5 High Dividend-Yielding S&P 500 Stocks Amid Coronavirus Woes

Amid coronavirus-related concerns, picking attractive stocks has become a daunting task for retail investors. A number of strategies — simple and complex — are being used to generate solid investment returns.

In the current situation, earning regular income is of utmost importance. So, we are discussing one of the easiest ways to select stocks, i.e. dividends.

Dividend-paying stocks always attract investors as these act as a steady source of income. Most of the time, cash dividends return more than what can be earned from deposits in savings accounts. This has become all the more important now as the interest rates are at near zero.

While selecting dividend stocks, investors generally focus on dividend yield (annual dividend per share/stock’s price) as this reflects the percentage return on the invested amount. Higher the yield, higher the chances of choosing that stock.

Nonetheless, as the dividend yield is based on the stock’s price performance, a lower share price indicates higher yield, making the stock attractive.

But before buying such a stock, one must ensure that it is not a dividend trap. Decline in the company’s stock price may be on account of fundamental weaknesses, and if those persist, there is a high chance of further price decline.

Apart from this, one should be aware of other factors like the current economic slowdown and high debt level. Companies need to preserve cash to tide over the uncertain times ahead. These issues have already prompted many firms to maintain the current dividend levels or even slash the same.

Choosing High Dividend-Paying Stocks

Based on the above-mentioned discussion, it’s not wise to select stocks based on dividend yield alone. A handful of other factors must also be taken into account before making any investment decision. One way is to take the help of the Zacks Stock Screener.

Through it, we have shortlisted five S&P 500 stocks that have a five-year average dividend yield of 2.5% or more and have outperformed the index so far this year. Also, these stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Further, these stocks have a VGM Score of A or B. Our research shows that stocks with a Value Score of A or B when combined with a Zacks Rank #1 or 2 offer the best upside potential.

5 Gems in the S&P 500 Index

General Mills, Inc. GIS — based in Minneapolis, MN — has a market cap of $37.3 billion, and is a global manufacturer and marketer of branded consumer foods sold through retail stores. The company carries a Zacks Rank #2 at present and has a VGM Score of A. Further, the stock has an average dividend yield of 3.6% and earnings growth projection of 7.5% for three to five years.

Headquartered in Oakland, CA, Clorox Company CLX has a market cap of $28 billion. It is engaged in the production, marketing and sale of consumer products. The average dividend yield for the Zacks Rank #2 stock is 2.5%. The stock has a VGM Score of B. Its earnings are projected to grow 5.8% in the long term.

With a market cap of $25.2 billion and a Zacks Rank #1, Fastenal Company FAST is a national wholesale distributor of industrial and construction supplies. This Winona, MN-based company’s average dividend yield is 2.8%. Also, its earnings growth projection is 9% for three to five years. The stock has a VGM Score of B.

Headquartered in Foster City, CA, Gilead Sciences, Inc. GILD has a market cap of $95.8 billion. The company is a pioneer in developing drugs for the treatment of human immunodeficiency virus, liver diseases, hematology/oncology diseases and inflammation/respiratory diseases. The average dividend yield for this Zacks Rank #2 stock is 2.9%. Its earnings are projected to grow 3.5% in the long term. The stock has a VGM Score of B.

KLA Corporation KLAC — based in San Jose, CA — has a market cap of $30.5 billion. It is an original equipment manufacturer of process diagnostics and control equipment that yields management solutions required for the fabrication of semiconductor integrated circuits or chips. The company presently carries a Zacks Rank #2 and has a VGM Score of A. Further, the stock has an average dividend yield of 2.6% and earnings growth projection of 12% for three to five years.

Year to Date Price Performance

Zacks’ Single Best Pick to Double

From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, SherazMian hand-picks one to have the most explosive upside of all.

This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.

Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.

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Fastenal Company (FAST) : Free Stock Analysis Report
 
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
KLA Corporation (KLAC) : Free Stock Analysis Report
 
General Mills, Inc. (GIS) : Free Stock Analysis Report
 
The Clorox Company (CLX) : Free Stock Analysis Report
 
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