Table of Contents
Stocks with High Dividend Yields: A Safe Haven in Uncertain Times
When investors seek stocks with higher dividend yields than Treasury bonds, the options are limited in today’s market. With the Federal Reserve raising interest rates since March 2022, U.S. government bond yields have reached a level unseen in over a decade. Recent data shows the 10-year bond yield hitting 4.482%, the highest since 2007, up from 1.6% in January 2022. This surge in bond yields, coupled with lower-than-expected unemployment claims, has fueled concerns about the central bank’s tight monetary policy.
The Hunt for High-Yielding Dividend Stocks
In this challenging environment, companies are becoming more reluctant to distribute their cash as dividends due to economic uncertainties. However, dividend stocks are still considered a defensive play during an economic slowdown, as they provide stability and a regular income stream. To find stocks with dividend yields higher than the 10-year Treasury yield, AsumeTech used its new AsumeTech Pro Stock Screener tool. The search criteria included yields higher than 4.5% while excluding stocks with yields above 8% (to avoid potential troubled companies offering high payouts to attract investors).
Identifying Strong Candidates
Among the stocks that meet these criteria, Pioneer Natural Resources stands out with a dividend yield of 7.2% and a debt-to-equity ratio of 24.2%. This oil and gas exploration company could also benefit from the recent surge in oil prices. Brent crude futures were trading near $94 per barrel, while West Texas Intermediate crude futures hovered around $90 a barrel. Goldman Sachs recently raised its 12-month oil price forecast, naming Pioneer Natural Resources as one of its top plays with a projected 13% upside.
Other energy companies on the list include Coterra Energy, yielding 6.1%, and Diamondback Energy, yielding 4.5%. Both have debt-to-equity ratios of 17.3% and 42.1% respectively. Several financial firms also made the cut, including Citizens Financial, which offers a dividend yield of 6.1% and has a debt-to-equity ratio of 43.1%. Despite being hit during the banking crisis earlier this year, Citizens’ stock has shown improvement, up 11% from its low point of $24.80 on May 11. Lastly, Best Buy, a leading electronics retailer, has a dividend yield of 5.2% and a debt-to-equity ratio of 40.9%. The company recently reported strong fiscal second-quarter earnings, exceeding expectations and predicting stabilization and growth in the consumer electronics industry for the upcoming year.
In summary, during these uncertain times, investors searching for higher yields can find refuge in stocks with strong dividend prospects. Companies like Pioneer Natural Resources, Coterra Energy, Diamondback Energy, Citizens Financial, and Best Buy offer attractive dividend yields while maintaining relatively low debt levels, making them potential stable investments.