That's the question investors need to be asking today as they consider how to deploy their money in the market.
A traditional stock is a vote for "pay me later," since you're expecting the stock to appreciate over time.
But for many stocks, that time never comes.
Sure, most stocks typically appreciate over time. But the current market environment is different.
What if we are at peak market and valuation levels?
That would make appreciation hard to come by in the near term. It also puts investors at risk for a decline, perhaps even a substantial decline.
That's where the best dividend stocks come into play. They're the "pay me now" stocks.
To offset the risk of "pay me later" never arriving, it's perfectly reasonable to demand payment today in the form of dividends.
And as we head into 2020, more and more investors will be buying into dividend stocks...
Keep reading to get the top dividend stocks for 2020. And for our best REIT to buy for 2020 - which could climb to five times its current price and yields a solid 7.9% - click here...
Many dividend stocks are paying that 8% annually now. Some are paying even more.
It's almost a no-brainer that investors should gravitate to dividend stocks.
That in turn will drive prices up further, boosting returns on dividend stocks.
Heading into 2020, dividend stocks are my favorite asset class for investors today.
Here are my favorites to buy now...
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Prospect Capital Corp. (NASDAQ: PSEC) is a business development company that invests in various asset classes, including debt and private equity, across a broad spectrum of industries, mostly in the United States. Currently, Prospect offers investors a dividend yield of more than 11%.
That massive dividend is secure too. The company expects to make $0.72 per share in the current fiscal year and $0.70 per share the following year.
While you won't see earnings growth, earnings will remain steady. And you'll get that huge dividend in the meantime.
With a valuation of only nine times current-year estimated earnings, I believe Prospect will appreciate greatly as investors chase that 11% dividend yield.
If you want to see what a dividend stock looks like as investors chase yield and bid up price, take a look at Main Street Capital Corp. (NYSE: MAIN).
In 2019, MAIN is up more than 25%.
The allure is the dividend, which now sits at 5.7%.
Like Prospect Capital, Main Street is a business development company that makes investments in debt securities and private equity.
Analysts expect the company to make $2.49 per share this year and next. That steady performance keeps the dividend safe and secure.
While appreciation for those owning Main today may be limited going forward, investors today get paid now with that healthy dividend.
At 17 times current-year estimated earnings, the stock is still cheap and solid fundamentally.
What happens when shares of a high-yielding stock decline in value?
The yield jumps.
Shares of Oxford Lane Capital Corp. (NASDAQ: OXLC) have fallen more than 20% since the summer.
As a result, the yield on the stock now sits just under 20%.
The company is a closed-end fund that buys fixed-income securities.
The risk of recession was the trigger for the decline. But now, with an upward-sloping yield curve, there is huge opportunity with Oxford.
Even if there is ultimately a decline in the dividend (something I do not expect), owning Oxford today is one of the best ideas I can find in the current environment.
This company can lose half its dividend, and it would still far exceed alternatives.
The more likely outcome is that the dividend falls, but only because the price of the stock moves substantially higher in 2020.
Oxford is a must-own dividend stock in 2020.
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