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The bears are still not here, but according to many signs – they are close. Even too close.
Dividend growth investing has many benefits, some of which include a steady line of income and also capital appreciation potential. Both of these are critical and extremely beneficial in today’s trading.
When companies and businesses grow their dividends, they generally can surpass the competition with flying colors, while also having less volatility. These dividends can provide stability of the total return, while also creating a steady income that restricts the long-term prices.
So… let’s cover some of the best defensive dividend stocks on the market!
What Are The Top Defensive Dividend Stocks To Buy In 2017
Following my last article on the best bear market stocks, we’ve got many requests for another one.
Since I don’t want to bother you with the same kind of stocks – this time we are focusing only dividend stocks. They are also kind of defensive stocks, performing great in declining market.
So let’s start:
When AT&T purchased DirectTV, it became the largest provider of TV you pay for on a global scale.
They were able to offer their services to more than 57 million households in the U.S. by itself. This really gives them the upper-hand, even since their phones and services aren’t the best. A year ago, 0.99% of wireless users dropped their services. During the third quarter, this percentage was at 1.16%. Also, these numbers don’t include the people who purchase prepaid plans/phones. In terms of the market, these numbers should be crushing them.
However, AT&T isn’t doing badly at all. They are profiting more from the customers they have. Their profit margin is at 40.7% for the third quarter, and this isn’t taking into account for the taxes and other things taken out. That’s a different number than the 36.3% for the same third quarter in 2014. This and the DirectTV deal really benefited AT&T, and gave them handsome profits. In the first nine out of twelve months of 2015, they made $12.8 billion in free cash flow.
Last year, this was only at $9.9 billion in total. The quarterly dividend is at $0.47 per share, which makes the telephone company pay out 57% of its free cash flow, significantly less than the 97% in 2014. Also, AT&T’s price-earnings ratio of 12 is less than the overall market’s P/E of 16.
Home Depot (HD)
Home Depot is a very high rated stock according to multiple people’s’ portfolios. With the home improvement store rising, the corporation has potential to increase its $0.69 quarterly dividend between now and December.
They have a dividend yield of 2.07%, and a Five Year Earnings per Share growth rate of 22%. Home Depot has upped its dividends for about eight consecutive years, now. They also have a 10 year dividend growth rate of about 19.4%. They have encountered numerous dividend hikes, but even after that the payout ratio is still only at 43%. This goes to show that Home Depot can take some pretty tough stress and still come out on top.
If you wanted to buy HD stock in 2009, it would cost you around $35 per share; now, it’ll cost about $134, which is an insane jump of over 280%! This is largely due to its dividend increases! HD has a very positive dividend growth potential, and also gives us a hint in reference to price growth. 26 analysts have offered a 12-month price forecast for Home Depot and have decided a median amount of $148.50 in 2017 (which is a 9% increase!).
Vodafone Group (VOD)
The Vodafone Group is not centered in the United States. Vodafone is based in the United Kingdom. They are know for their telecom services. They are rapidly growing, with their services being throughout all of Europe, Africa, Asia Pacific, and in the Middle East.
Analysts think revenues will decrease to 8.5% to $62.2 billion for the fiscal year that ends in March. It should then rise to $62.5 billion for the end of the fiscal year of March 2017. Europe’s constant expansion and increase to culture helps fuel this.
Vodafone reports that 80% of Europe has 4G cell phone coverage, which is a good sign for them as they invest a lot in it. To complement that, with faster growth in Asia, the Middle East, and Africa, their profits will be greater from the 4G network as well. In April to September alone, the sales in those three areas have increased by 6.7%!
Since Vodafone pays dividends twice every year, we can see that the price adds up to about $1.78 per share. I should also note that the taxes for foreign dividends in overseas companies do not apply for U.S. investors who invest in British stocks market. Vodafone trades in the U.S. as an American depository receipt, and it is expected to hit around $40 in the next year!
