Americans went to the polls today in the shadow of a resurging pandemic, with the dramatic increase in cases nationwide and the number of people hospitalized for COVID-19 hitting record highs at some state increasing. Meanwhile, it’s still unclear what a second stimulus package from the federal government might look like and how long it will take until that arrives.
To fuel this problem, some European governments are starting to lock down their respective countries again to prevent further spread of COVID.
With all these uncertainties, what should an investor do? Adding dividend shares as a potential defensive play can increase the protection of your portfolio.
We opened the TipRanks database, found three stocks that have proven input risk records in today̵7;s conditions. All three offer a dividend yield of at least 5% and are backed by a number of analysts, enough to receive a “strong buy” consensus rating. Let’s take a closer look.
AbbVie is a pharmaceutical company, one of the big names of Big Pharma. Pharmaceutical and biotech companies are known for their combination of high risk and high reward potential. Both the rewards and the risks are embodied in Humira, the company’s successful immunosuppressive anti-inflammatory drug. Humira is expected to generate ~ 40% of AbbVie’s 2020 drug division revenue – but with the patent expired, the competition is growing.
Against that backdrop, AbbVie acquired another pharmaceutical company, Allergan, which helped increase top sales by $ 16 billion for AbbVie while the combined companies brought in a total of $ 2 billion. The buyback shows investors that AbbVie is simultaneously looking beyond what it holds in Humira.
Future guides have higher turnover along with income. The revenue guidance has been increased to $ 10.47 – $ 10.49 EPS vs. $ 10.35 – $ 10.45 EPS.
Earnings are enough to allow management to increase dividends from $ 1.18 to $ 1.30. At $ 5.20 annually, this dividend yields 6.11%, 2.5 times the average dividend found in S&P listed companies. The payout ratio of 49.7% indicates that dividends are safe – current income is easy to cover and there is plenty of room for further growth.
Including stocks for SVB Leerink, noted analyst Geoff Porges, “AbbVie had another strong rally in the third quarter, demonstrating their very resilient business performance during the pandemic and highlighting their outlook. Strong growth for their core business The principle was once again raised and the company commented on mid- to long-term revenue potential for their core products as very positive. […] AbbVie’s valuation looks very attractive at today’s prices and we see significant upside potential as we expect the stock to return to relative multiples and more completely normalized after the trade. Current elections are settled in the new year. “
So Porges rates AbbVie as More Outperforming (i.e. Buying) alongside a $ 119 price target. This number shows a 35% upside potential over the next year. (To see Porges’s tracking profile, click here)
Overall, Wall Street is very optimistic about Abbvie. There are a total of 8 ratings; 7 Buy and 1 Hold – all add up to a Strong Buy consensus rating. The stock’s current price is $ 88 and its average price target of $ 110.13 shows a 25% increase in one year. (See ABBV stock analysis on TipRanks)
Next is WesBanco, a bank operating in western Pennsylvania, West Virginia, Ohio and Kentucky with 236 branches. The pandemic has hit financial institutions because loans fail to repay their debts. Loan losses, or their likelihood, have forced banks and lenders to begin building reserve ratios and setting up revenue for the loan loss.
WesBanco has spent the last two quarters building a contingency ratio with a large amount set up in Q2 and a smaller amount in Q3 and now has a contingency-to-peer ratio.
Moving on dividends, WSBC currently pays 32 cents per common stock, and even during the coronavirus crisis, WSBC keeps that payout stable. The 52% annual payment goes up to $ 1.32 per share and yields a substantial return of 5.16%.
William Wallace, an analyst with Raymond James, is standing upright with the bulls, noting: “PTPP earnings exceeded noted expectations, largely due to lower operating costs and high fee income. Ultimately, we expect investors to continue to hone credit for the foreseeable future-maturity, in which the company’s enhanced reserves continue to provide us with a level of comfort. All, with stock trading fundamentally relevant to peers, we continue to view risk / reward positively with a firm equity (+ 9% TCE) , along with both promising core earnings and a tendency to delay. “
It’s no surprise that Wallace rated WesBanco as Outperform (i.e. Buy) alongside a $ 29 price target. This target shows a potential price increase of 15% over the next year. (To see Wallace’s work, click here)
Wallace is not the only fan of WSBC on Wall Street, as TipRanks analysis shows the stock is a Strong Buy. Based on 4 analysts followed for the past 3 months, 3 analysts rate a stock as Buy, while one says Hold. The 12-month average price target is $ 26.88, marking a 6.5% increase from the stock level currently trading. (See WSBC stock analysis on TipRanks)
CatchMark Wood (CTT)
CatchMark Timber is the owner and operator of forests in many parts of the country. The pandemic has not directly affected the wood industry. However, the wood itself has maintained higher prices as US home builders saw the demand increase. Many of these new needs are generated from individuals moving out of the city to suburban areas.
In the most recent quarter, Q3 2020 EBITDA for CatchMark Timber was above expectations at $ 12.4 million versus a $ 11 million consensus. Expected earnings are attributed to control of operating and transportation costs as well as sales & administration costs.
At the same time, CatchMark reports Q1 earnings, it also claims third quarter dividends. This payout remains steady at 13.5 cents per share, yielding 6% returns. The company has a 6-year history of maintaining dividend payments, in all economic conditions.
Adding to the good news, RBC Capital analyst Paul Quinn, rated 5 stars with TipRanks, upgraded CTT to Outperform (ie Buy), while keeping his price target at $ 10. (To view the analyst’s track record, click here)
As Quinn said, “CatchMark reported Q3 results that were consistent with our forecast but above consensus expectations. Despite slight changes in the business outlook over the past few months, CatchMark’s stock has fluctuated in a wide range around our target price of $ 10. With stock prices back to attractive levels and the future outlook solid, we are increasing our ratings. “
Overall, CTT analyst Strong Buy’s consensus stems from 3 ratings of “buy” and 1 “hold”. The stock is priced at $ 8.91 and the average price target of $ 10.88 shows a 22% growth potential. (See CTT stock analysis on TipRanks)
For good ideas for dividend stock trading at attractive valuations visit TipRanks’ Best Stocks to Buy, a newly launched tool that combines all the insights of Equity of TipRanks.
Repel: Opinions presented in this article are those of prominent analysts only. Content is used for informational purposes only. It is very important to do your own analysis before making any investments.