The stock market has been treated like a punching bag so far in 2020. The losses have been astronomical but not all is gloom and doom. There are still stocks that pay dividends, respectable ones, that can be purchased at a discount.
AT&T (NYSE: T), the only aristocrat (an S&P 500 (NYSEARCA: VOO) stock that has raised dividends for 25 consecutive years) on our list, paid a quarterly dividend of $0.52 a share, a 7.14% yield, in Q1 of this year, and will do so again on its next payment date of May 1, 2020. Its stock price has dropped 25% since the start of the year. In reaction to the coronavirus outbreak, as a precautionary measure, AT&T cancelled a $4 billion buyback to have available cash to enhance its 5G plans and protect its employees.
The company’s 5G expansion plans aren’t the only thing it has going for it. With the coronavirus outbreak forcing people to stay and work at home, AT&T stands to benefit with its Fiber division, which offers a faster and more reliable internet connection, as well as its DirectTV satellite business. Additionally, the company’s OTT service, HBO Max, is due to launch next month. Streamers like Netflix (NASDAQ: NFLX) and Disney+ (NYSE: DIS) are quite popular given the current climate, recruiting 33% of American households as first time users during the pandemic. On the negative side, original program production is currently halted and wireless retail stores are shuttered and these issues could have an effect on the company’s bottom line.
In the battle against the pandemic, AT&T has contributed $5.5 million dollars for meals for medical personnel and first responders. Also, it is offering less expensive internet and restricting caps on its internet bandwidth, as well as providing uninterrupted service for customers not able to pay for two months.
IBM (NYSE: IBM), one year from becoming an aristocrat, has been paying dividends for 104 years, with its most recent quarterly payment of $1.62 per share, a 4.2% quarterly yield, distributed on March 10, 2020. The company has not been immune to the recent panic, its stock price dropping 18% since the beginning of the year. Furthermore, the pandemic will affect IT spending worldwide, with estimates predicting only a 1% increase this year, down 3% from original forecasts.
Recently, IBM has been shifting its business more towards providing cloud services, with its 2019 cloud revenue accounting for 27% of its total revenue. Aside from developing a powerful revenue stream, the company’s investment in cloud services can be seen as serendipitous considering the surge in telecommuting. This will certainly secure some much-needed revenue in these uncertain times.
On the COVID-19 battlefront, IBM is using its supercomputer, Summit, to run simulations to determine if there are any drugs in existence that can limit the harmfulness of the virus. Moreover, the company launched a map on its Weather Channel to track the spread of the coronavirus.
Broadcom (NASDAQ: AVGO) paid a dividend of $3.25 per share on March 31, 2020. Since the beginning of the year, the company’s stock price has declined by 25%, but is up 44% from its lowest point during the selloff. The reason was the company’s Q1 2020 results that said the coronavirus hadn’t disrupted business supply chains to a significant extent.
However, Broadcom withdrew its revenue forecast for fiscal 2020 due to uncertainties created by the pandemic; it expects Q2 revenue of $5.7 billion, $0.24 billion below analysts’ estimates. The market panic has unjustly affected Broadcom’s stock price, making it available at a discount. The company’s quarterly dividend yield is 4.1%, which is well-covered by its free cash flow (FCF) of $22.54 per share.
In the fight against COVID-19, Broadcom is donating $500,000 for a multi-million-dollar care package for Santa Clara (in Silicon Valley) locals affected by the financial fallout from the coronavirus outbreak.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.
Contributing Writer at MyWallSt
David fell in love with the stock market in 2000 after making $30,000 overnight on Techniclone. His favorite stocks today are Netflix, Google, Amazon, and Apple as they are the market leaders in their sectors and are safe long-term investments.