Investors looking for reliable sources of income should consider “rock solid” stocks that focus on dividends and avoid certain risks, according to Jefferies. The firm predicts steady growth in shareholder payouts, with dividends in the U.S. expected to increase by 5% this year and 5.6% in 2024. Despite concerns about higher interest rates, U.S. dividends have been steadily rising, reaching $614 billion in the trailing 12 months. Jefferies identified 10 companies in the MSCI USA Index with sustainable dividend and buyback yields, after eliminating various risks. Apple, Nike, Charles Schwab, and First Citizens Bancshares were among the top picks.
Apple, the largest company on the list, offers a total yield of 3.5%, consisting of its 12-month forward dividend yield and last 12-month buyback yield. The tech giant, known for its stock buybacks, recently experienced a pullback after revealing a projected decline in revenue for the September quarter. Despite this setback, Apple’s stock has gained 32% this year. Nike, on the other hand, saw a surge of over 6% in midday trading following its latest earnings report. The company’s earnings per share exceeded expectations, but revenue fell short due to challenges posed by high inflation and hesitant consumer spending. Nike has a total yield of 5.5%, with a current dividend yield of 1.4%. Charles Schwab boasts a total yield of 9.6% and is expected to announce its latest quarterly results soon. First Citizens Bancshares, with a total yield of 6.3%, has significantly benefited from its acquisition of failed Silicon Valley Bank’s deposits and loans this year.
In summary, Jefferies recommends investors consider “rock solid” dividend stocks that offer attractive yields and mitigate certain risks. Apple, Nike, Charles Schwab, and First Citizens Bancshares are among the 10 companies identified as favorable picks. Despite market uncertainties and challenges, these companies have demonstrated resilience and potential for future growth, making them appealing options for income-focused investors.