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Got $5,000? These 3 High-Yielding Dividend Stocks Are Trading Near Their 52-Week Lows

In Business
April 05, 2024

If you buy a dividend stock that’s trading at a reduced price, it gives you the opportunity to take advantage of a higher-than-normal yield, and the chance to profit from a gain should the stock bounce back and recover in value. This is why loading up on dividend stocks after they have slumped, provided their businesses are still in good shape, can be a great move for long-term investors.

Three stocks that are not only paying high yields but are also trading near their 52-week lows today are Starbucks (NASDAQ: SBUX), BCE (NYSE: BCE), and Gilead Sciences (NASDAQ: GILD). Here’s why investing $5,000 into these stocks could make a lot of sense for income investors right now.

1. Starbucks

Starbucks has developed an excellent brand over the years. Its iconic coffee shops are able to command premium prices over rivals. That has enabled it to generate great margins and post strong results. Starbucks has shown versatility amid inflation and even as wages have been rising. It also has a growing presence around the world.

In the company’s most recent quarterly results, which wrapped up on Dec. 31, 2023, Starbucks reported global comparable-store sales growth of 5%. Consolidated net revenue rose by 8% year over year to a record $9.4 billion. And net income of just over $1 billion grew by 20%. All told, the business has been performing great.

Over the past 12 months, however, shares of Starbucks have fallen by 12%. While the company simply may not be as attractive as other growth stocks, it’s still a solid option for income investors. As a business that’s still growing internationally and generating fantastic numbers, this could be a good place to invest $5,000 for the long term. With an investment of that size, its 2.5%-yielding dividend — which is higher than the S&P 500 average yield of 1.4% — could generate $125 in annual income for your portfolio.

2. BCE

BCE is a top telecom company in Canada. With a lack of competition in the country, it’s an industry leader and in a great position to dominate over the long term. Its strong telecom and media assets give investors a diverse business to invest in. Putting $5,000 into the stock could go a long way.

While shares of BCE are down 25% in the past 12 months, I suspect that has more to do with higher interest rates than anything else. BCE is primarily attractive for its dividend, and if investors can get high returns elsewhere, the stock may not be as lucrative of an investment option. But if interest rates come down, this is a prime example of a stock that could start to rally.

In the last three months of 2023, BCE reported operating revenue of 6.5 billion Canadian dollars, which was nearly unchanged from the prior-year period. And adjusted earnings of CA$691 million grew by just under 6%.

With the stock’s fall in value over the past year, BCE is now yielding 8.6%. A $5,000 investment in the shares could generate around $430 in dividends over the course of a full year. Trading near its low, now could be an ideal time to load up on this stock.

3. Gilead Sciences

Gilead Sciences rounds out this list as another high-yielding investment that could be attractive for income-seeking investors. The healthcare company generates revenue from an increasingly diverse mix of drugs. While its core business centers around HIV drugs (they brought in $4.7 billion in sales over the last three months of 2023), medicines aimed at treating cancer generated $765 million and grew at an impressive rate of 24% year over year. Meanwhile, Gilead Sciences’ treatments for liver disease produced $691 million in revenue last quarter.

The company’s revenue hasn’t been growing at a fast rate; product sales were flat last quarter when excluding its COVID-19 treatment, Veklury. But the stability and consistency that Gilead offers makes this an attractive option for dividend investors. At 4.2%, its yield is well above average. And with a $5,000 investment, it would bring in about $210 in dividends on a yearly basis.

Gilead’s shares are trading near their 52-week low and they’ve dropped 12% in the past 12 months. But if you’re looking for a stock you can safely put money into for the long haul, it’s a great option.

Should you invest $1,000 in Starbucks right now?

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Gilead Sciences and Starbucks. The Motley Fool has a disclosure policy.

Got $5,000? These 3 High-Yielding Dividend Stocks Are Trading Near Their 52-Week Lows was originally published by The Motley Fool

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