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2 High-Yield Dividend Stocks to Ride Out Volatility
Stock Analysis & Ideas

2 High-Yield Dividend Stocks to Ride Out Volatility

Story Highlights

Amid high volatility, dividend stocks can be used as an efficient hedge. This article will focus on one stock from the energy sector, which has increased its dividend for 27 consecutive years, and another from the communications sector that has an 8%+ yield.

As several large-cap companies pay dividends, it is tough to select the right stock. To clear up any confusion, let’s turn to the TipRanks’ Stock Screener. We will use it to zero in on two top large-cap dividend stocks that have an ‘Outperform’ Smart Score, a Buy analyst rating consensus, and a dividend yield of at least 5%.

Amid high volatility, bears had the upper hand over the bulls in the first half of 2022. High inflation, rising interest rates, and disruptions from the war in Ukraine could keep volatility elevated. Thus, it is prudent to focus on preserving capital and earning steady and high yields from large-cap stocks to ride out volatility with ease and beat inflation. 

Enbridge (NYSE: ENB)(TSE: ENB)

Enbridge is an energy infrastructure company that transports hydrocarbons. Thanks to its highly-diversified cash flow streams, inflation-indexed revenue, and long-term contracts, ENB has a stellar record of paying and growing its dividends irrespective of market conditions and volatility. 

For context, ENB has increased its dividend for 27 consecutive years. Moreover, ENB stock offers a solid dividend yield of 6.3%. 

With the ongoing strength in its base business and a strong energy outlook, Enbridge is well-positioned to drive its earnings that would support its payouts. Moreover, benefits from new growth projects, robust capital investments, and cost and productivity improvements should support its earnings growth.

ENB stock sports a Moderate Buy consensus rating on TipRanks, based on five Buy and six Hold recommendations. Further, the average Enbridge price target of $47.90 indicates 15.6% upside potential over the next 12 months. Overall, our data-driven stock score shows ENB stock has a maximum Smart Score of 10 out of 10.

AT&T (NYSE: T)

Telecom giant AT&T is a solid income stock. As telecommunication services are deemed essential, AT&T stock is a relatively safe bet amid a weak macro environment. It’s worth mentioning that despite the recent cut in its dividend following the WarnerMedia spin-off, AT&T offers a yield of more than 8%. 

AT&T’s simplified pricing and improved go-to-market strategy drive customer adoption and penetration rates. Further, it is ramping up investments in key growth areas, including 5G and fiber, which will support sustainable revenue and earnings growth. 

Additionally, AT&T’s focus on optimizing its cost structure and strengthening its balance sheet by reducing debt augurs well for future payouts. 

AT&T stock has received 12 Buy, five Hold, and one Sell recommendations for a Moderate Buy consensus rating on TipRanks. Moreover, the average AT&T price target of $23.38 indicates 10.4% upside potential over the next 12 months. Further, AT&T stock sports a maximum Smart Score of 10 out of 10.

The Takeaway

Investing in the current market scenario is indeed tough. However, keeping cash in your savings account amid a high inflationary environment isn’t adding value. Thus, it is prudent to invest in high-quality dividend stocks to navigate the current volatility easily and earn a steady income. 

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