The market bounced back sharply in April, but it remains well below its all-time highs of mid-February. Investors are optimistic that the U.S. economy will reopen sooner rather than later, a hope that most of the concerns about COVID-19 have been overblown.
With that in mind, investors have a unique opportunity to purchase several stocks that will survive the COVID outbreak and thrive in the years ahead.
Best of all, these companies pay safe, reliable, and - in some cases - lofty dividends.
These are the best dividend stocks to buy in May 2020.
Best Dividend Stocks to Buy in May, No. 3
The Blackstone Group Inc. (NYSE: BX)
As Congress pumps money into small businesses and the Fed pumps capital into the market, we've heard a lot of noise about the private equity industry.
The new Paycheck Protection Program has effectively barred the private equity industry's portfolio companies from taking part in the program. This could create big headaches for PE shops that have large stakes in unprofitable or highly leveraged companies that desperately need cash.
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Simply put, we could see a lot of second-tier private equity companies go out of business in 2020, particularly if there are significant delays to reopening the economy.
That said, if investors are looking for ways to play this story, you can't beat owning one of the top private equity companies that will surely survive this economic crisis.
The Blackstone Group Inc. (NYSE: BX) is a PE firm with roughly $538 billion in assets, and one that is quickly putting capital to work. Look for Blackstone to purchase assets on the cheap and ride them to long-term gains that will outperform the market. The company just picked up a stake in Macau-based Melco Resorts & Entertainment Ltd. (NASDAQ: MLCO), giving it a bigger presence in the recovering Chinese gaming market.
Shares of BX stock are fairly priced and pay a dividend of 3.6%. If economic conditions improve and the shutdown ends by Q3, we see shares of Blackstone rallying to $64 per share. With shares currently trading at $55, that price target represents a potential upside of 16.3%.
Best Dividend Stocks to Buy in May, No. 2
AT&T Corp. (NYSE: T)
When looking at dividend stocks, we want to identify companies that have a history of paying and hiking their payments every single year. If a company reaches 25 straight years of dividend hikes, they receive the title of Dividend Aristocrat.
The Dividend Aristocrat that investors should eye today is AT&T, which has increased its payments for 36 years in a row. On top of that, it currently offers investors a whopping 6.5% return on their money.
Yes, the company had a bad earnings report this week. It reported that roughly 1 million television subscribers cut the cord. While that business remains profitable, it's important to note that the firm is about to launch the new HBO Max streaming service next month.
But investors need to focus more on the fact that this is the largest wireless provider in the United States. And with 5G about to take off like a rocket, AT&T stands to hold its title of best wireless network in the country.
AT&T trades at $31.78 per share. But we see the stock climbing back to the $40 range - above its 52-week high - within the next 12 months.
This is a stock to buy and hold - and relish in its safe 6.5% annual payout.
Now, here's the best dividend stock on the market today...
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The Single Best Dividend Stock to Buy in May 2020
STAG Industrial Inc. (NYSE: STAG)
If investors are looking for a long-term investment play that taps into the shifting dynamic of the U.S. economy, look no further than STAG Industrial. The real estate investment trust operates in the industrial e-commerce space and is poised to ride out COVID-19.
This is one of the best stocks to own right now. The REIT owns properties that it leases to warehouse operators, distribution centers, U.S. manufacturers, and - where demand may soon rise - from cannabis producers.
The firm owned 450 properties with significant exposure to U.S. ecommerce. More than 40% of its tenants are tied to e-commerce, and the company suggests that even more will come in the years ahead. Shares were cut in half after the U.S. economic shutdown, but they have rallied back to the $27 range on news that just 5% of STAG's tenants sought rent relief.
In fact, the firm's most recent conference call suggests that it is seeing a strong number of inquiries from global manufacturers that are seeking to move production back to the United States. Should companies continue that trend of re-domiciling production, look for shares to run to record levels.
Shares of STAG currently trade at $27.34 and have a dividend of 5.27%. I expect that shares will hit at least $36 over the next 12 months, which represents more than 30% upside.
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.