2 Cheap Pharmaceuticals Highlight Jefferies Franchise Picks Dividend Stocks to Buy

Investing

Published: April 20, 2016 8:25 am

Last Updated: January 13, 2020 10:34 am

With the market rallying to 2016 highs, the question for investors is the same one faced every time this happens: What now? After two brutal 10% or more sell-offs in less than a year, and a mountain of reasons for stocks to take a breather, one idea still makes good sense. Buy the top-rated dividend stocks, and to enhance the income potential even more, sell covered calls on your holdings.

A recent Jefferies research report listed of the current holdings in the firm’s Franchise Picks portfolio. These are the top high-conviction stocks ideas that the company presents to institutional and high net worth clients. All are rated Buy, and we screened the list for the stocks paying the highest dividends. Four make good sense for investors now.

AT&T

This company had an outstanding first quarter from a stock price standpoint and could be poised to go higher. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.

With its shares trading at a very cheap 12.5 times estimated 2016 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.

AT&T has been focusing on the IP VPN and Ethernet services. This outstanding business model, along with the decline of Verizon’s market share in the arena, has helped the company meaningfully grow its revenues from strategic business services. Apart from taking appropriate technical measures, the company has collaborated with big cloud service providers like Amazon Web Service and data center operators to provide Ethernet connections.

Some top Wall Street analysts lowered first-quarter postpaid net addition estimates substantially, and current quarterly earnings estimates are posted at $0.69 per share, with others expecting the company to post lower handset expenses. AT&T is expected to report earnings April 26th.

AT&T investors receive a huge 4.93% dividend. The Jefferies price target for the stock is $40, and the Thomson/First Call consensus estimate is $39.07. Shares closed Tuesday at $38.92.