Dividend stocks are often a good investment option during a recession. That’s because even though a stock price may temporarily drop, you are still getting paid on a regular basis. Depending on the dividend yield, you could even offset the yearly inflation.
Given ongoing economic uncertainty and stock market volatility, Finbold analyzed on August 14 the best dividend stocks in terms of yield, value, and company quality, and selected the two that came on top.
Verizon (NYSE: VZ)
Verizon Communications (NYSE: VZ) is a holding company that provides through its subsidiaries communications, information, and entertainment products and services to consumers, businesses and government agencies.
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Verizon offers one of the highest dividend yields at 7.82% annually while being undervalued. Morningstar’s analyst equity report has a fair value of $54 per share for the VZ stock, 63% above its current market price of $33.
Morningstar analyst equity report. Source: Interactive Brokers Fundamentals Explorer
Verizon has a high cash flow coverage of around $18 billion in the first half of 2023. This should be enough to finance capital expenditures and dividend payments going forward.
Wells Fargo (NYSE: WFC)
Wells Fargo (NYSE: WFC) is a financial services company that provides banking, investment and mortgage products and services.
WFC offers a dividend yield of 3.2%, which makes it one of the best investments in the banking sector in terms of dividend yield and being undervalued.
Morningstar’s analyst equity report places a fair value of $61 per share. Given that WFC trades at $43 per share, Morningstar’s fair value price target makes it undervalued by 43%.
Morningstar analyst equity report. Source: Interactive Brokers Fundamentals Explorer
Both Verizon and Wells Fargo have underperformed the S&P 500’s 17% return year to date with -16% and 4%, respectively, without the dividend yield.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
