We’ve seen a wild ride this month, and we’re barely a week into August. After stocks hitting a year-to-date peak on July 31st, each day in August saw another red close as markets pared back gains and institutional investors took profit. Pundits point to the usual range of tea leaves to explain what’s happening, including inflation and overvalued tech stocks. No matter the core reason, volatility is back, and retail investors are getting nervous.
Many of those investors are flocking back into treasuries, high-yield savings accounts and money market funds. Broadly, even the lowest-performing short-term fixed-income option returns somewhere around 5% today. Some investors, though, want a little more yield for their cash. For that class of investor, nervous about going all-in on tech and growth equities, these are the most reliable dividend stocks for August.
Realty Income (O)
“The Monthly Dividend Company,” Realty Income (NYSE:O), continues living up to its slogan despite real estate unease. The REIT reported earnings last week, and the results are pretty positive. Although occupancy dipped slightly, 99% of the REIT’s properties still produce cash flow for shareholders. Critically, the company increased operating income by 2% squeezing out a little extra yield for dividend investors.
The company’s growth prospects are also decent, considering its market penetration and maturity. Last quarter, the company picked up $3.1 billion in new property. Ultimately, the company reported a $1 funds from operations, a REIT alternative to earnings-per-share, which beat analyst estimates by about 3%.
The REIT’s current dividend yield is about 5.2%, giving investors wanting monthly cash flow a great alternative to even the highest-yielding savings and money market accounts today. According to analyst consensus, shares of the company are also about 15% undervalued, providing new investors a slight upside potential alongside their dividend distributions.
If you’ve been paying attention to the news, you’ve likely seen reports that shook telecom stocks last month, including dividend aristocrat Verizon (NYSE:VZ).
But this sector-wide slump is a golden opportunity for investors eyeing reliable dividend stocks, and Verizon is among the best. Notably, Morningstar analysts suggest there won’t be massive fallout.
But the appeal of Verizon isn’t solely its potential recovery. The company published great financials at the end of July that indicate plenty of inherent upside. Critically, post-paid wireless revenue jumped 4%. That may not seem like a lot, but, in a sector that’s cost-sensitive and highly competitive, increased revenue for postpaid plans means consumers are loyal to the cell provider. New customer acquisition jumped, too, and the firm added 8,000 new subscribers over the quarter. Again, the stats aren’t earth-shattering, but it’s difficult to understate how competitive the telecom field is.
Verizon’s current dividend yield is a whopping 8%. Although some analysts label the stock a potential value trap, the recent price dip and its promising growth horizon make Verizon a highly reliable dividend stock.
Tobacco company Altria (NYSE:MO), another dividend favorite, also reported healthy earnings last week, making the stock perfect in a well-rounded income-driven portfolio.
Despite its maturity, and globally falling smoking rates, Altria still pushed net margins higher and marked almost 2% revenue growth over the quarter. Critically, though, Altria is looking ahead to a somewhat smokeless future. Altria’s product pipeline includes a range of smokeless options for nicotine-hungry consumers that are also more conscious of their overall health.
Altria’s current dividend yield is a staggering 8.3%. The high yield makes some investors nervous, as the payout ratio is higher than 1, but Altria has a position in dividend portfolios nonetheless. Particularly for income-focused investors, Altria stands apart as a stable company with consistent dividend growth and, importantly, slightly underpriced, according to analyst consensus.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.