10 Dividend Stocks For 2021
Dividend stocks that I expect to outperform in 2021 based on my research
Hello Everyone!
As promised, here is Part II of my “Top Stocks For 2021” Newsletter series. Today we are going to take a look at 10 Dividend Stocks I like for 2021.
Disclaimer: The stocks mentioned below are not intended to be a list of buy ratings. Stocks can sometimes move in a volatile fashion, so it is important to first perform your own due diligence or contact your financial advisor. Each investor has their own goals and risk appetite, which should be considered prior to investing.
10 Dividend Stocks For 2021
1. AbbVie, Inc. (ABBV)
Stock Price: $104.70
Market Cap: $182.6 Billion
YTD Performance: 16.8%
Dividend Yield: 5.0%
2021 Estimated Sales: $53.9 Billion
AbbVie is a pharmaceutical company that maintains the #1 selling drug in the world for a number of years now. However, Humira has already lost its patent in Europe and is due to see its US patent expire in 2023, which is when generics can begin selling. This has been the bear case for AbbVie for some time now, but it is not something unknown to management, which is why they have a jam packed product pipeline. The company has a number of new blockbuster drugs. Sure, none of them will be at the level of Humira, but together they can surpass and more than carry the load Humira will leave behind in 2023. The company is also known for paying a high-yield dividend that increases at a strong rate every year. Look for ABBV cash flows to remain strong in ’21 and the dividend to keep rising.
2. Broadcom Inc. (AVGO)
Stock Price: $429.04
Market Cap: $175.7 Billion
YTD Performance: 36.7%
Dividend Yield: 3.4%
2021 Estimated Sales: $27.3 Billion
Broadcom is a chipmaker and one of the best Dividend Growth stocks out there, having boosted their dividend an average of 55% per year over the course of the past 5 years! Obviously that percentage is not expected to continue, but the 11% boost a few weeks back is nothing to sneeze at. Broadcom is also a play on 5G being that AVGO is a large supplier to Apple. The company provides supplies not just for the iPhone, but for iPads as well. In addition, the company has a huge backlog that will fuel revenue growth through the first part of the year.
3. CVS Health Corporation (CVS)
Stock Price: $67.90
Market Cap: $89.1 Billion
YTD Performance: -8.4%
Dividend Yield: 2.9%
2021 Estimated Sales: $277.7 Billion
CVS is a name that saw a fall dip during another wave of COVID and an announcement that Amazon was entering the pharmaceutical space, which was a great time for me to scoop up shares. Since then the stock has been a rocket and I expecting positive things in ’21. An interesting point brought up by the Rite Aid (RAD) CEO was how the COVID-19 vaccine will drive more business in ’21. The pharmacies like CVS, Walgreens, and Rite Aid will be administering the COVID-19 vaccines, but customers must wait around for 10-15 minutes to ensure no side effects are visible. The CEO mentioned that those 10-15 minutes will be an opportunity for customers to grab some items from around the store that they may have not initially came for, which will eventually drive sales.
4. Lockheed Martin Corporation (LMT)
Stock Price: $353.90
Market Cap: $99.1 Billion
YTD Performance: -9.0%
Dividend Yield: 2.9%
2021 Estimated Sales: $68.00 Billion
Lockheed Martin is the largest manufacturer of military defense systems and in fact is a stock I initiated a position in today (12/30). The Defense sector has largely been trading at a discount for much of 2020. LMT does not look like they will be positive in 2020, but they just added a $1.3 Billion Navy contract that will add to their growing backlog. Tension around the world is not easing, and countries want to be prepared with the latest technology, especially the United States. LMT along with other defense contractors like RTX and GD are set to benefit. LMT is trading at a big discount on forward earnings. In addition, the company increased the dividend 8.3% a few months back, making them another solid dividend growth stock having increased the dividend an average of 10.4% the past 5 years.
5. Lowe’s Companies, Inc. (LOW)
Stock Price: $160.54
Market Cap: $118.7 Billion
YTD Performance: 34.1%
Dividend Yield: 1.5%
2021 Estimated Sales: $84.5 Billion
Lowe’s may not be my preferred home improvement store to visit for me personally, but right now it is my preferred investment over HD (by a hair). I actually like both home improvement stores heading into 2021 because the pandemic will still largely be around for the first half of the year, which will continue the home improvement boom we have seen in 2020. In addition, housing is set to continue its strong performance which tends to help HD and LOW. Both stocks were on fire during Q2 and Q3, but have largely traded sideways since August. Both companies are strong dividend growth stocks, with Lowe’s being part of the prestigious Dividend Kings list. New(er) CEO Marvin Ellison is a former HD executive who is making BIG improvements to Lowe’s supply chain and their digital footprint.
