Three stocks with strong dividends that are worth paying attention to
The Christmas season is an ideal time to reassess your investment portfolio, especially when it comes to dividend stocks. Equity markets experience volatility, and it is in this environment that price falls in quality titles can provide interesting opportunities.
This article focuses on three stocks that combine attractive dividends with potential for growth: Diamondback Energy, Brookfield Renewable, and Starbucks.
Diamondback Energy: Stable Yield in the Energy Sector
Diamondback Energy $FANG operates as a major player in oil and gas production in the U.S. Permian Basin. Although the company's stock has lagged the S&P 500 this year, its operating results point to a positive future.
With the recent merger with Endeavor Energy and the operational savings achieved, the company has the opportunity to significantly increase its cash flow. Diamondback's base dividend of $3.60 (2.3% yield) is sustainable even with the oil price at $37 per barrel. In addition, the expected free cash flow for 2025 is equivalent to more than 10% of market capitalization, opening up room for additional extraordinary dividends.
Brookfield Renewable: A leader in renewable energy
Brookfield Renewable $BEP is a key player in renewable energy. Despite a 16% drop in share price this year, this diversified portfolio company offers attractive dividends. The main reason for the stock's weakness is the political uncertainty associated with Donald Trump's return to the presidency, which has driven investors away from the renewable sector.
However, Brookfield Renewable has been able to grow in the past even during periods of adverse conditions. For example, it has increased its cash flow by 12% per year since 2016, which is a testament to its stability. With a forward dividend yield of 6.3% and a valuation at 4.9 times operating cash flow, this stock is an opportunity for investors looking for long-term growth combined with passive income.
Starbucks: Attractive valuation and room for a turnaround
Starbucks $SBUX experienced a significant share price decline of nearly 10% in December. This decline is related to several factors such as higher coffee prices, interest rate uncertainty, and employee strikes in key regions. Still, Starbucks remains a quality dividend stock with potential for a turnaround.
Under the leadership of new CEO Brian Niccol, the company is focused on improving operational efficiency and working conditions. The current dividend yield is 2.8%, and the company has 14 years of uninterrupted dividend growth. Even as Starbucks struggles in China and faces higher input costs, its valuation (P/E of 26.6) is now attractive and the stock is an attractive choice for investors confident in the long-term recovery of the brand.
Disclaimer: There is a lot of inspiration to be found on Bulios, but stock selection and portfolio construction is up to you, so always do a thorough analysis of your own.
Source: TheMotleyFool
