5 Dividend Stocks to Buy in April
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APRIL IS KNOWN FOR surprises many of investors could do without: Tax Day and April Fools’ Day among them. Taxes, of course, have a certainty equaled only by death, and the first of the month is no laughing matter if your financial advisor calls to tell you that, no lie, your portfolio is in trouble.
In that case, you might want to quote another financial figure – banker and poet T.S. Eliot, who famously wrote “April is the cruelest month.” (That was the first line of “The Waste Land,” by the way.)
Yet whatever dread investors may harbor, April will indeed have its bright moments, if you know where to find them. Here are five dividend stocks to buy this month, all of which may well yield April showers of cash:
Broadcom (AVGO)
Founded in 1961 as a division of Hewlett-Packard, the former Avago Technologies purchased Broadcom Corp. in 2015 for $37 billion and took on its name. Ah, but what’s in a name if the new company only semi-conducts a profit? Turns out AVGO has nearly doubled since a sharp plunge in July, triggered by the surprise purchase of mainframe software company CA. Once investors recovered, they remembered CEO Tan Hock Eng has a proven track record of operational excellence.
“Broadcom is growing cash from operations at a mid-teens clip, driven by mid- to high-single digit revenue growth,” says Ellen Hazen, senior vice president and portfolio manager, F.L.Putnam Investment Management Co. in Wellesley, Massachusetts. “At $10.60, the dividend provides a 3.8 percent yield, and has grown at more than 50 percent the last several years. This is just under half of the company’s free cash flow so again, there is scope for further dividend growth.”
Spirit AeroSystems Holdings (SPR)
After dismal performance for much of 2018’s final quarter, this Wichita-based aerospace manufacturer has gifted investors with a 36 percent leap since Christmas Day, with shares now trading near $90.
In the short term, investors may worry whether current troubles with the 737 MAX will spill over, as SPR provides around 70 percent of the structure on 737s. Long-term impact could depend on how long the planes are grounded and how many customers cancel orders. But in the meantime, Boeing Co. (BA) has more than 4,600 unfulfilled orders on the 737 MAX, according to the Wichita Business Journal.
SPR has a dividend yield of 7.7 percent, equaling a quarterly payout of 12 cents a share, up 20 percent from this time last year. Meanwhile, Zacks Research predicts an expected earnings growth rate for 2019 in excess of 19 percent – beating the 11.1 percent projected gain for the aerospace defense equipment sector.
Apple (AAPL)
While the headlines bellow about dried-up overseas iPhone sales, Apple still hovers around that magical market cap of $1 trillion. (Currently, it’s roughly $901 billion). And now it’s broadening its revenue stream by jumping into the streaming TV business and unveiling a news subscription service.
“Slowing iPhone sales may scare some investors away from this iconic stock, but it has an enormous economic moat,” says Robert Johnson, professor of finance at Creighton University’s Heider College of Business. “The firm has a very high quality balance sheet as its cash holdings alone represent $18.33 per share.”
In terms of its quarterly dividend, AAPL has hiked it yearly since 2014, with the current 73 cents per share up 10 cents from this time last year. “The forward dividend yield of 1.71 percent may be slightly under the S&P 500 yield of 2 percent, but AAPL represents a wonderful value,” Johnson says. “Buying AAPL at a discount to the market seems to be a no-brainer, and its forward price-to-earnings ratio of nearly 15 times is below the market consensus.”
Comerica (CMA)
Like so many stocks in the financial services sector, Comerica took a hit in mid-March when the Federal Reserve held the line on an interest rate hike. Nor is the year-over-year news good for this Dallas-based company, as the stock has slid more than 21 percent to $72 per share. Still, CMA is up close to 12 percent since Dec. 24 and gets high marks for its divided, which currently has a yield of 3.7 percent.
“Comerica has high dividend growth potential,” says Kian Salehizadeh, senior analyst at Blockforce Capital in San Diego.
Blockforce holds Comerica in its dividend growth exchange-traded funds, and as recently as March 1, CMA far outperformed the S&P 500 in 2019, with shares up more than 24 percent.
“The company’s dividends are supported by 41 percent earnings per share growth, while its five-year annualized dividend growth stands at 19 percent,” Salehizadeh says. The company doubled its quarterly dividend in 2018 to 60 cents per share, and just increased it again to 67 cents per share.
Tootsie Roll Industries (TR)
If stocks had such a thing as a trick-or-treat cycle, this iconic Chicago candy maker might make for a prima facie case. Starting on Oct. 12, TR went on a roll, if you will, and has shot up almost 30 percent. That’s pretty sweet when you consider Tootsie Roll is a mature, stable company, founded in 1896.
As for TR’s quarterly dividend, it’s nothing to write home about. With a yield of just 1 percent, the 9 cents per share payout hasn’t budged since 2014. And yet shareholders probably won’t mind given how delicious those recent returns have been.