6. Qualcomm (QCOM)
Stock Price: $148.49
Market Cap: $167.1 Billion
YTD Performance: 68.3%
Dividend Yield: 1.7%
2021 Estimated Sales: $30.24 Billion
QCOM is another name that can be filed away as a Dividend Growth stock, as they have an average 5-yr DGR of 10%. In the thick of COVID back in April, when it was all new to many, QCOM still increased the dividend 5%. The company has long been partners and enemies with Apple, which has largely impacted how the stock has reacted. Good news between the two usually saw the stock rise and then news of the two fighting caused QCOM to fall. Recent news came out that Apple was in the process of building their own modems to replace QCOM as early as next year (2021), which resulted in QCOM weakness. I personally believe it will be later, but in the meantime, QCOM is another play on 5G. The fact of the matter is the two companies have a licensing agreement that runs through March 2025, so although Apple can create modems, QCOM technology would still be used. Modem sales may drop off over time, but the licensing side of things will propel QCOM higher. I would be a buyer on any further weakness.
7. The Walt Disney Company (DIS)
Stock Price: $177.30
Market Cap: $323.8 Billion
YTD Performance: 22.6%
Dividend Yield: N/A (To be reinstated within next 6mo)
2021 Estimated Sales: $69.6 Billion
I know I know, I can already hear you yelling at the screen, “DISNEY DOESN’T PAY A DIVIDEND!” For years, Disney has paid a bi-annual dividend, odd timing I know, but due to the pandemic and the closure of theaters, resorts, and parks, still to this day for the most part, the company had to suspend their dividend. However, streaming has been on fire with the launch of their Disney+ streaming platform (proud subscriber) who now has over 86 million subscribers. Once parks and resorts can open again near a reasonable capacity, Disney will once again start the cash flow machine, which will once again see a return of the dividend, in my opinion, and because of this I am including it as a “Dividend Stock.” The streaming news is fabulous, but being in the infancy stages and focusing on growth, the company is not making money in the segment yet, whereas Parks & Resorts and Studio were the company’s biggest contributors to profits.
8. United Parcel Service, Inc. (UPS)
Stock Price: $169.03
Market Cap: $148.1 Billion
YTD Performance: 44.4%
Dividend Yield: 2.4%
2021 Estimated Sales: $86.5 Billion
I am sure you have heard the news that e-commerce is growing. Yeah, you have heard it a time or two. As e-commerce continues to grow, someone has to ship all these packages. Fed-Ex and UPS are first in line to benefit from the growing trend. UPS still works closely with AMZN, but e-commerce is much more than that. Amazon is building out their own shipping segment, but many companies utilize UPS. Think of how fast ETSY is growing and the likes of HD and Lowe’s online sales, UPS will get many of these packages to be shipped.
9. Visa, Inc. (V)
Stock Price: $214.37
Market Cap: $497.0 Billion
YTD Performance: 14.1%
Dividend Yield: 0.6%
2021 Estimated Sales: $23.2 Billion
Visa has been a solid stock for me in 2020, one I added midway through the year. The yield is nothing special at the moment, but there is a reason for that. As you may know, as a stock price increases, the dividend yield naturally decreases and vice-versa. Over the course of the past 5 years, Visa stock has increased over 170%. During that same five-year period, the company has increased the dividend an average of 20% per year. That is BIG TIME dividend growth, but the yield has not been able to keep up with the stock appreciation, so with Visa you get a best of both worlds. You have the opportunity for stock growth and a growing dividend on the side. As the economy, primarily the travel world, returns to even a small percentage of normal, shares of Visa are prime for a big run given how much the travel industry impacts them.
10. Walmart Inc. (WMT)
Stock Price: $144.30
Market Cap: $410.9 Billion
YTD Performance: 21.4%
Dividend Yield: 1.5%
2021 Estimated Sales: $557.0 Billion
Last but not least we have Walmart. In 2020 WMT launched Walmart+ to go head to head with Amazon. It was a bold, but necessary move to bolster their e-commerce segment. WMT has long been a defensive name for many dividend investors. The company is reliable and has shown an ability to adapt to the changing environment. This is an ultimate safe pick or what I like to call a foundational stock for someone just getting started. RBC Capital made WMT their top pick for 2021 and placed a $170 price target on the stock. The e-commerce move combined with the company performing well in good or bad economies bodes well for a quality stock moving forward.
Stay tuned for the next segment, “10 REITs for 2021” which I will look to publish in the coming days. Let me hear from you on your thoughts on the Newsletter, the format and other feedback on what you would like to see in future Newsletters. Contacting me on Twitter (@Dividend_Dollar) and drop me a DM.
Stay safe and happy investing!
Disclaimer: I currently have positions in ABBV, AVGO, CVS, LMT, V.