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5 Safe And Cheap Dividend Stocks To Invest (May 2020)

May 09, 2020 9:43 AM ETADP, BAC, CSCO, DIV, GD, GWW, KEY, MGA, PH, PRU, RTX, SPG, SPY, SWK, TGT, TSN, PARA, MG:CA80 Comments


  • This article is part of our monthly series where we highlight five companies that are large cap, relatively safe, dividend paying, and are offering large discounts to their historical norms.
  • These are not normal times, so we adjust our strategy a little bit to tilt in favor of safer stocks rather than cheaper prices.
  • It's always a good idea to keep your wish list ready by separating the wheat from the chaff.
  • We go over the filtering process to select just five stocks from more than 7,500 companies that are traded on US exchanges, including OTC networks. We provide two groups of five stocks, each with different goals.
  • Looking for a portfolio of ideas like this one? Members of High Income DIY Portfolios get exclusive access to our model portfolio. Get started today »

We are still in the midst of an unprecedented situation due to the fallout from the coronavirus pandemic, a once in a century kind of event. The health crisis quickly turned into an economic crisis of huge proportions due to widespread shutdowns of daily life. Though worst seems to be over in most states for now and many are reopening in a phased manner, but it is a long road ahead for the economy to get back on track.

Obviously, markets have been volatile, to say the least, and likely to remain choppy for another few months until we get the sense of some normalcy in day-to-day life. That said, major market indexes have come back more than 25% from their lows of March 23, 2020. We believe a lot of credit for this surge goes to the actions of the Fed and the $2 trillion federal stimulus package. It's a bit surprising that the collective wisdom of markets can see something upbeat that many of the experts (in the economic or healthcare arena) can't see. The market is obviously looking at six to nine months ahead and appears to display the confidence that this problem would be somehow contained by that time. Sure, this confidence could prove to be wrong entirely and shortsighted. Only time has the answer.

With that said, it's very difficult to know the future with any degree of certainty, especially in the current environment. However, we should look at investing as a long-term game plan and not on the basis of day-to-day or week-to-week gyrations. For long-term investors, this market downturn may be an opportunity as it's likely to throw some gems at incredible values, if not already.

S&P 500 ETF (SPY) six-month chart, courtesy Yahoo Finance

As long-term dividend investors, we need to pay less

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This article was written by

Financially Free Investor is a financial writer with 25 years investment experience. He focuses on investing in dividend-growing stocks with a long-term horizon. He applies a unique 3-basket investment approach that aims for 30% lower drawdowns, 6% current income, and market-beating growth on a long-term basis and he focuses on dividend-growing stocks with a long-term horizon. He runs the investing group High Income DIY Portfolios which provides vital strategies for portfolio management and asset allocation to help create stable, long-term passive income with sustainable yields. The service includes a total of 10 model portfolios with a range of income targets for varying levels of risk, buy and sell alerts, and live chat. Learn more.

Analyst’s Disclosure: I am/we are long ABT, ABBV, JNJ, PFE, NVS, NVO, UNH, CL, CLX, GIS, UL, NSRGY, PG, KHC, ADM, MO, PM, BUD, KO, PEP, D, DEA, DEO, ENB, MCD, BAC, PRU, UPS, WMT, WBA, CVS, LOW, AAPL, IBM, CSCO, MSFT, INTC, T, VZ, VOD, CVX, XOM, VLO, ABB, ITW, MMM, LMT, LYB, ARCC, AWF, CHI, DNP, EVT, FFC, GOF, HCP, HQH, HTA, IIF, JPC, JPS, JRI, KYN, MAIN, NBB, NLY, NNN, O, OHI, PCI, PDI, PFF, RFI, RNP, STAG, STK, UTF, VTR, WPC, TLT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendation to buy or sell any stock. The author is not a financial advisor. Please always do further research and do your own due diligence before making any investments. Every effort has been made to present the data/information accurately; however, the author does not claim 100% accuracy. The stock portfolios presented here are model portfolios for demonstration purposes.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (80)

What is the difference between VIAC and VIACA?
@valleyside VIACA is the symbol for the voting shares controlled by the Redstone family's National Amusements. VIAC shares are for the rest of us. They are more liquid and nonvoting shares.
Is it possible the world entered 1929 like loss decade, or Japanese market 30 years malaise.
We can't discount probability of this scenarios.
Never in the history of industrialized world, entire countries, shut down their economic activities and trade. Even , during such calamities as WWI, WWII, Spanish influenza , the industries , economic life and trade, continued uninterrupted. Simply put it, None of the existing economic models , factors the magnitude and consequences of this worldwide shutdown.
Hence, it behooves investors to proceed with extreme caution, making preservation of capital of paramount importance.
Great stuff as usual! The first time I read an ariticle of this series, I read it all. The second time as well. Starting the third time I found that most of it looks like cut and paste, so from then on, I usually skip to the end-results and pick up one or two names to follow and may scan the long tables for names I am not familiar with.
I think the method you follow is fine, but that takes up most of the article. It is fine for the first or second time, but after that it becomes a burden and negatively impacts readabilty.
I suggest you find some way to structure your articles so that parts that repeat from one article to the other are collapsed so that if someone wants to read it, can open and read it, but regular readers would normally skip it, still have the possiblity to open the collapsed stuff and check the details to refresh their memories.
Further, I see no point in inserting a table in table form and in image form. Choose one and stick with it. It will improve the readability of the article.
If you offer data for readers to download, then readability would probaby greatly improve by not showing the entire table, but inserting a file with the data table and only showing the first few lines. If you manage to do that, then table 1A and table 1B could be merged, making it even more readable.
I will keep scanning your articles for good stuff. If I see you implement some of my recommendations that will be the icing on the cake.
Thanks a lot and keep writing,
Author -- Your number for RTX's dividend is incorrect. The correct dividend amount is $0.475/qtr, $1.90/yr. This is the first announced dividend of RTX, post the merger of RTN & UTX. As of COM Fri, 08May20, RTX's div yield was 3.24%.
Great research and enjoy the data. One of key parameters I look at in dividend stocks is rising earnings estimates and history of rising dividends. All 10 finalists have analysts reducing their EPS estimates over the next quarter and year. All except RTX have history of rising dividends. But when analysts keep reducing their estimates something is going on we may not know about. Plus .. the depth and duration of the current "recession" is unknown. So I will pass on these stocks.
Financially Free Investor profile picture
@dhcortez - Sure, these are difficult times. Not easy to buy unless you have a pretty long time horizon. All the best.
Bin there dun that profile picture
@Financially Free Investor - "Not easy to buy unless you have a pretty long time horizon."
I would suggest, "Not easy to buy unless you have at least a
TEN-YEAR time horizon."
This situation is UNPRECEDENTED.