5 best dividend-paying stocks to buy in September 2021

The past year has not been a great one for investors who rely on regular income from their investments. Fixed income yields are much lower than inflation, with one-year CD rates not even offering 1% while annual inflation exceeds 5%. Dividend investors haven’t had a good year either, as many companies cut their dividends last year. While many have reinstated dividends, some have yet to do so. In addition, the dividend yield of the S&P 500 is below the historical average. What are the five best dividend paying stocks you can buy in September 2021?

  1. Annaly Capital Management (NYSE: NLY)

Based on the current payout, NLY is offering a dividend yield of 10.16% which looks quite attractive. However, the stock is only up around 5% for the year and is significantly underperforming the markets. NLY is a REIT (Real Estate Investment Company) which generally pays high dividends. All told, with a double-digit dividend yield, NLY is among the best dividend-paying stocks to buy in September 2021.

NLY is a good dividend stock with a double digit yield

Wall Street analysts have mixed forecasts for NLY stock and it has received seven buy and five hold ratings. Its median target price is $ 9, which is a 3.9% premium over current prices. The highest target share price of $ 9.50 is a 9.7% premium while the lowest target price of $ 8.25 is a 4.7% discount from current prices.

Here it should be noted that while NLY has historically given good dividends, the share has not generated capital appreciation. On the contrary, it is down 19.74% over the past five years. Even if we add in the dividends that an investor would have earned during that time, the total returns would be significantly lower than the S&P 500.

That said, if you are looking for a stock that pays a good dividend, NLY is still among the best stocks to buy, of course, if you are not too interested in capital gains and are happy to receive the return on the market. double-digit dividend.

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  1. Verizon (NYSE: VZ)

Verizon stock is down 7.7% so far in 2021 and significantly underperforming markets. Earlier this year, Warren Buffett revealed a big stake in Verizon. Berkshire Hathaway owns a 3.8% stake in Verizon, which is currently valued at $ 8.6 billion. The company is Berkshire Hathaway’s seventh largest stake. The largest, of course, Apple, where Berkshire has a 5.5% stake valued at over $ 140 billion. Meanwhile, despite Buffett’s love for the title, it has underperformed the markets.

vz is a good dividend stock to buy

Verizon is one of the dividend-paying stocks Buffett loves

Notably, while Berkshire Hathaway does not pay a dividend, Buffett has invested in several dividend-paying stocks, with Verizon being one of them. The conglomerate collects billions of dollars each quarter in dividends from corporate issuers. Getting back to Verizon, it currently pays a 4.72% dividend yield, which looks pretty appealing.

While Wall Street analysts aren’t overly bullish on Verizon stock, it’s part of the ways to play up the 5G story. If you’re looking for a dividend-paying stock that also gives you 5G exposure, Verizon might be one of the best bets.

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  1. Edison International (NYSE: EIX)

Edison International is a California-based electricity company and has both renewable and non-renewable facilities as part of its portfolio. The stock pays a healthy 4.6% dividend yield, triple that of the S&P 500. Like some of the other high dividend stocks, it is also underperforming in 2021 and is down 7.8%. so far in 2021.

Edison is a good dividend paying stock in the utility industry

Overall, Edison is a good dividend paying stock in the utilities industry. Utility companies are known to pay higher dividends and the industry is defensive in nature. With US equity markets looking a bit shaky amid the Evergrande Crisis and an impending US Federal Reserve tightening, defensive stocks like Edison could be well placed.

Wall Street analysts are also seeing a rise in the stock, and its median target price of $ 70 implies a rise of 21.2% over the next 12 months. Overall, if you’re looking for a utility stock with a high dividend yield, Edison seems like a good bet.

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  1. IBM (NYSE: IBM)

US tech companies, especially growth names, are very frugal when it comes to dividends. Either they pay no dividends or the yield is even lower than that of the S&P 500. And this despite the fact that they make huge profits every quarter. That said, the older companies in the tech space pay high dividends because they don’t have as many opportunities for growth as the growth names.

ibm is a good dividend stock

IBM is a good dividend in the tech industry

With a dividend yield of 4.85%, IBM is among the best dividend-paying stocks in the tech industry. The stock has gained 9.1% so far in 2021. While still underperforming the markets, the underperformance is lower than some of the other dividend-paying stocks.

IBM has taken steps to improve its growth and also acquired Red Hat to enhance its product offering. The company is working on a turnaround strategy to relaunch its growth. If the efforts are successful, the stock could offer good long term returns. Moreover, in the meantime, investors would receive the big dividend. The stock is trading at an NTM PE (over the next 12 months) of 11.6x, which seems reasonable.

Wall Street analysts have given IBM a median price target of $ 149.50, which represents potential up 10.5% from current prices. Of the 17 analysts covering the stock, four rate them as a buy while 11 rate them as an expectation. The other two analysts rate IBM as a sale. Overall, IBM is one of the dividend paying stocks that may also offer the potential for capital appreciation aside from the high dividend yield.

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  1. Chevron Corporation (NYSE: CVX)

Crude oil prices have firmed this year, helping to support earnings at energy companies like Chevron. Over the past year, several companies have had to cut or completely suspend their dividends due to falling energy prices. As energy prices have risen, dividends are back and some energy companies are now paying a high dividend yield.

Chevron is a good dividend-paying stock to drive up oil prices

Brokerages, including Goldman Sachs, see crude oil rise from these levels. If crude oil strengthens further, it could mean more capital gains for Chevron investors. In addition, the company may have a more favorable opinion of the dividend.

Earlier this month, Credit Suisse reiterated the CVX share as a buy. However, JPMorgan lowered the title from buy to neutral. In some ways, we believe CVX is a victim of the success of its own capital discipline, as higher spending on the energy transition does not appear to be compensating elsewhere in the portfolio. As a result, we are now seeing the company’s dividend hedge breakeven point approaching $ 55 / bbl Brent, which is a bit above the group average, ”he said in his grade.

Chevron is moving towards a low carbon activity

Notably, Chevron has announced that it will spend $ 10 billion on the low-carbon sector by 2028, $ 7 billion more than previous forecasts. However, the increase in spending would only be reflected in the stock in the long run.

All told, with a dividend yield of over 5.5%, Chevron is among the best dividend-paying stocks to buy. Wall Street analysts are also bullish on the stock, and its median target price of $ 124 implies a 28.1% rise from current prices. The high street target price of $ 155 is a 60% premium. Overall, CVX looks to be a good dividend-paying stock in the energy sector.

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Mohit Oberoi is a freelance financial writer based in India. He completed his MBA with a specialization in finance and also holds a CFA charter. He has over 14 years of experience in the financial markets. He has written extensively on world markets over the past seven years and has written over 7,500 articles. It covers metals, electric vehicles, asset managers, technology stocks and other macroeconomic news. He also enjoys writing on personal finance and valuation related topics.

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