The higher the U.S. stock market goes, the more important stock selection becomes for investors. The environment can be more difficult for dividend investors, as rising interest rates make fixed income alternatives more attractive. One way for investors to historically identify the best-performing large-cap dividend stocks is to use the Quintile 2 Russell 1000 screen. By ranking the Russell 1000 stocks by dividend yield and dividing them into five groups, Bank of America has found that stocks in the second highest group tend to outperform their peers. Here are nine dividend stocks currently in Quintile 2.
Public Service Enterprise Group (ticker: PEG)
Public Service Enterprise Group has a 3.3 percent dividend yield, one of the highest among Quintile 2 stocks. The diversified energy company owns both Public Service Electric & Gas in New Jersey and energy supply company PSEG Power. Analyst Julien Dumoulin-Smith says PEG should be able to grow its regulated utility business at a solid clip. In addition, the company has a major potential expansion opportunity in offshore wind and transmission, where it holds an incumbent advantage over potential competitors. Bank of America has a “buy” rating and $58 price target for PEG stock.
Coca-Cola Co. (KO)
Coca-Cola struggled with a difficult North American beverage market in recent years, but analyst Bryan Spillane is bullish on KO stock headed into 2019. Spillane says Costa Coffee could give Coca-Cola a boost in both morning (hot) and afternoon (cold) beverage sales. In addition, Costa could provide a boost in China and generate ready-to-drink marketing opportunities. Spillane says Coca-Cola has the clearest, best long-term strategy among its peers. Coca-Cola has a 3.4 percent dividend yield, and Bank of America has a “buy” rating and $52 price target for KO stock.
Prudential Financial (PRU)
Prudential is one of the largest global diversified life insurance providers, operating primarily in the U.S. and Japan. PRU stock has taken a 14 percent hit in 2018, but that sell-off has pushed the company’s dividend yield up to 3.6 percent. Analyst Jay Cohen says the 2018 weakness is a buying opportunity. Cohen says the company’s track record of solid execution and its exposure to the high-growth business of pension de-risking makes it a safe bet for long-term dividend investors. Bank of America has a “buy” rating and $110 price target for PRU stock.
Camden Property Trust (CPT)
Camden Property Trust is an apartment real estate investment trust headquartered in Houston. The Houston market makes up about 12 percent of Camden’s total net operating income. In the most recent quarter, Houston property same-store NOI was up 3.7 percent in the aftermath of 2017’s Hurricane Harvey. Camden may not have the extremely high yields that other REITs have, but its 3.3 percent dividend makes it a solid play for income investors. Analyst Juan Sanabria says the Houston market should continue to improve in 2019. Bank of America has…
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