3 Dividend Stocks for 2020 – Dividend Stocks at a Discount?


Hi I’m Jimmy in this video I’m going to walk through three of the best dividend stocks that I could find that have run into issues recently or run into negative news and that’s hurt their stock for one reason or another. Now I actually came up with these companies because I’ve been out looking for undervalued dividend stocks that look like they could do well in the next couple of years. Now I set up this video a bit different and that I actually I’m ranking these three companies according to their struggles or according to how much pullback they’ve had from least to most and in theory that would also imply risk and upside as well. And at the end of the video I’ve actually got two bonus companies two bonus dividend paying stocks that almost made this last but came just short. Okay let’s get started. So coming in at number three is one of my favorite companies that has struggled a bit in the news recently and that is Home Depot ticker symbol HD. So over the past year. Home Depot stock is up just short of 11 percent which isn’t too bad at all. But the concern with Home Depot is that they’re very steady revenue growth. May begin to slow over the next couple of years. We haven’t seen many signs of it just yet but when we jump over Home Depot’s stock chart well here we can see that in this area some analysts came out and said that the industry upside may be limited. And as we could see the market didn’t seem to like it all that much. Then they also ran into some effects with hurricanes. There were some concerns about their impact how they be impacted by tariffs. Then right here. Well once again earnings came out and there was some disappointment as to the outlook of Home Depot stock. Then earnings came out again down here in this area most recently with a pullback in the stock market. Home Depot is down once again. Now I recognize that there are concerns over a recession in the near future. And if the economy were to go into a recession in theory that would trigger less remodeling and it would also hurt Home Depot’s revenue. But even if that were to happen where the the Federal Reserve has recently lowered interest rates and bond yields have continued to fall. So in my mind this is likely to keep the housing market at least somewhat active as mortgage rates are likely to stay low for at least a little bit longer as long as that happens. I expect for Home Depot’s stock and revenue to do fairly well. And given that they’ve upped their dividend fairly consistently over the past few years and they have a dividend yield of more than two and a half percent right now that’s based on the current dividend rate. Well even if a recession does come and there let’s pretend that their revenue does begin to slow I would expect for it to begin to pick up shortly after the recession ends. And any long term investors would do quite well. And in the meantime we get to get paid with their dividend for holding their stock. OK. On to number two on our list Chevron ticker symbol CVX. So here’s the situation with Chevron. So Chevron had made a bid to buy Anadarko Petroleum and a Darko agreed. And this would push Chevron up to the same level as Exxon Mobil as far as production is concerned by the way the announcement of this deal happened right in this area. And eventually what happened was Anadarko backs out of the deal because they’ve got a better offer from Occidental Petroleum and a Darko then has to pay a fee to Chevron for backing out of the deal. And clearly that adds to Chevron’s bottom line at least temporarily on a one time basis. Well all this is interesting and all but all this action in the middle here doesn’t really explain why Chevron stock is still down over the past year. Well a lot of that can be explained by the price of oil. This is the price of oil going back the past few years. And as we could see oil is weighed down from the 2014 levels and it’s even down from October of last year levels. So clearly this is an issue since in theory lower oil prices would mean lower profit margins for energy companies in general. OK. But where is the opportunity. Well Chevron owns one of the top portfolios of properties in the Permian Basin which is one of the best places to drill for oil. Now this is allowed for Chevron to generate a steady amount of free cash flow over the past few years. And this has funded both their cash dividends and their stock buybacks. And personally I believe that even if oil stays stuck in the 50 or 60 dollar range. Well I would expect for Chevron’s dividend to remain