The Three Best Dividend Stocks to Buy in July
The Three Best Dividend Stocks to Buy in July
By:Mike Butler
Find out which of our July faves sports an 8.03% dividend
- Dividend stocks can be a great way for new and seasoned investors to get exposure to different sectors in all market environments.
- Dividends are cash payouts to ETF and equity shareholders that are made on a quarterly basis.
- The dividend is taken out of the stock price so it is not an arbitrage event.
- The "dividend champions" and "dividend aristocrats" watchlists on the tastytrade platform help us see what companies really focus on delivering an enticing dividend.
What is a dividend stock?
Dividend stocks are publicly traded companies or exchange-traded funds (ETFs) like SPY that offer an incentive to investors to buy shares. The incentive is a quarterly cash payment that shareholders that can count on as consistent. The dividend amount is known ahead of time, and traders and investors can take this into account when analyzing a stock or ETF.
Dividend stocks can be a nice place to park some cash when markets are complacent and not much is happening. Dividend stocks offer cash payouts to shareholders, and some of these payouts can be a sizable percentage of the stock price. If the stock price grows over time, the dividend can be a nice boost to profitability.
The Dividend Aristocrats watchlist on the tastytrade platform helps us see mega-cap companies in the S&P 500 that have increased their dividend for 25+ consecutive years, where the Dividend Champions watchlist shows us companies of all sizes and sectors that have increased their dividend at the same rate.
Let's take a look at Target (TGT), AT&T (T) and AbbVie (ABBV)— three companies that have underperformed relative to their sector for the year.
Target—a well-known dividend stock near 2023 lows
- 9.9 IV rank
- $60.9 billion market cap
- 2.43% dividend yield
- $1.10 on 8/15/23
Everyone I know goes to Target (TGT) for one item and leaves with 20, and yet the stock is near the lows of the year as an affordable buy-it-all-here megastore. This Dividend Aristocrat has a market cap of $60.9 billion and announced a $1.10 dividend for Aug. 15, 2023. This is still a healthy dividend, considering the stock price is hovering around $133 after falling from the 2023 high of $181.70.
At over a 3% dividend yield for this year, Target currently has an expected move of +- $21.28 through Jan. 19, 2024.
AT&T—a low-priced stock with a dividend yield over 6%
- 38.4 IV rank
- $114 billion market cap
- 8.03% dividend yield
- $0.28 on 7/7/23
AT&T (T) announces earnings before the market opens on July 26, so investors will have a better idea of future guidance in a few weeks. This stock is currently trading at $16, well off the highs of $20.48 realized in late January. Rumor has it Amazon (AMZN) may be tinkering with the idea of getting into communications, which would naturally be a competitive nightmare for companies like T, but AT&T boasts a $0.28 dividend announced for July 7, 2023, which is a very high yield for such a small priced stock.
At a market cap of $114 billion, you might think there would be some implied volatility attached to this stock's price, but the expected move through Jan. 19, 2024 is just +-$1.74.
AbbVie—will Botox lift ABBV From the 2023 Lows?
- 39 IV rank
- $238 billion market cap
- 3.94% dividend yield
- $1.48 on 7/13/23
AbbVie (ABBV), a Chicago-based pharmaceutical company, has a booming Botox business among other things. The company announced a $1.48 dividend for July 13, 2023, which is about a 4% dividend yield.
The stock is trading at $137, about five points off the lows realized a few days ago. ABBV reached a 2023 high of $168.11 in January and hasn't had much strength since, given inflation and recession worries and how they may affect cosmetic procedures.
The stock has posted gains four days in a row, and with earnings being announced in late July/early August, we may have a better idea of what to expect in the next few quarters.
AbbVie has an expected move of +-$14.65 through the Jan. 19, 2024 cycle.
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