5 Best Dividend Stocks for 2019 – High Dividend Stocks

Hey YouTube. I’m Jimmy in this video. I’m going to go through my top five dividend
aristocrats that I think could have a solid 2019 a spread out my picks among different
sectors to try to help diversify our portfolio a bit. Now when I chose these companies I tried to
stick with companies that have a few different features. Obviously we want a decent yield. Then I tried to find companies that looked
relatively cheap when we looked at their PE ratio. Then I looked at their dividend coverage ratio
to make sure that it was greater than one. The higher the dividend coverage ratio the
higher in theory the likelihood is that that kind of company can continue to afford their
dividends. Now to be considered to be considered a dividend
aristocrat the company must have grown their dividends for at least twenty five consecutive
years. So we’re likely to end up with larger more
high quality companies call it blue chip companies if they’ve been around for that long and they’ve
continued to increase the dividend for that long. OK. Now let’s jump into the companies. So our first company comes from the Communication
Services sector. It’s AT&T ticker symbol T. Right now AT&T
is a current dividend yield of about six point five percent. Their PE ratio is about 10x. When we compare that to the S&P 500 they have
about an 18x PE. So AT&T looks pretty good. AT&T is a dividend coverage ratio of about
two point four which tells us that they earned their profit was two point four times what
they paid out in dividends. So once again the higher the coverage ratio
the better. So here’s a chart of AT&T for 2018. And as you can see it’s been in gradual decline. Now if we look at some key events that have
driven the stock we could see that this drop here. This was their most recent earnings and they
missed EPS estimates by about 5 percent. Then this jump here. Well this is where they came out with the
news that AT&T is expecting to roll out three different streaming video services trying
to compete with Netflix and then the final piece the biggest news overall. That’s sort of been around for a while. Is their merger with Time Warner and they’re
expecting in February of 2019 to get some news from the government as to whether or
not the merger will be able to go through. Ultimately AT&T’s goal is to try to create
content buy content if they need to. And their goal is to ultimately be a content
provider which should give them much better multiples of what they’re currently trading
at. Okay. Our next company is Leggett and Platt ticker
symbol LEG. Now this company isn’t as popular as AT&T
but they have a dividend yield of almost 4 percent a PE ratio that’s less than 17x and
a dividend coverage ratio of about one point five. So the numbers look pretty good. But who are they. Well they fall in the consumer discretionary
sector. They create and manufacture products that
are used in mattresses furniture car seats retail store fixtures things like that. They’re the company that first created they
first come up with the idea of putting springs in a mattress. And they’ve held that patent for a long time. Now here’s what their chart looks like. And this dip and recovery came from earnings. Now earnings actually came in in-line with
estimates but management issued guidance and guidance was a bit lower than expected. So the market didn’t like but it wasn’t too
big of a deal since the market almost immediately recovered. Then this pop here well this right before
that there was an announcement that the company would be buying elite comfort solutions there
one of the global leaders in phone technology. Basically they’re used in beds furniture cars
boats airplanes shipping products pretty much anything that uses foam. The company says they expect this acquisition
to be accretive within the next two years. It creative means that it will increase earnings
per share. The next company comes from the consumer staples
sector. It’s Kimberly-Clark ticker symbol KMB KMB
has a yield of almost three point five percent a coverage ratio of about one point six and
a PE ratio at about seventeen point five. Now here’s what their chart looks like. We can see that they’ve done OK for the year
they’re about flat for the year but they’re a lot better than the first two companies
that we like. Now this makes sense if you think about it
because you’re a consumer staple and in theory if the market or the economy were to head
lower we’ve been fear that heading lower consumer staples should do better than the rest. Now in this recent drop can be announced earnings
and they actually beat estimates and they came out with the forecast that was about
in line with what analysts were expecting. But some divisions globally missed earnings
and they reduced the forecast for those divisions. So the market didn’t seem sure how to react
since they drove the price low lower and almost immediately kicked it higher. Oh yeah. Kimberly Clark is a health and hygiene company. They make diapers tissues paper towels things
like that stuff you wouldn’t stop. Buying if the country went into a recession. That’s why they’re a consumer staple. OK. Only two companies left. So our next companies from the health care
sector and it’s called AbbVie. Ticker symbol a BBVA AbbVie has a dividend
yield of a bit over 4 percent. They have a coverage ratio of a bit over one
point two and their PE ratio is just short of thirteen X.. Now add these biggest product is Humira accounts
for about 60 percent of revenue and that’s a pretty big number. Now the patent protection for Humira already
ran out in 2016. So the company has been digging around trying
to find their next big product. Now there’s been talk that they may make a
big acquisition. They’ve a bunch of products in the pipeline
that could be big for them. Over the past twelve months they’ve spent
about five billion dollars in research and development so that could shape up to add
to the next big product at the thereafter. This is a chart of AbbVie and the first big
drop here. This came when an analyst from SunTrust released
his report saying that Humira, the sales of Humira could be down more than expected in
Europe. Now when he when he’s released a report he
lowered his price target to about 135 given that the current prices is about ninety dollars
per share it looks like with his lowered expectations there could still be some decent upside for
us. Our final companies from the industrial sector
Emerson Electric ticker symbol EMR their dividend yield is a bit over 3 percent. They have a coverage ratio of almost one point
eight. Their PE is a bit higher than the other companies
at 19x. It’s also a hair over what the S&P is now. Emerson makes a whole bunch of different items
including electrical products valves regulators and a bunch of other products that are used
in the industrial space commercial space and in the consumer markets. This is Emerson’s chart and as we could see
recently the stock has really dipped lower. This is at least partially due to management
lowering their guidance for 2019. Then there were also some analyst downgrades
in there. Now this dropped back here. We can see that this drop came shortly after
Emerson announced the acquisition of HTE engineering services. I haven’t seen a price tag for what they’re
gonna be paying for HTE but they announced it right before the stock start to fall. Now Emersons actually fairly good at integrating
acquisitions into their business since 2016. They’ve completed five acquisitions of more
than 240 million dollars and it served their business well it’s really helped add to growth. So to my way of thinking this recent pullback
could be an opportunity if nothing else it’s an opportunity to get in when the dividend
is a bit over 3 percent. So if we were to buy all five of these companies
going to put the same amount same dollar amount in each of the companies well then the yield
for our entire portfolio would be almost 4.5 percent. That’s not too bad when we consider that the
average yield to the S&P 500 is about 2 percent. Now we switch out of the coverage ratio. We can see that the average coverage ratio
is a bit over one point seven which when it comes to keeping up with their dividends. For me that’s plenty good when we look at
the average PE ratio. Well the average PE ratio for our dividend
portfolio is about 15x. Once again the S&P 500 is trading at about
18x. So our portfolio could be a bit undervalued
relative to the S&P 500. What do you think. Do you like these companies. Are there any companies that you would added
that I wouldn’t touch. I did have a few runner ups that didn’t quite
make the cut. Personally I like Target but frankly Leggett
and Platt which is in the same sector had a slightly higher yield and a better current
ratio. The current ratio is it looks at the cash
and cash equivalents compared to short term debt. I tried to look at each of these to make sure
that they had at least a decent amount of cash. I also consider Pepsi which look good. Dover looks pretty interesting and there are
a few others that didn’t quite make the cut but what do you think of our dividend portfolio. Let me know what you think of the comments
below. And if you haven’t done so already hit the
subscribe button and I’ll see in the next video. Thanks for sticking with me all the way to
the end. Thank you.

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