quite consistent since it’s funded by free cash flow. And that should help their stock their buyback program would also help their stock price which has trailed the S&P 500 over the past year. OK now we move on to our number one company and then I’ll touch on the two runner up stocks that didn’t quite make this list. So the number one company on our list is ad v ticker symbol. ABBV now AbbVie is down more than 20 percent over the past year and their main problem is actually quite large. So ad vs a pharmaceutical company. And as we know oftentimes a pharmaceutical company can be very reliant on the success of a single product. And AbbVie is no different. So this is a chart of revenue generated by product during 2018. And as we can see there Humana product dominates their revenue. Now Humana is supposed to faced direct competition in the U.S. when their patents went up in 2023 but things aren’t all great until then when we switch back to their stock chart. Well we may first notice that AbbVie stock has had a rough go of it over the past year or so. Now I bring this up because this drop right here. Well this drop happened after Novartis is drug which is very similar to Humana. It won approval in Europe and then this drop here happened when AbbVie came out with earnings and no surprise there Europe business showed sign of weakness as far as Cameron is concerned. So ad v recently announced the acquisition of Allergan. When did they announce it right here. So we’re still a ways away from this deal being. Finalized but once this acquisition is finalized. Well I believe it would help diversify advise portfolio away from the dominance that Humana has now. Based on the 2018 revenue if they combined right now. Well Humana would still represent about 38 percent of total revenue but that’s better than what it represents right now. Now I still expect for AbbVie stock to remain fairly volatile over the next couple of years. But right now they’re trading at a forward PE of less than seven acts which tells me that during this time period it’s possible that the stock market oversold them a bit due to the flurry of bad news that they’ve received. And this brings us to what I really like about AbbVie at this point right now at these dividend yields is about six point seven percent going off their last given amount of a dollar 7 per quarter. Now this is a chart of the history of at these dividends and clearly it’s been rather good. So I believe that this has the potential to keep in enough long term investors for Abdi to turn this thing around. And I would expect for their stock to begin to recover over the next couple of years. So at the end of the day I believe that at the Chevron and Home Depot are going to have the potential to have a net a strong next few years. And the fact that they pay solid dividends could help protect them if the stock market if the economy were to struggle in the next few years with interest rates being as low as they are I believe that strong dividend paying stocks like these companies are likely to do well because the yield will be attractive to many investors. OK now I know I mentioned to dividend paying stocks that I thought were good runner ups to this top three list. So the first of those two companies is Lockheed Martin ticker symbol LMT. Now they have a dividend yield of a bit less than two and a half percent and I elected not to go with Lockheed Martin because in my eyes their stock isn’t offering the same value as the other three companies although I’m a big fan of what they’re doing and they’re a solid defensive holding. And then finally we have Medtronic ticker symbol MDT now Medtronic has a dividend yield of a bit over 2 percent. And although I think that Medtronic has a decent value right now and they have some potential upside I actually like the yield and potential of Avi a bit better and since they’re both in the same industry I thought it made sense more sense to go with Advair over Medtronic but I do think Medtronic looks like a fairly stable company but what do you think. Do you like these top three or top five dividend paying stocks. Do you think that the two runner ups that I had belong in the top three. Do you think a different company blogs in the top three. What do you like that I didn’t mention. Please let me know what you think of the comments below. If you haven’t done so yet please hit the subscribe button and hit the Like button it really helps this video and the channel. I really appreciate it. Thank you for stick with me all the way to the end of the video. I’ll see in the next video. Thanks.

