Three Affordable Dividend Shares to Purchase in December's Market
Three Affordable Dividend Shares to Purchase in December's Market
If you're wrestling with the soaring stock market valuations or looking for some solid income sources for your investment portfolio, this could be an opportune moment to pile up on dividend stocks, numerous of which currently appear extremely budget-friendly. Despite the fact that growth investors have mainly disregarded dividend stocks this year, the silver lining is that if you're aiming for these investment types at present, you won't have to look far to find some excellent bargains.
Three stocks offering dividend yields that surpass the standard S&P 500 yield of 1.2% while also trading at pocket-friendly valuations include Merck (0.11% yield inflection), Verizon Communications (5.6% yield), and Albertsons Companies (0.02% yield). Let me explain why these stocks could make splendid income-generating additions to your investment portfolio right now.
Merck
Merck, a leading pharmaceutical company, boasts an alluring dividend yield of 3.2%. It has experienced a 7% fall in stock value this year, as the company has failed to post impressive growth numbers, and investors may also be apprehensive about the company's future prospects. For the full year of 2024, Merck is forecasting revenue of approximately $64 billion, which represents an around 7% increase from its 2023 revenue of $60 billion.
While these figures are not necessarily poor, investors may express more concern over Merck's top-selling drug, Keytruda, losing its patent protection in the coming decade. This could put pressure on its top line and potentially drift down its growth rate even further. However, the company has been investing in its growth, with recently approved Winrevair, a treatment for pulmonary arterial hypertension, projected to bring in around $4 billion for Merck in the future. Plus, it has Gardasil, a vaccine that offers protection against stereotypical papillomavirus, which could generate $11 billion in sales by 2030.
Merck faces lofty expectations, with Keytruda bringing in an astounding $25 billion in 2023. However, with a focus on development and growth, there's still time for this healthcare company to diversify its business and develop more drugs. Also, with a relatively low payout ratio of 64%, the dividend seems safe for now. Plus, the stock is trading at only 10 times next year's estimated future profits, which provides investors with a great discount in view of the risks and uncertainties ahead.
Verizon Communications
One dividend stock that you should ponder buying is Verizon, which offers a seductive 6.1% yield and has raised its dividend payments for an impressive 18 consecutive years.
The company's growth rate, currently around 1-2%, may not be enough to impress investors. Despite the stock price increase of approximately 17%, its high yield and relatively low forward price-to-earnings (P/E) multiple of 9 suggest that investors are still hesitant to fully commit to Verizon, and there may be further upside potential if you purchase it today.
The company's acquisition of Frontier Communications for $20 billion could provide investors with renewed hope that Verizon is set to expand and become a more significant force in the booming fiber market. However, the downside is that this acquisition adds about $10 billion of additional debt for Verizon to manage, which may not appeal to risk-averse investors, especially as interest rates remain comparatively high.
Despite the elevated debt, with Verizon trading at a comparatively low earnings multiple and the possibility of further interest rate reductions, this is a stock that appears to be reasonably secure. Dividend investors should not hesitate to invest in Verizon, as the stock may have even more upside potential due to its enhanced growth prospects and impressive dividend growth history.
Albertsons
The lowest-yielding stock in this list is Albertsons, which offers a yield of approximately 2.4%. However, this low-volatility stock has an average beta value of around 0.3, which could make it an excellent choice for investors seeking a stable income investment to buy and hold. Albertsons is a well-known name in the grocery sector, which can make it a reliable stock to hold for several years.
The company's revenue growth for the period ending September 7 was a modest 1.1%, with revenue totaling $18.6 billion. This is hardly a growth juggernaut, but the company is investing in its digital business, where sales grew by 24% last quarter.
Albertsons stock trades at a forward P/E of less than 10 and is another budget-friendly investment to own right now. Moreover, if its proposed merger with Kroger goes ahead, the stock could prove to be an even superior buy as the combined business would be an even more prominent player in the grocery industry.
In the context of investing, you might consider these statements: "In the pursuit of reliable income sources in finance, investing in dividend stocks like Merck and Verizon Communications could yield substantial returns, with Merck offering a 3.2% yield and Verizon boasting a 6.1% yield." Furthermore, "When managing your investment portfolio, budget-friendly stocks like Albertsons, with its 2.4% yield, can provide a steady income, especially for risk-averse investors seeking low-volatility options."