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4 Hot Dividend Stocks to Add to Your Portfolio in October

Uncertainty looms over the U.S. market with respect to the timing of the Fed rate hike, plunging crude oil prices , macro headwinds in China and a slowdown in global markets. Consequently, investors have been treading cautiously as 2015 has been rather difficult for the stock market so far.

The Tumultuous Journey

Though the Federal Reserve may go for a rate hike in December from the near-zero level it's at, China-related concerns will likely remain.

China has seen several years of extremely fast-paced growth and a resumption of those growth rates may not be in the offing. The International Monetary Fund (IMF) estimates that China's economy will expand 6.8% this year, which would be the weakest since 1990.Growth concerns across the world and especially in China have triggered worldwide sell-offs in equities.

And given the U.S. stock market's exposure to movements in China's growth potential, U.S. equities have come under tremendous pressure. The Dow, S&P 500 and Nasdaq slumped 1.5%, 2.6% and 3.4% in September while dropping 7.6%, 7.0% and 7.4%, respectively, in the third quarter.

While there is usually an uptick in the fourth quarter, this may not materialize this year given the continuing overhangs. So the remainder of 2015 is unlikely to be much different from the first three quarters of the year.

In this backdrop, the slight improvement in the Bureau of Economic Analysis' estimate of growth for the U.S. economy from 3.7% to 3.9% is little consolation.

Dividend Stocks: The Safest Bet

It is quite clear that the market is quite volatile. But even in a volatile market, dividend stocks have always been popular with investors. Not only do these stocks offer higher income in the current low-rate environment, but they also provide a cushion against equity market risks.

Moreover, dividend stocks are historically less volatile than non-dividend stocks and are proven outperformers over the long term. These stocks are a safe bet to create wealth with as the dividends generally act as a hedge against economic uncertainty. Moreover, these stocks provide downside protection by offering sizable yields on a regular basis.

Adding Value to Dividend Stocks

Many investors like to look for value in stocks but this can be very tough to define. There is a great debate on the metrics that can be used to determine future performance.

For this reason, value investing is probably a safer bet at this time of chaos. Value stocks generally possess impressive long-term prospects, helping investors sail through tumultuous phases in the stock market.

4 Dividend Plays

With the help of our new style score system, we have picked 4 stocks based on their high dividend yield,encouraging Zacks Rank and favorable Value Style Score.

Please note that the Zacks Style Score for value takes into account all valuation metrics to give us an actionable metric that helps identify stocks truly trading at a discount to intrinsic value. Back-tested results show that stocks with Style Scores of 'A' or 'B' when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) handily beat other stocks.

These four stocks have at least a Zacks Rank #2 (Buy) or better, a Value Style Score of "A" or "B" and pay a robust dividend yield that exceeds 3%.

Braskem S.A.BAK

Headquartered in Camacari, Brazil, Braskem figures as the largest petrochemical operation in Latin America and is among the five largest private companies in Brazil. It produces primary base petrochemicals such as ethylene, propylene, benzene, caprolactam, DMT and termoplastic resins (polypropylene, polyethylene, PVC and PET) gas and GLP.

This stock, which sports a Zacks Rank #1, offers a robust dividend yield of 4.14%. Holding a value style score of 'A,' the company has witnessed upward estimate revisions in the last 60 days. The stock has gained nearly 16% in the past one-month time frame. Also, the company posted an average earnings beat of 44.2% over the past four quarters.

Greif, Inc.GEF

Headquartered in Delaware, OH, Greif is engaged in providing industrial packaging products and services. The company produces steel, plastic, fiber, flexible and corrugated containers, packaging accessories and containerboard, and provides blending, filling and packaging services.

This stock, which sports a Zacks Rank #2, offers a trailing four quarters' dividend yield of 5.27%. Holding a value style score of 'A,' the company has witnessed upward estimate revisions in the last 60 days. The stock has fallen over 3% in the past one-month time frame, reflecting a buying opportunity for dividend seeking investors. Also, the company posted an average earnings beat of 6.08% over the past four quarters.

WGL Holdings Inc.WGL

Headquartered in Washington, the District of Columbia, WGL Holdings is a public utility that through its subsidiaries delivers and sells natural gas and provides energy-related products and services to metropolitan Washington, D.C. and adjoining areas in Maryland and Virginia.

This stock, which sports a Zacks Rank #1, offers a trailing four quarters' dividend yield of 3.03%. Holding a value style score of 'B,' the company has witnessed upward estimate revisions in the last 60 days. The stock has gained nearly 13% in the past one-month time frame. Also, the company posted an average earnings beat of 121.83% over the past four quarters.

Black Hills CorporationBKH

Headquartered in Rapid City, SD, Black Hills is an energy company primarily consisting of four principal businesses: electric, coal mining, oil and gas production, and energy marketing.

This stock, which sports a Zacks Rank #2, offers a trailing four quarters' dividend yield of 3.81%. Holding a value style score of 'A,' the company has witnessed upward estimate revisions in the last 60 days. The stock has gained over 9% in the past one-month time frame. Also, the company posted an average earnings beat of 13.8% over the past four quarters.

Bottom Line

Investors across the board have varying preferences and investment strategies. But dividend payment not only reflects a company's sound financial status, it also speaks about its commitment toward investors. Investment in the above-mentioned stocks should result in a steady stream of income that is expected to grow overtime.

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 >>

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

BLACK HILLS COR (BKH): Free Stock Analysis Report

WGL HLDGS INC (WGL): Free Stock Analysis Report

BRASKEM SA (BAK): Free Stock Analysis Report

GREIF INC (GEF): Free Stock Analysis Report

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


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

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