IMPORTANT POINTS:
- Dividend stocks are ideal for times of recessions and volatility.
- AT&T, Chicago Atlantic Real Estate Finance, and Devon Energy Corporation are the top 3 picks.
- These stocks offer annual returns between 7.6% and 12.29%, making them attractive options for investors.
In times of economic downturns, investors tend to opt for “dividend stocks” for their portfolios. The reason? Even if the stock price falls, they can make up for losses by receiving quarterly payments. Additionally, depending on performance, it is possible to offset annual inflation with some of these actions.
Here we present the best dividend stocks in terms of yield, value and company quality.
AT&T
AT&T is a parent company that provides telecommunications and technology services worldwide through its subsidiaries. It has two main segments: Communications and Latin America. The former offers both mobile and fixed telecommunications and broadband services in the US and globally, while the latter provides the same services only in Mexico.
On the other hand, this stock offers one of the highest dividend yields, at 7.6% annually. And it’s trading below its fair value estimate, according to Morningstar’s analyst equity report. Based on that, T stock is 57% undervalued, maintaining Morningstar’s top 5-star rating, making it a stock to consider.
AT&T is expected to grow its wireless revenue by 3% to 4% through 2027 and remain a strong wireless competitor in the long term.
Chicago Atlantic Real Estate Finance, Inc.
Chicago Atlantic Real Estate Finance, Inc. (REFI) is a commercial real estate finance company that provides risk-adjusted returns to shareholders over time through dividend income and other distributions.
However, the company offers a high dividend yield of 12.29% annually, making it a solid pick for a yield-oriented portfolio.
Morningstar Analyst Equity Report puts a fair value of $18.09 per share for the stock. Since REFI is trading at $15.3 per share, Morningstar’s Fair Value puts it undervalued by 18%.
Piper Sandler analyst Crispin Love recently gave the company a “neutral” rating with a price tag of $16.00.
Devon Energy Corporation
Devon Energy Corporation (DVN) is an energy company engaged in the exploration, development and production of oil, natural gas and natural gas liquids in the US.
With a dividend yield of 9.52% annually, it is positioned as one of the highest dividend stocks in the energy sector.
TipRanks has rated the stock a ‘Moderate Buy’ with an average price target of $60.29 based on 14 analysts over the past three months. That’s 14% above the current market price of $52.5 per share.
With oil prices trading above $90, Devon Energy Corporation could see strong profits this quarter, which is relevant given that the company aims to distribute 50% of its free cash flow to shareholders in the form of dividends.
Finally, so far this year, Devon Energy Corporation is down 9%, AT&T is down 22%, and REFI is up 2%. The dividend yield could offset some of these losses. For comparison, the S&P 500 has returned 16% in the same period.
