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2 High-Yield Dividend Stocks I'd Buy More of Right Now


The stock market hasn't exactly performed well lately, and just like most people, I don't enjoy watching my portfolio's value decline. Having said that, market weakness like we've seen in October shouldn't be feared. Instead, it should be looked upon as a buying opportunity to add more of your favorite stocks at a discount.

With that in mind, here are two stocks that I already own in my portfolio that are both down by more than 7% over the past month and are on my shopping list as we head into November.

One dollar bill with center cut out and dividends written in its place.

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Bank stocks have been beaten down lately -- here's a high-yielding one to consider

Bank stocks, as a group, haven't been doing too well recently. Rising interest rates are generally a positive catalyst for banks, and in the midst of the market's sell-off in October, the benchmark 10-year Treasury yield fell considerably. Many bank stocks were beaten down, as well.

One example is Toronto-Dominion Bank (NYSE: TD) , a Canada-based bank with substantial operations in the U.S. Sure, TD isn't as large of a beneficiary of U.S. tax reform as the big U.S.-based banks, but its business is certainly moving in the right direction .

TD has grown its earnings at a 10.2% annualized pace over the past five years and has exhibited strong revenue growth and expense controls along the way. Over the past year alone, the bank's deposits have grown by 8.4% and the loan portfolio has grown by 7.2%, both of which outpace most U.S. peers.

Plus, TD still has lots of growth potential, as its U.S. operations are mostly concentrated on the East Coast. The majority of TD's earnings (60%) come from its Canadian operations, where it's the No. 1 bank by assets, but I wouldn't be surprised to see its U.S. earnings increase significantly in the years ahead.

As far as dividends go, TD pays a generous 3.7% yield that is well covered by its earnings. The company has an excellent track record of increasing the payout, and I don't foresee that coming to an end anytime soon.

A dirt cheap stock with room for growth

Telecom giant AT&T (NYSE: T)  already is the largest stock position in my retirement portfolio, but it's tough to resist the urge to add even more. At just 8.4 times forward earnings and with a 6.7% dividend yield, AT&T stock is literally priced for no growth -- but I don't think that will be the case at all.

Sure, there are some legitimate concerns surrounding AT&T, which is likely why the stock is trading for such a depressed valuation to begin with. For starters, the company took on a massive debt load in order to finance its acquisition of Time Warner, as well as a few other purchases over the past few years. And its DIRECTV satellite TV business is hemorrhaging customers, with nearly 360,000 cancellations during the third quarter alone.

However, there are a few big reasons why I'm optimistic about AT&T's future. First, it's important to note that AT&T's mobile phone service still makes up the lion's share (about 80%) of its revenue. AT&T has been adding phone customers at an impressive pace, and the addition of Warner Media gives the company yet another opportunity to offer unique bundles of services to entice even more customers.

Additionally, the upcoming rollout of 5G wireless technology could be a big growth tailwind over the next several years. AT&T looks to be an early 5G leader, and as devices with 5G capability begin to become available throughout 2019, we could see a significant and long-tailed uptick in wireless revenue.

Finally, from a dividend investor's perspective, AT&T's dividend, while massive, is well covered by the company's earnings. AT&T has increased its payout for the past 34 years and prides itself as a Dividend Aristocrat , and I don't see an end to that streak coming anytime soon. The company's stock is yielding 6.7%, and AT&T doesn't need to grow by more than 3%-4% per year to achieve market-beating total returns over time.

As the market realizes that its concerns about the company's debt and TV business are overblown, the stock should return to a more reasonable price-to-earnings multiple.

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Matthew Frankel, CFP owns shares of AT&T and The Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Personal Finance , Stocks
Referenced Symbols: T , TD



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