Dividends Will Shine, Making for Some Attractive Buys Now

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  • Interest rates are back to zero again, and the Federal Reserve has indicated that it will likely remain that way for years to come. That means investors looking for an income need to move to riskier assets such as stocks.

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  • However, in any space, there are winners and losers. In today’s stock market, there are a number of companies still paying strong dividends that aren’t near all-time highs like the big tech names.

    That’s why Cressent Capital just listed nine dividend names. Two look interesting right now.

    The first is AbbVie (ABBV). The pharmaceutical company has seen its share price drop in recent weeks, and now its dividend yield has been pushed up to nearly 5.5 percent. With the healthcare space in general looking like an attractive place for investors, shares will likely rebound.

    Another name on the list is 3M (MMM). The conglomerate is a play on a recovering economy, not just the N95 face masks it’s been selling like hotcakes during this economy, and offers a 3.7 percent dividend yield right now, as well as a reasonable valuation under 20 times earnings.

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  • Action to take: Besides buying shares of the above two stocks, options traders should look at AbbVie’s January 2021 $90 calls. Trading for around $3.65, should offer a high percentage return on a rebound in shares over the next few months, and could even move in-the-money.