While 2019's market handsomely rewarded investors, the U.S. Federal Reserve also cut interest rates to around 1.75% during the year, making it a little harder for folks to make passive income through savings accounts.
Fortunately, the top dividend stocks to watch now are great ways for investors to overcome this hurdle. Income-seeking investors may want extra money for retirement funds or a cash portion of their portfolio.
And our favorite picks today are some of the best dividend stocks to own now, offering the appreciation and income potential that could do just that over the long term.
Plus, dividend stocks can leap over historically low interest rates on bond yields and cash.
In fact, our top pick for dividend stocks is providing its investors with a dividend of more than 11%. That's a whopping five times more than the average 2% yield on an S&P 500 stock.
Check out our picks below.
The Top Dividend Stocks to Watch Now, No. 5: McCormick & Co.
Stocks that consumers will buy year in and year out, regardless of the economy, tend to offer stable dividends. And that's the case with one of the best dividend stocks, McCormick & Co. (NYSE: MKC). It's likely you've seen some of its products if you've ever looked in a spice cabinet.
MKC was founded in 1889, but it's still providing plenty of spice to investor portfolios. Recently, it hiked its dividend 9%, to $0.62 per quarter from $0.57. In fact, as of Dec. 31, 2019, shareholders of record will get in on this raised dividend - payable on Jan. 13.
The Top Dividend Stocks to Watch Now, No. 4: Washington Real Estate Trust
Investors searching for both protections against low interest rates and a huge upside need to look long and hard at real estate investment trusts (REITs).
Great dividends are only part of the story with REITs. They also offer nice tax benefits and protection against inflation in the future.
But not all REITs are equal. What we also look for are REITs in markets where demand is high, so they have the tenants to maintain their dividends.
We've found all of that in this top dividend stock, Washington REIT (NASDAQ: WRE), which manages corporate and multifamily properties in Washington, D.C.
Right now, WRE has a dividend yield of 4%, 100% more than the U.S. 10-year bond.
WRE's price target is $35 by 2020's first quarter. In other words, strong stock price appreciation and a rock-solid dividend yield are yours with this stock.
The Top Dividend Stocks to Watch Now, No. 3: Becton Dickinson
Money Morning Chief Investment Strategist Keith Fitz-Gerald has a principle he adheres to in times when markets are uncertain. As long as consumers have to have a company's products, the stock will do well.
The medical supply sector is a great example of "must own" stocks. You can choose not to buy a car or not to get fancy gadgets if times are tight. But medicine is always in demand.
The "must have" products are why medical supply company Becton Dickinson & Co. (NYSE: BDX) is a top dividend stock to own. And it recently boosted its dividend from $0.77 to $0.79.
That's good for a yield of 1.22%. But BDX is a higher-growth equity, too. And its share price is expected to climb 12% in 2020.
The Top Dividend Stocks to Watch Now, No. 2: Hewlett Packard
Tech company Hewlett Packard Inc. (NYSE: HPQ), is another great dividend-yielding stock that has also raised its dividend recently. It now pays a nice 3.4% yield.
While HPQ stock has been trading weakly, the fact that the company has robust cash flow (meaning that the dividend is reliable) - and it has an expected short-term upside of about $24 per share - makes it a great dividend stock to buy.
HPQ is also supported by several large hedge funds buying it on the idea that a potential merger with Xerox Inc. (NYSE: XRX) could happen in the future.
Right now, Carl Icahn owns more than 10% of HPQ and is pushing the board to approve the merger. And Icahn and the hedge funds could realistically create pressure for HPQ to accept XRX's bid.
The Top Dividend Stocks to Watch Now, No. 1
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Now for our leading pick with a dividend yield of more than 11%...
This dividend stock is the mortgage REIT Armour Residential REIT Inc. (NYSE: ARR). Now, ARR packs a bit more risk than some more traditional stocks, but it also provides greater opportunity.
ARR invests in mortgage-backed securities that come from Ginnie Mae, Fannie Mae, and Freddie Mac. The company's strategy is simple, too. It borrows cash short-term. And with very low interest rates, it uses its cash to buy mortgage bonds that have a higher yield and a longer term.
Currently, ARR sells at a 0.74 price-to-book value. So if the company went belly-up tomorrow, the stock would still be worth 35% above its current value.
Yes, the mortgage market may mean some additional risk. At the same time, ARR has a strong floor beneath it in case of choppy waters. It also has a low valuation vis-à-vis competitors.
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