer at them, you will see their advantages and understand that they have given positive results. With significant losses today, it is advised to dive deep into this trio and end up with great results in your portfolio.
Contact Information:
Email: [email protected]
Phone: 3604642979
Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely with
helping them pursue the most comfortable financial life possible.
Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.
Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.
Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.
Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.
With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.
Aaron can help you and your family to create, preserve and protect your legacy.
That’s making a difference.
Disclosure:
Disclosure:
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