With interest rates once again dropping and stock market volatility going through the roof, safe dividend stocks are increasingly in demand. Here are three for you to consider, all recently recommended by the expert analysts at Cabot Wealth Network.
3 Safe Dividend Stocks to Buy
Safe Dividend Stock #1: Innovative Industrial Properties (IIPR – yield 3.0%)
IIPR is a real estate investment trust (REIT), so it’s not suitable for all portfolios, but with a yield of 3.0% and a stupendous growth rate, it’s definitely worth a look for most investors.
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What differentiates IIPR from other REITs is its narrow focus; the company targets the legal cannabis industry—and it’s the only publicly traded REIT to do so! So while its clients are in an industry that is not federally legal and thus often lack access to financing that enables property ownership, IIPR is in a totally legal industry.
And business is booming! The company currently owns 49 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 3.2 million rentable square feet, which were 98.9% leased to cannabis companies. (Twenty of those properties were added to the portfolio in the past five months.) Clients include Cresco Labs, GR Companies (Grassroots), Green Thumb Industries, Green Leaf Medical, Green Peak Industries, LivWell Holdings, Maitri Genetics, PharmaCann, The Pharm, Trulieve Cannabis and Vireo Health.
Fourth-quarter results, released February 26, revealed total revenues of $17.7 million in the quarter, up 269% from the year before, and adjusted funds from operations (AFFO) of $1.18 per diluted share, up 211% from the year before. As for the stock, after peaking in the summer of 2019 (later than the cannabis industry as whole), the stock corrected down roughly 50%, but it’s been heading up since December, and in the market’s recent weakness, simply pulled back to its 50-day moving average at 87, providing a fine buying opportunity.
Buy this if you want a low-risk way to invest in the cannabis industry.
Safe Dividend Stock #2: Ping An (PNGAY– yield 5.0%)
Ping An is a Chinese financial giant with a big yield and great prospects for long-term growth thanks to three big factors.
1) Middle class Chinese consumers, who have more disposable income than their parents, want to invest and protect their families via life and health insurance.
2) China’s government is struggling with such heavy debt loads that it’s unlikely to be able to strengthen the safety net for its citizens in the foreseeable future.
3) China’s population is aging, yet Chinese women give birth to 1.6 children each on average – way below the 2.1 children required to maintain the current population.
These trends are a challenge for the Chinese economy but good news for purveyors of investment services as well as health and life insurance—like Ping An.
The company provides financial products and services for insurance, banking, and asset management but is best known for its life, health and property insurance business. It is also evolving into more of a financial technology (fintech) play, with its co-CEO, a former McKinsey consultant, heading up the effort to transform the company into more of a blend of financial services and technology.
The most recent quarterly earnings were up 49.7%, the company delivers a 24% return on equity and the stock is only trading at 17 times trailing earnings and nine times projected earnings. As for the action of the stock, it’s been building a base between 21 and 25 for nearly a year, and the market’s recent weakness only served to push it to the lower end of that range once more—which looks like a decent entry point. Note: Quarterly earnings are expected March 10, so avoid a big surprise and wait until after they’re released.
Buy this if you want a low-risk way to benefit from the growth of China.
Safe Dividend Stock #3: Verizon Communications (VZ– yield 4.4%)
Verizon is the largest wireless carrier in the U.S.; of the four major U.S. telecom carriers (Verizon, AT&T, Sprint and T-Mobile), Verizon has by far the most wireless revenues with the largest network and coverage. This was once a high-growth industry—back in the 1990s as the world shifted to wireless—but it has since become a slow-growth, stodgy business, more like a utility. As a result, Verizon’s stock, as well as those of the other major telecom companies, has underperformed the market for years. In fact, its stock price is still below its 1999 high.
That said, a stock like this is rather attractive in markets like this, because it’s so cheap. Unlike most low-risk stocks these days, Verizon sells at a cheap valuation of 12 times earnings compared to a price/earnings ratio of 23 for the S&P500.
But the exciting part of this story is 5G, the next generation of wireless communications technology that will enable much higher speeds and internet connectivity as well as a new generation of technologies like artificial intelligence, self-driving cars, robotics, smart cities and much more. The technology is a game changer that will thrust the world into a digital age like nothing we’ve seen before.
And Verizon is well ahead of its major competitors in the race as it’s already built 5G mobile services in 30 cities, creating the most expansive 5G network in the country. Smartphones with 5G are just hitting the market this year; Apple (AAPL) will launch its 5G-enabled phones in September. And with these new phones and new technologies will come increased demand for internet connectivity through cellular networks—which is exactly what Verizon will offer. Thus, revenue growth will accelerate, earnings will grow and the stock will reward early investors. The stock recently pulled back (with the weak market) to its lows of 17 months ago and that presents a fine buying opportunity.
Buy this if you want a low-risk way to play the 5G revolution.
Timothy Lutts heads one of America’s most respected independent investment advisory services. Each week, Tim personally picks the single best stock in his exclusive Cabot Stock of the Week advisory. Build your wealth and reduce your risk with the top stock each week for current market conditionsLearn More