Income-oriented investors love finding dividend stocks to buy now. That’s particularly true when those stocks are on sale, as many continue to be. However, heading into summer, many things make risk-averse investors cautious about buying equities.
Still, if the CME Group FedWatch Tool is correct, the next direction that interest rates will move is down. And that move may happen as early as September.
At that time, the belief is that investors will benefit as a wider range of stocks become buyable. And as investors know, the largest gains will go to those who were already in these top-performing stocks.
But which stocks will be those top performers? There are many contenders. To come up with this list, I used a simple stock screener. I looked for stocks with projections for at least 15% stock price growth and a minimum dividend yield of 3%. Based on the results, here are seven dividend stocks to buy now.
Pfizer (PFE)
The five-year stock chart for Pfizer (NYSE:PFE) looks like a traditional bell curve chart. But you really wouldn’t want to be an investor on the ends of this one. PFE stock swelled in 2021 and 2022 after the company successfully brought a COVID-19 vaccine to market.
But the explosive growth from those products is long gone and in 2024, PFE stock is waiting for a catalyst to push the stock higher. That may come from the company’s pipeline. And this is about more than their struggles in the weight loss arena.
Pfizer is leading the way in areas like mRNA technology and precision medicine. The breakthroughs may still be years away. But analysts are beginning to send the message that PFE stock is undervalued. Nine of 26 analysts give it a Strong Buy rating. And a price target of $32.57 would be a 17% stock price gain to go along with a dividend that yields 6.06% and has increased for 15 consecutive years.
Bristol-Myers Squibb (BMY)
I’m staying in the biopharmaceutical space with the next stock on this list of dividend stocks to buy now. Bristol-Myers Squibb (NYSE:BMY) stock is down sharply in 2024. Most of that dip came after the company reported a clunker on the bottom line in its first quarter earnings. Posting a negative $4.40 per share is hard for investors to overlook.
However, if you have the time and patience to take a long position, BMY stock is one to consider. Bristol-Myers Squibb has a significant portfolio of oncology drugs, with the most notable one being its skin cancer drug, Opdivo. And the company’s pipeline shows the company is likely to have many more drugs available in the future.
And when you look closer at recent earnings reports, the miss in the second quarter looks like an anomaly. The company is digesting several acquisitions that will boost its portfolio. Nevertheless, investors were in no mood to reward shaky earnings. But analysts remain bullish on the stock which could be ready for a breakthrough.
Gilead Sciences (GILD)
The last biopharma name on this list is Gilead Sciences (NASDAQ:GILD). Recent news illustrates to investors how quickly the fortune of these companies can change. GILD stock surged 10% higher upon news that the company’s Phase 3 injectable HIV drug lenacapavir was found 100% effective in preventing the infection in cisgender women in recent trials. To say a success rate of 100% is rare would be an understatement.
The stock came back to earth a little. This is most likely due to the realization that it will take some time before Gilead can submit the drug to the U.S. Food & Drug Administration (FDA) for approval.
Gilead is also digesting an acquisition, CymaBay. That will drag down earnings in 2024. But the company expects the acquisition to be accretive to earnings by 2026. High-yield dividend stocks can sometimes require patience. But that patience could be rewarded with a stock that offers a 4.5% dividend yield while you wait.
United Parcel Service (UPS)
United Parcel Service (NYSE:UPS) is an easy choice as one of the dividend stocks to buy now in expectation of lower rates. UPS stock is down about 13% for the year after the company reported lower sequential revenue as volume was down in every category (U.S., International, and Supply Chain).
However, the company did say it saw improvement throughout the first quarter. Furthermore, it expects volume and revenue to return to growth in future quarters.
The question for investors is whether they should buy the dip in UPS stock. A forward price-to-earnings (P/E) ratio of 16.4% is reasonable. And investors will get a dividend that yields 4.5% and significantly pays $6.52 per share. The payout ratio of over 90% may be concerning with debt that is at 10 year highs. But the company has increased its dividend for 15 years, and with a little help from the Fed, that dividend looks safe.
Energy Transfer (ET)
Energy stocks that are sensitive to the price of oil have not fared well in 2024. Fortunately, that’s not the case with Energy Transfer (NYSE:ET).
The midstream company provides an essential network of pipelines and terminals to keep oil and natural gas flowing. That means its business model is not that sensitive to oil prices. You can see that by looking at the five-year ET stock chart which has shown a steady move upward.
But the stock may still be undervalued. What investors may not be pricing into ET stock is the demand for natural gas that will be driven by data centers. This demand is still in its early stages and is coming from both artificial intelligence (AI) and cloud computing.
As of the market close on June 20, 2024, analysts are forecasting 13.9% earnings growth and a 22% increase in the company’s stock price. When you add in the company’s status as a master limited partnership (MLP) with a dividend that yields 8.12% and its forward P/E of around 10x, you can see why its one of the dividend stocks to buy now.
Vale (VALE)
Why is Vale (NYSE:VALE) down 29.5% in 2024? That has to do with steel prices which have been beaten up as the market is flooded with cheap Chinese steel. However, if the Biden administration has its way, there will be higher tariffs coming on imported steel.
That would be bullish for a company like Vale that provides the iron ore that is needed by steelmakers. The company reported its highest level of iron ore production since 2019 in the first quarter.
But that’s not the only reason that analysts see the potential for a 46% increase in the VALE stock price. That’s also due to the fact that Vale mines copper. Demand for copper is expected to soar in future years, and data centers will be a significant reason why.
This expected demand makes VALE stock look seriously undervalued with a forward P/E of 6x. And the company has a particularly juicy dividend yield at 10.45%.
Molson Coors (TAP)
Molson Coors (NYSE:TAP) is home to many iconic beer brands like Coors and Miller Lite. The company was a beneficiary of the 2023 boycott of the Bud Light brand. Now investors are hoping for an encore. But after a first quarter earnings report that saw the company beating on the top and bottom lines as well as affirming its guidance, TAP stock is down 24% in the three months ending June 20, 2024.
The reason may be in part due to concerns about declining demand due to the popularity of GLP-1 medications. When you combine that with the fact that Bud Light is expected to make a recovery, it’s fair to wonder where the growth will come from. The answer may come from the company’s shift to focus on its premium brands.
But this is still an attractively valued stock at just 8.8x forward earnings. Analysts give TAP stock a 28.5% upside with a dividend yield of 3.48%.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.