Everyone wants to buy low and sell high. But it’s a lot easier said than done — especially in a falling market. The S&P 500 has tumbled 16.5% year to date.
But you don’t need a rallying market to make money from stocks. You can also collect dividends.
Instead of trying to capture a stock’s next move up — or down — dividend investors can just sit back, relax, and let the dividend checks roll in.
After all, Warren Buffett once said, “Wall Street makes its money on activity. You make your money on inactivity.”
It’s hard to be a buyer of anything in a market where everyone seems to be panic selling. But then again, being contrarian is exactly how many investors became successful.
“Be fearful when others are greedy and greedy when others are fearful.”
That’s perhaps the most famous quote from Buffett.
With that in mind, here’s a look at three companies delivering oversized dividend checks to investors. Wall Street also sees an upside in this trio.
We pay our cell phone bills and Internet bills every month. If you want to get even, consider collecting dividends from companies that provide these services.
AT&T, for instance, is one of the largest telecommunications companies in the world. More than 100 million consumers in the U.S. use its mobile and broadband services. At the same time, the company also serves nearly all Fortune 1000 companies with connectivity and smart solutions.
And because wireless and Internet services are necessities for the modern economy, AT&T generates a recurring business through thick and thin.
The company pays quarterly dividends of 27.75 cents per share, translating to an annual yield of 5.9%.
Raymond James analyst Frank Louthan has a ‘strong buy’ rating on AT&T and a price target of $24. Considering that AT&T shares currently trade at around $18.90 a piece, the price target implies a potential upside of 27%.
Realty Income (O)
Realty Income is a real estate investment trust with a portfolio of over 11,700 properties that are under long-term lease agreements.
Its top tenants include big names like Walmart, CVS Pharmacy, and Walgreens — companies that have survived and thrived through thick and thin.
In fact, the REIT claims that it collects around 43% of its total rent from investment-grade tenants. A diversified, high-quality tenant base allows Realty Income to pay reliable dividends.
Moreover, while most dividend-paying companies follow a quarterly distribution schedule, Realty Income pays its shareholders every month.
The stock currently yields 4.6%.
Morgan Stanley analyst Ronald Kamdem has an ‘overweight’ rating on Realty Income and a price target of $74 — roughly 13% above the current levels.
MPLX isn’t a household name like AT&T. But for the serious yield-hunters, it’s a stock that probably shouldn’t be ignored.
Headquartered in Findlay, Ohio, MPLX is a master limited partnership created by Marathon Petroleum to own, operate, develop and acquire midstream energy infrastructure assets.
The partnership pays quarterly cash distributions of 77.50 cents per unit. With the stock trading at $33.73, that translates into a chunky annual dividend yield of 9.2%.
In Q3, MPLX generated $1.26 billion of distributable cash flow, which provided 1.58 times coverage for its cash distributions for the quarter.
The stock is also up 12.8% year to date, in stark contrast with the S&P 500’s double-digit loss during the same period.
Wells Fargo analyst Michael Blum sees further upside on the horizon. Blum has an ‘overweight’ rating on MPLX and a price target of $40, about 19% worth of upside from where the stock sits today.