The markets had another difficult month last month, with the S&P 500 declining by 9%. The index has now fallen 24% for the year, bringing several high-quality stocks down with it. For long-term investors, the good news is that many beaten-down companies won’t remain that way for very long. That means purchasing today, despite how perilous the situation may appear, may enable you to lock in some high-yielding stocks at low prices.
Pfizer (PFE -0.77%) and Suncor Energy (SU 1.50%) are two dividend stocks that are standing out as being among the most attractive buys at the moment. Here are some reasons to consider buying shares of these stocks right away.
1. Pfizer
Pharmaceutical behemoth Pfizer has declined 26% so far this year, keeping pace with the general markets. However, it’s a little odd that investors are only valuing the company at nine times earnings considering the success of its COVID-19 vaccine and the company’s capacity to adjust to changing conditions. Health officials are still giving booster doses, and there is currently no way of knowing if and when that will stop, but COVID-related revenue won’t completely evaporate, despite the fact that its bottom line will probably fall as anxieties about the coronavirus continue to fade.
Additionally, the low earnings multiple shows that the stock has a lot of bearishness built into it. But that shouldn’t be the case given that Pfizer has been actively expanding its company and diversifying it over the past year by buying a number of startups. ReViral, a firm in the clinical stages that focuses on therapies for the respiratory syncytial virus, was acquired by the company in June (RSV). Pfizer is presently conducting many RSV-related studies.
And the drugmaker will have additional opportunities in the future. As of July 3, the company’s cash and short-term investments totaled a staggering $33.3 billion. Pfizer is in excellent condition to explore growth possibilities while still paying a respectable dividend, which yields 3.7% now — more than double the S&P 500 average of 1.8%. This is typical for a company that continuously generates positive free cash flow. Pfizer has a lot of potential to increase its payment in the future, as seen by its low payout ratio of 31%. The business has boosted its dividend by 25% over the last five years.
Pfizer is a great company with a growing pipeline, a ton of cash, and a respectable return. With the stock, especially at its current cheap price, it is difficult to lose money.
2. Suncor Energy
Suncor Energy, a Canadian oil sands firm, is another excellent option for investors to take into account. Its dividend yield, which is slightly around 5%, is significantly higher than Pfizer’s. Since the beginning of 2022, Suncor stock has increased 21% as investors have been more positive about it and other oil and gas equities as a result of higher oil prices.
The firm announced outstanding Q2 earnings in August, with adjusted funds from operations reaching a record-high 5.3 billion Canadian dollars for the quarter ended June 30. The business also emphasized how stronger pricing had helped its oil sands businesses achieve record results for the second consecutive quarter.
Due to the recent decline in oil prices, Suncor’s shares have decreased. However, investors shouldn’t rule out a rally because the price of oil may remain high, particularly given that the conflict in Ukraine is still raging. With a payout ratio around 25%, Suncor might still be a fantastic dividend stock even if oil prices fall. Investors aren’t currently paying more to buy the stock, since the price-to-earnings ratio is slightly over 5.
Due to its dividend and exposure to the oil and gas industry, Suncor can be a great option for investors searching for a company to help counteract the impacts of inflation.
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