A Trio of Income Favorites

04/17/2019 5:00 am EST

Focus: DIVIDEND

Harry Domash

Publisher, DividendDetective and Winning Investing

Income expert Harry Domash maintains a wide variety of portfolios designed to help investors seeking a diversified portfolio of dividend stocks. Here, the editor of Dividend Detective highlights a trio of yield-oriented favorites.

In our Preferreds portfolio, we’re adding one new pick credit-rated investment quality, that is paying a 6.4% market yield. We’re adding Brunswick 6.625% Series B Notes (BC-B) to the portfolio.

Brunswick Corporation (BC) produces a variety of consumer products including outboard boat engines and accessories, as well as billiards, fitness, and game room equipment. These notes recently traded at $25.75 per share, above their $25 issue and call prices.

The market yield is 6.4% and the yield-to-call (1/15/24 call date) is 5.9%. The notes are credit-rated investment quality (BBB-), and Brunswick remains on the hook for any missed dividend payments.

We’re adding two new picks to our Manufacturing & Services portfolio. Both are solid, well-established players, and both pay unusually high dividends. How high? One is at 6.5% and the other pays around 5.2% (estimated).

We’re adding communications giant AT&T (T) to the portfolio. With its share price dropping almost 20% in 2018, AT&T might be a surprising pick.

However, the telecom’s acquisition of entertainment giant Time Warner, although technically approved in June 2018, was opposed by the U.S. Justice Department, and only finally cleared by a federal court in February.

We expect AT&T to exploit Time Warner’s many entertainment industry assets, igniting a growth surge that could surprise analysts. AT&T recently upped its dividend, driving its yield to a surprising 6.5%.

We’re also adding chemical products producer Dow Inc. (DOW), which was just spun off from conglomerate DowDupont, on April 2. Analysts only expect mid-single digit revenue growth, and 10% annual EPS growth.

But newly focused management is likely to exceed expectations. Also, the new Dow plans to pay big dividends, saying it would start by paying $2.1 billion annually, which Barron’s said equates to around $2.80 per share, roughly a 5% yield.

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