90 Replies to “3 Dividend Stocks for 2020 – Dividend Stocks at a Discount?”

  1. Morning Jimmy (9am in NYC) aka The Polo Man….great advice as always. A huge inspiration to keep me knowing what im doing in this investing game. Keep it up

  2. I'm a big fan of your videos. I think you could have added companies like ADM whose stock is currently down because of the trade war. I think it has a div yield of above 3%. Keep up the great work ♥️

  3. Thanks for the video all great picks! Surprised 3M is not in the list. Any predictions on how 3M will do in the next few years? Thank you!

  4. Two ABBV insiders bought $4.3 million and $2.0 million of this stock since the end of July 2019… They must have faith.. I've purchased ABBV three times since beginning of June and just reinvested my dividends in more a couple days ago… This is a long term investment…thanks for the video….

  5. 3 I'm eyeing are JPM, ADM, and CAT. Waiting for a further pull back. I picked up RDS and BP at the low on Thursday.

  6. I thought you would mention Boeing. They have a durable competitive advantage and is only down due to a short term issue. Once 737 Max back flying I'll be looking to buy.

  7. I would be interested in what your opinions would be for the healthiest balance sheet dividend stocks are right now? Who has the smallest debt and resilience during an economic downturn?

  8. weak choices and too obvious see other channels with same subject with same stocks
    total useless zero added value, thanks for wasting time tho

  9. love chevron ltm hd, but im confused on abbvie. yes they have outstanding profit margins, but their balance sheet does not look that good to me, and they pay too much in dividends for what they net.

    i like a company like foot locker, yes its getting hit along with the retail sector bad, but they're one of the most solid retail stores and strong brand name (while continuing to expand their house of hoops brand) almost 50% off 52 week lows,with a stable balance sheet. fl has a 4% dividend yield and they cover yearly dividend payments sometimes within a single quarter. the dividend growth potential is massive and the sports shoe market will help sustain foot lockers revenue forever. they're also the only sports sneaker retail store that isnt a specific brand,which means they can work with everyone without too much competition. adidas nike ua and puma arent going to fight with fl and eachother to split 500m if working together makes them money as well

  10. a defence and a petroleum based stock.. no thanks, i'd suggest TSMC (TSM) as a very solid dividend payer with big upside for the next 5-10 years, also TPR is pretty oversold with a good div, potential recovery within 5 years probable imo

  11. Thanks for the suggestions. Of the three, ABBV seems the most compelling value. The Allergan appears accretive based on price offered vs enterprise value. Several mergers & acquisitions in healthcare. Interesting to compare with Pfizer – Mylan deal. OXY's price action is taking a beating after the details of the Anadarko deal came out and the following proxy fight. Looking at SPG, dropping into undervalue territory.

  12. The only one I like is home depot. Oil is a sunset industry with electric cars and renewable energy so no chevron. Pharma stocks r too complex for me so no abbvie. Lockheed is in weapons so I dont like it. I prefer intuitive surgical to Medtronic too

  13. Thanks, great vid! One of question I like to ask is, will a dividend company still be thriving 50 years from now? Take Home Depot — are they still going to be thriving far in the future, or is their moat and upside potential not strong enough? Are they Amazon resistant (and if so, are they a potential acquisition target for them)? HD intuitively seems to have legs over the long term, with some bumpyness…

  14. Could you do a deep dive on stocks with negative debt to equity? You mentioned both Abbvie and Home Depot in this video, both of which have not just significant debt, but negative debt to equity (Abbvie being a standout). How does this affect your willingness to hold the stock long term, and what are the concerns associated with it? Personally, I have concerns about Abbvie's ability to pay it's bills post merger (increasing their debt further) and after humira has lost it's patent, which will significantly hit their revenues.

    In regards to HD, I read somewhere that the reason HD has taken on so much debt is to support their stock buybacks at a low APR, but to me this doesn't really seem like good business. This supports them in the short term, but in a downturn when revenues are hit, they're going to have a hard time paying their bills and I'm wondering if there will be a big drop. In fact, if you could go over the potential effects of stock buybacks that are supported with "cheap debt", that would be very helpful.

    I've been watching your videos since you were at like 8k subscribers, and I'm really glad to see you're growing, man. Love your videos.

  15. Jimmy, great video!
    You state that Abbvie and Medtronic are in the same industry (technically -yes), but to compare a pure pharma company to a pure medical device company is a little short-sided as they have different challenges and opportunities. in my opinion the stability and predicted upside of medtronic is much greater than Abbvie's due to their position in the their market. Although, if things go well for Abbvie the upside is greater for the time being. Just some food for thought. Not being critical. cheers.

  16. Great video as always Jimmy, please do more of these "undervalued" presentations. I'm long CVX and would like to buy HD if it pulls back a bit more. Considering ABBV as well. You could potentially put PFE, CAT, BA, SPG, MMM, BLK, and CVS in the undervalued category as well, maybe you could look at some of those for future vid.

  17. I've seen some tech companies that just started paying dividends recently and I believe they are undervalued at the moment. Citrix Systems (CTXS), NXP Semiconductors (NXPI), Cognizant Technology Solutions (CTSH). The dividends won't be paying any bills but the capital appreciation on all three could be substantial in the next few years.

  18. I think Lockheed Martin is going to be big in the upcoming decade, because of their aerospace capabilities. I bought 3 shares of ABBIVE and I plan to buy more.

