Whether you are the type of investor that looks to grow your portfolio through stock appreciation, or through income, you should always be on the lookout for a good value.
It is easy to find income. Dividend stocks provide a steady income stream that you can use to either supplement your non-investing income, or reinvest in the market. Dividend reinvestment programs are a great vehicle for building wealth if consistently used through the year to take advantage of the power of compounding the distributions.
Dividends are important, but you have to find good dividend stocks trading at attractive prices in order to maximize your upside potential and have the greatest chance of enjoying stock appreciation and steady income to jump start your portfolio and grow your wealth.
Here are a few stocks to consider for long-term portfolio growth.
Exxon Mobil (XOM)
Oil and gas giant Exxon Mobil (XOM) is currently yielding 4.1% and the stock trades at a low forward P/E of 14.4. Oil can be a volatile commodity, and WTI Crude is currently trading at $63.50 a barrel. The U.S. Department of Energy predicts that worldwide oil prices will average around $65 in 2019 and slightly lower at $62 in 2020. Should the forecast prove true and oil prices remain reasonably stable over the next two years XOM should perform well. The stock took a hit in the latter part of 2018 but has rallied 18% to date since the start of 2019. The company has a 36-year streak of dividend increases and analysts have an average price target of $88.08 on the stock. XOM is currently trading at $80.32. Exxon missed estimates for its most recent quarter but the stock did not sell off on the miss, and it will next report earnings July 26.
As is the case with most utilities, telecom leader Verizon (VZ) offers a high dividend yield of 4.1%. Verizon operates in a very competitive market, but with strong barriers of entry the leaders of the sector enjoy strong pricing power and Verizon has managed show modest earnings growth of 6.6% per annum over the last five years. Looking ahead analysts see profit growth slowing to an annual rate of 2.5% over the next five years, but the company has a strong track record of reporting positive earnings surprises so actual earnings growth could wind up stronger than expected and drive shares higher. VZ is currently in the upper end of its 52-week range of $57.37 with an average price target of $58.70. The stock has a low valuation with a forward P/E of 11.8, which should keep momentum under the stock as long as Verizon is able to continue showing modest earnings growth and extend its five-quarter streak of positive earnings surprises. The company has a 12-year streak of dividend increases. The company reported mixed Q1 numbers with a bottom line beat will next report earnings July 23.
Soft drink giant PepsiCo (PEP) has been a solid performer in 2019 with shares appreciating 16% year to date. With the stock’s recent gains, PEP is currently trading just pennies below its all-time high but the valuation remains attractive with the stock trading at just 14 times earnings. Despite a consumer shift away from sugary soft-drinks PepsiCo has managed to grow profits at an annual rate of 6.7% per annum over the last five years due to cost-cutting measures and increased focus on its snacks and non-carbonated beverage segments. PEP has a solid dividend program, growing its dividend each of the last 46 years and the stock is currently yielding 2.9%. PEP is currently trading at $127.87 with an average price target of $125.29. The company posted better than expected top and bottom line numbers and will next report earnings July 17.
Kimberly-Clark (KMB) is a consumer goods company. A few of the company’s brands include Kleenex, Pull Ups, Scott and Huggies. KMB stock is up 11.7% on the year and shares are currently trading in the upper end of its 52-week range and nearing its all-time high. The company has shown annual earnings growth of 2.7% over the last five years and analysts expect stability in the future with profits rising at a modest 3.3% per annum over the next five years. KMB currently trades at just 18 times future earnings. Kimberly-Clark is a dividend aristocrat with a 46-year streak of dividend increases and the stock currently yields 3.3%. KMB trades at $127.21 with an average price target of $121.80 and the company will report its next set of quarterly numbers on July 22 after posting better than expected Q1 earnings and revenue on April 22.