Top Dividend Stocks to Buy Amid Market Volatility
As market fluctuations continue to create uncertainty, investors should consider stocks with robust dividends that provide stability during turbulent times. With tariff policies influencing the market dynamics, dividend-paying stocks can serve as a safe haven, offering both income and potential growth.
Why Consider Dividend Stocks?
Dividend stocks can be particularly appealing during periods of volatility. They not only provide regular income through dividends, but they also tend to be associated with more established, financially sound companies. As tariffs remain a pivotal factor affecting stock performance, selecting well-covered dividend stocks can mitigate some of the risks associated with economic downturns.
Two Strong Players in the Midstream Sector
Energy Transfer (NYSE: ET) and Enterprise Products Partners (NYSE: EPD) are two of the largest midstream master limited partnerships (MLPs) in the United States, known for their strong distributions. Energy Transfer presents an impressive forward yield of 8.3%, whereas Enterprise offers a solid yield of 7.4%. Both companies maintain robust balance sheets and have well-covered distributions by their distributable cash flow, ensuring a reliable income stream for investors.
Resilience in the Face of Tariffs
While both companies stand to benefit from increasing natural gas demand due to their fee-based revenue structures, they are not entirely immune to the effects of tariffs. With rising costs for materials such as steel, project returns could take a hit if the companies cannot pass on these expenses to their customers. Additionally, retaliatory tariffs could affect the export of natural gas liquids (NGLs). Despite this, their solid financial positions and historical performance indicate potential resilience in challenging economic climates.
Philip Morris International: A Growth Dividend Stock
Philip Morris International (NYSE: PM) is another compelling choice for dividend investors, boasting a yield of 3.6%. This growth stock operates in a defensive industry and has minimal exposure to tariffs, as most of its products are manufactured and sold outside the U.S. The company’s smokeless portfolio, including rapidly growing segments like Zyn and IQOS, is driving its expansion, with Zyn volumes expected to increase significantly this year.
The Telecom Giant: Verizon Communications
Amid market uncertainties, Verizon Communications (NYSE: VZ) stands out with its attractive 6.4% yield. The telecom giant has shown steady revenue growth despite some challenges in its legacy businesses. Verizon’s strong subscriber growth in wireless and broadband, combined with its efforts to leverage its network for artificial intelligence solutions, positions it well for the future. Moreover, the company generated $19.8 billion in free cash flow last year, comfortably covering its dividend payouts while allowing for strategic reinvestments.
Assessing Valuation and Growth Potential
When investing in dividend stocks, valuation plays a critical role. Energy Transfer and Enterprise Products Partners are currently trading at lower enterprise value (EV) to earnings before interest, taxes, depreciation, and amortization (EBITDA) multiples compared to historical averages. This suggests that they are undervalued relative to their past performance and can present a good entry point for investors.
Final Thoughts on Dividend Investments
When evaluating stocks for dividend investing, consider not only the yield but also the company’s overall financial health and market position. Stars like Energy Transfer, Enterprise Products Partners, Philip Morris International, and Verizon Communications may offer valuable opportunities for those seeking steady income amid market volatility. Always approach investing with a well-informed strategy to navigate potential risks and capitalize on opportunities.
