With the Federal Open Market Committee holding interest rates steady, the fixed income market is suffering from vanishing income. Where is the next best place to generate yield?
The answer is high-dividend paying companies with strong brand recognition, solid fundamentals, and those that are currently undervalued from recent earnings lost due to the COVID Pandemic.
Owning a basket of dividend-paying stocks also offers investors the potential for competitive upside performance in strong market environments and the potential for lower downside risk in weak environments.
Here are six great candidates for your portfolio.
Procter & Gamble (PG)
Procter & Gamble (PG) serves consumers around the world with its portfolios of trusted, quality, leadership brands in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa.
The company operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care, and Baby, Feminine & Family Care.
P&G trades at 26 times earnings and yields 2.41%. Analysts are maintaining a buy rating and have recently raised P&G’s target price from $130 to $143.
On the recent earnings call, management reported that due to COVID-19 pandemic people are washing their clothes more often, eating more meals at home, and washing more dishes. Hence more of their products are being purchased off store shelves, helping increase revenue.
Pepsico (PEP) is a global food and beverage company operating through six segments: Frito-Lay North America, Quaker Foods North America, North America Beverages, Latin America, Europe Sub-Saharan Africa, and Asia, Middle East and North Africa.
PEP at 28 times earnings and yields 2.97%. Analysts recently raised PEP’s target price to $164.
PEP generates solid growth despite fewer orders from restaurants, theaters, and stadiums. With its updated target price along with its dividend yield, suggests a potential return of 22%.
Pfizer (PFE) is engaged in the discovery, development, and manufacture of healthcare products. Its global portfolio includes medicines and vaccines. The Company manages its commercial operations through two business segments: Pfizer Innovative Health (IH) and Pfizer Essential Health
PFE trades at 15 times earnings and yields 3.95%. Analysts upgraded PFE to a BUY with a target price of $55.00.
Pfizer and BioNTech recently began a 30,000-patient trial to evaluate the efficacy and safety of its BNT162b2 coronavirus vaccine candidate. If the trial is successful, Pfizer will seek regulatory approval for the vaccine by October 2020.
Johnson & Johnson (JNJ)
JNJ is a holding company, which is engaged in the research and development, manufacture, and sale of a range of products in the healthcare field. It operates through three segments: Consumer, Pharmaceutical, and Medical Devices.
JNJ trades at 25 times earnings and yields 2.77%. Analysts are reiterating a BUY on JNJ with a target price of $165.00.
J&J was recently selected as a finalist in its development and testing a COVID-19 vaccine. Plus J&J will see stronger growth for the Medical Device segment as procedural activities recover in the second half of 2020 and into 2021.
Kimberly-Clark Corporation (KMB) together with its subsidiaries, manufactures and markets personal care and consumer tissue products worldwide. It operates through three segments: Personal Care, Consumer Tissue, and K-C Professional.
KMB trades at 20 times earnings and yields 2.82%. Analysts are maintaining KMB a BUY with a target price of $170.00.
Second-quarter was much better than expected because makers of household disinfectants and cleansers were the biggest winners from the coronavirus crisis.
KMB reinstated its recommitted to repurchasing shares, signaling the company thinks the strength will continue even after the threat of Covid-19 fades.
The Coca-Cola Company (KO) is a worldwide beverage company. The Company’s segments include Europe, Middle East, and Africa; Latin America; North America; Asia Pacific; Bottling Investments, and Corporate.
KO trades at 22 times earnings and yields 3.47%. Analysts upgraded KO to a BUY with a target price of $54.00.
KO made headlines with a 28% decline in second-quarter revenue but signaled the worst was over, as sales improved during May and June.