Yield is not the be-all and end-all when picking out the best dividend stocks, especially in a volatile market like the one 2022 has turned out to be so far.
Income dividend investors often focus on regular dividend increases over the long haul and couple it with the growth prospects a firm has for the long term to pick out the cream of the crop.
Following this logic, Finbold has identified two dividend stocks to help investors navigate the second half of the volatile 2022 market.
AbbVie (NYSE: ABBV)
The firm maintains its leadership position in the treatment of inflammatory diseases, aiming to offset future fall in Humira sales, an antibody arthritis drug, by switching patients to other more effective drugs and focusing on the oncology portfolio of drugs. AbbVie’s net income was $924 million in Q2 2022, up 20.6% year-on-year (YoY).
On August 24, the firm received Food and Drug Administration (FDA) approval for its Imbruvica drug for treating patients with chronic graft versus host disease (cGVHD), which should prop up the financial position of the firm. The high earnings before interest, taxes, depreciation, and amortization (EBITDA), solid drug portfolio pitted against a backdrop of market uncertainty should create conditions in which AbbVie is a long-term asset.
In addition, the high dividend yield of 4.16% offers investors a $1.41 quarterly income per share, making it one of the largest in the healthcare sector. When comparing the yearly performance of all stocks, ABBV is one of the better-performing stocks in the market, outperforming 88% of all stocks.
TipRanks analysts rate the shares a moderate buy, seeing the average price in the next 12 months reaching $160.54, 19.40% higher than the current trading price of $134.46.
Magellan Midstream Partners (NYSE: MMP)
Magellan represents a partnership with one of the higher financial strength ratings in the industry. The firm transports refined products and performs a lot of oil-related business, aiming to become a one-stop shop for its customers through a fee-based business, further insulated from industry cycles by long-term take-or-pay contracts.
The annual dividend yield stands at a whopping 7.87%, offering $4.15 annually for each share investors hold. Furthermore, on August 29, the firm decided to expand its refined products pipeline, possibly ensuring the future safety of its high dividend.
The long-term trend is positive, and the short-term trend is neutral, with the stock trading in the upper part of its 52-week range, staying above the moving averages. Over the last month, MMP traded from $49.19 to $53.19, a tighter trading range than usual.
Further, the support zone is in the range of $48.90 to $50.59, while the resistance zone is from $52.14 to $53.39.
Meanwhile, on Wall Street, analysts agree that the stock is a moderate buy with average price predictions for the next 12 months at $55.80, 8.08% higher than the current trading price of $51.63.
Finally, the above two stocks present an unlikely pairing; however dividend investors often look for strong cash flows to properly gauge the safety of the dividend along with general trends in the industry the firm is operating in. AbbVie and Magellan tick both of these boxes and could be set for a solid second half of the year.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.