    Chevron is looking very solid, and I agree with your analyst. Home Depot, however…I prefer Lowes over Home Depot.

  19. Thanks for sharing your insight. HD has been on my watchlist for a while. I'd love to hear your opinion on Macy's. 👍🏾

  20. great video….. great suggestions… Jimmy, you know that Bloomberg terminal is THE source for getting financial data at its best, however, it is a bit pricy for those who don't have reached that level yet. Would you have a suggestion as of where to have alternatives for financial news, charts, financial info etc.?

    much appreciated
    Rgrds

  21. In my opinion ABBV could very likely cut their dividend. A takeover like this could hurt net income in the short term, and they already pay out 90%+ of their income. Either cut the dividend or they will start taking out debt to pay the divs

  22. WPG at 3.34 a share has a dividend yield of 31%
    Why would I want to pay for such expensive stocks as yours when it doesn’t give me anywhere close to that?

  23. Hi Jimmy, Great video as usual. Yes, I particularly like your ABBV pick. There's actually a great risk arbitrage opportunity for people with the available cash. In stead of buying ABBV stock which has a gigantic dividend yield of 6.64%. However I bought the AGN (Allergan Shares instead.) Which ABBV made a takeover offer for in June.

    When the deal goes through. (I guess I should say IF the deal goes through.) ABBV will pay $120.30 in cash + .866 of a share of ABBV. ABBV shares closed on friday at $64.43 per share. Apparently the market wasn't too pleased with the announcement because ABBV was trading around $77 per share at the time. So that stock is down around 16% or so. In any event. If you buy the AGN shares, today you can get them for $158.25.

    When the deal goes through. (Probably some time in 2020) AGN shareholders will get at least $176.10 in value.

    At today's current ABBV share Price $64.43 X 0.866=> $55.80 + $120.30 = $176.10.

    Given that AGN shares currently trade for $158.25 that's a nice little profit of just over 11%.
    However, it gets even better if ABBV goes back up to what it was trading at the time of the announcement (who knows?).

    Say ABBV Share price is $77 X 0.866 => $66.68 + $120.30= $186.98 for a nice little profit of 18%.

    Now, ultimately my goal is to own the ABBV stock. So ultimately I will just be lowering my adjusted cost base, which will increase the yield, and the buy out hopefully not be taxed. (I'm not sure about that- consult your tax professional.)

    Anyway, I thought your subscribers should know.

  24. Hey Jimmy,
    thank you for uploading so many helpful videos! Do you think a stock dividend portfolio scores a higher Dividend Yield and Growth than Dividend ETFs?
    Thanks

  25. I would like you to do a comparison of two of the greatest dividend stocks Verizon at 4.24% dividend yield and AT&T at 5.8% dividend yield. I prefer Verizon and feel it's perfectly situated for the roll out of 5G in 2020.

  26. Why would I invest for 2,5 yield if I can get 10% from growth investing without even trying ? Im not criticizing. Just trying to understand.

  27. Any Dividend Stock, to make a good monthly income from it, you have to buy more than 50 stocks from a specific compan(ies).

  28. If you want to own abbvie, don't buy it. Buy allergan instead, when the deal goes through you get more value ( cash and abbvie stock). Abbvie overpaid for allergan.

  29. Great video. I already own Abbvie. Home Depot seems like there is enough merit here to do further research. As far as Chevron goes, I already own Exxon Mobile. Which leads me to wonder, what is your opinion on owning several different stocks in the same sector like Chevron and Exxon Mobile. Is it not diversified enough, or is it a good hedge in case one stock turns out to be weaker? What is your opinion, Jimmy?

  30. I think abbvie is great stock to hold for a long term and pays a high yield dividend, it is a good stock to add in your portfolio

  31. Thank you for your review. I will not touch stocks related to healthcare. Home dept is great pick for me. Every time there is major weather event it means people will ned to run to HD to fix up their properties. I regret I sold Lockheed. I think it is a solid company but again if dems would take over Washington they will slash defence spending. Thanks again I enjoy your work

  32. I'm liking carnival CCL for the long term. Outbreak is bringing price down in short term and u can pick em up right now at over 41/2 % yield

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