Investors seeking income should consider “rock solid” stocks that focus on dividends and avoid certain risks, according to Jefferies. The firm predicts steady growth in shareholder payouts, with dividends in the US expected to rise by 5% this year and 5.6% in 2024. Despite concerns about higher interest rates, US dividends have been steadily increasing, reaching $614 billion in the last 12 months. Jefferies identified companies in the MSCI USA Index with sustainable dividend and buyback yields, removing risks such as unsustainable dividends, weak balance sheets, poor cash flow, poor earnings visibility, and value traps. Apple, Nike, Charles Schwab, and First Citizens Bancshares are among the 10 companies that made the cut.
Apple is the largest company on the selected list, offering a 3.5% total yield with a 0.6% current dividend yield. Despite a recent decline in revenue forecasts related to its latest iPhone release, Apple’s stock is up 32% year to date. Nike has a total yield of 5.5% and a current dividend yield of 1.4%. The company’s latest earnings report exceeded expectations, leading to a stock rally of over 6%. Charles Schwab’s total yield, including dividend and buyback, is 9.6%, with a current dividend yield of 1.8%. First Citizens Bancshares has a dividend and buyback yield total of 6.3%, and its shares have surged nearly 84% this year, driven by its acquisition of Silicon Valley Bank’s deposits and loans. Morgan Stanley recently initiated coverage of First Citizens Bancshares with an overweight rating and a price target suggesting a 35% upside by December 2024.