10. Bank of America
> Dividend Yield: 2.6%
Strengths: Bank of America Corp. (NYSE: BAC) is a slow and steady grower at this stage, now that it’s in the top four banks by assets in America. It has Warren Buffett in its corner, as its largest single shareholder is Berkshire Hathaway, with a huge investment in the company. The bank is growing its dividends again, and its businesses of bank deposits, lending, credit cards and mortgages are spread out, along with the asset management and investment operations of Merrill Lynch. Its core earnings remain healthy.
Risks/Concerns: Banks face lower net interest margins now that interest rates have come down and since the yield curve is so flat. Bank of America also has massive deposits and the Merrill Lynch investment advisory unit that could come under focus if politicians deliver on their threats to break up the big banks. The Federal Reserve also has allowed bank dividends to rise enough that some investors might want them to keep some powder dry so they don’t have a risk of having to lower their dividends if the economy keeps slipping lower.
11. Cincinnati Financial
> Dividend Yield: 2.0%
Strengths: This is a leader in commercial lines of insurance, and it is also well known in life insurance, personal liability insurance and investments. Cincinnati Financial Corp. (NASDAQ: CINF) has raised its dividends for 59 consecutive years, and it maintains very healthy payout ratios that allow a big cushion.
Risks/Concerns: The low interest rate environment plays against companies being able to offer long-term life insurance, and the financial crisis still took out more than half the value of this company from its 2007 peak through the late-2008 trough. Its strong rally from the start of 2018 might also make this one more susceptible to profit-taking at the next slowdown.
> Dividend Yield: 3.0%
Strengths: As of 2019, Coca-Cola Co. (NYSE: KO) has raised its dividend for 57 consecutive years. The company has been diversifying away from its core Coca-Cola and sugar-water drinks into sports beverages, coffee and tea. Its shares finally have broken above that $45 to $50 barrier that had been in place. The business is also deemed to be a defensive name that can withstand any sort of economic slowdown, even if colas and other beverages may slow down in a recession.
Risks/Concerns: Coca-Cola has had to overcome that image of just selling sugar-water beverages that were bad for you. Buffett may drink a Coke per day and may be the largest shareholder via Berkshire Hathaway, but many groups still view Coca-Cola as one of the few top targets in the war on diabetes and obesity.
13. Delta Air Lines
> Dividend Yield: 3.0%
Strengths: Delta Air Lines Inc. (NYSE: DAL) has the highest dividend of the major legacy air carriers, and the company pays out 20% to 25% of its earnings as dividends. Airlines seem to have better pricing power over add-on fees to ticket prices, and there are fewer low-cost and money-losing competitors that can undercut a carrier these days. While gate-costs at airports are high, that also acts as a buffer to keep low-cost and predatory competitors at bay in the major markets.
Risks/Concerns: Delta’s debt has risen in recent years, and the airline remains susceptible to the price of jet fuel. The entire airline industry remains very economically sensitive due to how cyclical airline travel is. That said, having the highest yield and a desire not to cut its dividend makes it stand out among its peers.
> Dividend Yield: 2.1%
Strengths: Dover Corp. (NYSE: DOV) is one of the boring industrial companies that is often overlooked as an American leader, but it makes engineered systems, fluids and products around refrigeration and food equipment. It is fairly valued at 16 times expected earnings and is expected to show low-single-digit revenue growth ahead. Dover is also in the club of stocks that has raised its dividend over 50 consecutive years.
Risks/Concerns: As a boring industrial player in America, many investors overlook the company due to not having an easy brand identity. By spanning multiple industries for equipment and components, pumps, conveyors and other items used by manufacturers, most investors do not know much about it or follow it very much.
> Dividend Yield: 3.8%
Strengths: 3M Co. (NYSE: MMM) may have fallen out of favor, but the conglomerate has a long operating history and has diversified operations in safety and industrial products and transportation, electronics, health care and consumer products. Its stock sell-off also has it valued at less than 16 times 2020 expected earnings, and it still has plenty of earnings coverage to keep up. With 3M’s dividend hike of 6% in February 2019, it has now hiked that dividend for 61 consecutive years, and it has paid dividends for more than 100 consecutive years.
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