Given ongoing economic uncertainty and stock market volatility, investors might consider adding undervalued, quality dividend stocks to their portfolios, Morningstar investment specialist Susan Dziubinski wrote in a blog post this week.
High-quality companies have the financial stability to maintain their dividends during fraught economic periods, and price risk is reduced when investors can buy the stocks of these companies at bargain rates.
David Harrell, editor of Morningstar DividendInvestor, said that investors are well advised to focus on companies with management teams that support their dividend strategies and favor those with competitive advantages, or economic moats.
“A moat rating does not guarantee dividends, of course, but we have seen some very strong correlations between economic moats and dividend durability,” Harrell says.
Analysts turned to the Morningstar Dividend Yield Focus Index to find the best dividend stocks and selected 10 top constituents, all of which were trading in the 4- and 5-star range at the beginning of April.
See the accompanying gallery for the 10 best dividend stocks. Year-to-date performance is as of around 1:30 p.m. April 10.
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