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Intel Corporation

59.6800
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59.6800
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42.8600 60.9700
52 weeks
52 weeks

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15 of the Best Dividend Stocks to Buy for 2020

These are the best dividend stocks for 2020.

With 2020 just getting underway, the stock market is on something of a long-term tear. A nearly 11-year bull rally is already the longest-ever uptrend in Wall Street history, and the American economy is equally robust as the unemployment rate (3.5%) is the lowest in 50 years. Despite this, interest rates still sit near historical lows and the 10-year Treasury yields only 1.8%. As income investors struggle to find decent sources for yield, U.S. News has highlighted 15 of the best dividend stocks to buy for 2020. Each offers the potential for capital appreciation and yields that 10-year Treasurys can't provide.

Bristol-Myers Squibb (ticker: BMY)

Pharmaceutical giant Bristol-Myers Squibb, fresh off a year in which it gobbled up "pharma tour de force" Celgene and gained 28%, looks like one of the best dividend stocks to buy for 2020. As is frequently the case with drugmakers, the strengths of BMY lie in its current drug portfolio and its pipeline. Its anticoagulant Eliquis and cancer treatment Opdivo both take in nearly $2 billion each quarter. The Celgene acquisition gives it a $10 billion annual cash cow in Revlimid, and analysts expect BMY to grow earnings 15% annually over the next five years.

Market capitalization: $155 billion
Dividend yield: 2.7%
Payout ratio: 47%

The best dividend stocks to buy are often ones that can both afford to pay shareholders a meaningful quarterly dividend -- preferably a sustainable and growing one -- and offer a shot at solid capital gains. Medifast, which sells healthy meals as a part of company-designed weight-loss programs, checks both boxes. As the payout ratio indicates, it pays out less than half of earnings to finance its dividend, using the rest to grow its business. Expected to grow earnings about 20% annually over the next half decade, MED shares trade for 18 times earnings, making their appreciation potential more impressive than their dividend.

Market capitalization: $1.3 billion
Dividend yield: 4%
Payout ratio: 48%

Also tapped as one of the top energy stocks to buy for 2020, Energy Transfer is a natural gas pipeline company operating as a master limited partnership, an MLP. This structure, similar to a real estate investment trust, allows MLPs to use a pass-through structure where the entity avoids corporate taxes and instead distributes its available cash flows to investors. This makes for large payouts, and Energy Transfer's 12,000-plus miles of pipeline are generating plenty of cash flows, as ET collects a toll for everything it transports. In an era of incredibly low interest rates, ET and its 9% yield goes down as one of the best dividend stocks for 2020.

Market capitalization: $37 billion
Dividend yield: 9%
Payout ratio: 97%

While the energy sector is often flush with high-yielding investment opportunities, the tobacco industry has also been a famous cash flow generator since time immemorial. There are just a handful of global giants in this space with the global presence of British American, which is worth over $100 billion. The portfolio of brands includes Camel, Lucky Strike, Dunhill, Pall Mall, Newport, Natural American Spirit, Kool, Grizzly snuff and Vuse e-cigarettes, to name a few. Although shares gained over 40% in 2019, BTI remains oversold following a brutal 2018 overcorrection driven by fears vaping could cripple Big Tobacco. At 10 times forward earnings, this Steady Eddie and its 6% yield is a perfect option for conservative investors.

Market capitalization: $104 billion
Dividend yield: 6%
Payout ratio: 56%

One of just two names among the best dividend stocks to buy for 2020 that also made the cut last year, mega-cap pharmaceutical AbbVie makes the world's bestselling drug, Humira. AbbVie's 2019 returns were jeopardized by the company's surprise $63 billion buyout of Botox-maker Allergan (AGN) at a hefty 45% markup. Markets worried that the North Chicago, Illinois-based ABBV was overpaying for Allergan, but shares have rebounded sharply from their mid-year woes and despite a subsequent 40% rally, shares can still be snatched up for just 9 times forward earnings. Don't mind AbbVie's 191% payout ratio, which is artificially inflated due to one-time losses. ABBV pays a sustainable dividend and has raised its payout annually for 46 straight years.


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