After last week's trade banter between the U.S. and China, investors flocked to commodities and government bonds as safe havens from economic uncertainties. This in turn sent bond yields plummeting to their lowest levels in years.
Many analysts believe that bond yields hitting these low levels, paired with monetary easing from central banks, should be enough to send stocks into another rally in the second half of 2019. Dividend stocks can provide the best of both worlds for investors looking for a more secure payout on their investments. Nearly 60% of the stocks in the S&P 500 offer a dividend yield of at least 1.7%.
The allure of income yielding dividend stocks have the potential to bring investors back into the stock market. Trade tensions and fears of economic slowdown have hindered economic sentiment, but dividend stocks can offer worrisome investors refuge during rough economic climates.
However, investors should be wary of high dividend yield stocks as stocks with some of the highest yielding dividends can be indicative of poor returns. Dividends yields may be high because of recent hits to a stock's price. Instead, investors should look for dividend stocks with solid growth trajectories.
General Mills GIS sports a dividend yield of 3.61% and has performed well this year, up 39.7% year-to-date. General Mills beat our estimates for its fourth quarter earnings to help it close out its fiscal year with four straight earning beats for an average EPS surprise of 11.35%. GIS slightly missed our revenue estimate but its reported revenue of $4.16 billion was a year over year jump of 7% nonetheless. Zacks Consensus Estimates call for earnings to make an 8.45% jump to $0.77 per share while the company generates $4.1 billion in revenue this quarter. General Mills is projected to post top and bottom-line gains next quarter as well, with earnings expected to pop 4.71% on the back of a 1.77% revenue jump to $4.49 billion. GIS stock sits at a Zacks Rank #2 (Buy).
AT&T T has a high dividend yield of 5.92% and its stock price has jumped 20.6% in 2019. The company is listed as a Zacks Rank #3 (Hold) at the moment. Consensus estimates forecast the company's earnings to rally 4.44% to $0.94 per share, while revenue slips 0.47% to $45.52 billion for the current quarter.
In Q2 2019, the company's earnings were right on line with estimates, with revenue matching expectations. AT&T's communications sector increased 0.3% to $35.5 billion in Q2. Looking ahead to T's current fiscal year estimates, revenue is projected to rally 7.14% to $182.95 billion, while earnings are predicted to pop 1.7% to $3.58. AT&T is currently trading at a discount to its industry's PE average of 14.4 at 9.7X forward earnings, as it has over the past three years.
The Home Depot HD currently offers a dividend yield of 2.11% and HD shares are up 18.3% YTD. The company is coming off a solid first quarter where it beat our earnings and revenue estimate, with revenue up 5.7% year over year and earnings up 9.1% from Q1 2018. For Q2 2019, consensus estimates forecast HD's bottom line to make a 1.31% gain and for revenue to increase 1.77% to $31 billion.
The company's first quarter earnings beat retained its five-year long trend of beating earnings estimates. In addition, HD has also surpassed sales expectations in 9 out of the last 11 quarters. HD's Pro segment is a key growth driver as the company attempts to improve its service capabilities for the Pros. The company added 35,000 new customers to its B2B website, which brought its total to 135,000. Home Depot holds a Zacks Rank #3 (Hold).
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AT&T Inc. (T): Free Stock Analysis Report The Home Depot, Inc. (HD): Free Stock Analysis Report General Mills, Inc. (GIS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research