National Health Investors Inc (NHI)
The NHI’s stock has dropped a good bit over the last few observations. This could be due to the fact of a possible GOP gutting of the Affordable Care Act. However, the selloff of NHI’s dividend appears to be overdone.
It’s way too easy to debate the business that bases itself on financing senior living and medical spots as a “safe” investment. There is truth there, though. How? The Baby Boomer Generation is retiring altogether. They need these places and services. This will cause a spike in the stock!
Performance and Dividend
The only impact on the stock I might need to suggest is how the government can pay for those services, but that is left to the politicians. Be that as it may, this is not just a “high-risk, high-reward” stock, either. National Health Investors has been around for nearly 25 years, and even though they cut their dividend in 2000, they seem to have been steadily rising, even when you take into account all of the healthcare questions/costs.
The NHI hiked its dividend by more than 5% before a fourth-quarter report (which the market seemed to love). The good news for investors is that the recent selloff made shares 10% cheaper.
Macquarie Infrastructure Corp (MIC)
MIC owns a lot of businesses which specialize in U.S. infrastructure. For example, the Atlantic Aviation provides fuel and hangar services at almost 70 airports! Amongst their list of businesses is also an energy business based in Hawaii, ownership in wind/solar facilities, and even a liquid storage business.
Performance and Dividend
You can put these pieces of the puzzle together. MIC is growing rather favorably. The company proved again they were an example of free cash flow from per share growth going from 10% to 15% in 2017 and projected in 2018.
Some noise has been made about the company’s exposure to energy, but these seem to be overlooked. Their liquid terminal business, for example, operates using a “take or pay” strategy which limits the exposure to commodity swings. If you need more evidence, MIC has upped its dividend every quarter since the later part of 2013.
There a very little high-yield stocks that offer that type of growth. The dividend is already at 7%, and it seems to be a very wise choice.
Nike, Inc. (NKE)
Nike makes amazing apparel, footwear, sports supplies, and more, and also makes my list of picks.
Performance and Dividend
This company has the potential to grow their dividend, while also being a giant in the large-cap area. Nike did see a decrease in 2016, but the stock did whisper a sign that the huge company was far underpriced. Nike shows a constant growth pattern, having a 14% annual earnings growth rate. Nike has also increased its dividend since 2009, and by at least 10% at that (minus 2016). The two-year payout ratio for each quarter is 22.61%, which tells us they aren’t reaching deep into their cash flow to make dividend payouts.
Every year since 2012, Nike has shown years of growing earnings-per-share, growing dividends, and growing revenue. Financial Times analysts gave the company a median share price of $61, challenging 13% in 2017.
Las Vegas Sands (LVS)
There was a big supression in China recently, amongst other things like their economy, and it weakened the hotel and casino owners of Las Vegas Sands (LVS). LVS is a fairly big runner in Macau, which is the go-to for China’s gaming. In the third quarter alone, the sales there made up to around 56% of its revenues; this forms speculations that LVS earnings are to drop 27%, and to $2.60 a share this year.
Do the failing profits make this exciting?
Are we estimate LVS would consider as a Penny stock soon? No, absolutely not! However, since Sands has focused on the gaming in Macau, this provides hope in the investment area. The company is also expanding their businesses. Also located in Macau, they expect to launch a St. Regis-branded hotel by the end of the year.
They also plan to open the Parisian Macao, which is a hotel, casino, and retail mall, all of which will be open in 2016. They operate in Las Vegas and Singapore, and they don’t just specialize in Chinese locations. Their revenues should go up by 1.6%, which goes to $12 billion in 2016; they also are projected to increase by 8%, which is $13 billion in 2017.
Additionally, their quarter dividends are also increasing. They will pay out $0.72 per share, which is a pretty good increase from the once $0.65. There is speculation that Sands will use about 83% of its free cash flow to fund this great payout. It is still down 47% from its high, which was attained in March of 2014