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10 Dividend stocks that could benefit from self-quarantine and social distancing

More and more companies are closing their offices each day during the COVID-19 pandemic and employees are advised to self-quarantine and work from home. In this post, we’ll explore 10 stocks that could profit from the recent efforts to stop the spread of COVID-19.

Telecommunications Screening

The telecommunication sector, usually categorized by its high cash flow, payout ratio and starting yield is a sector that could post some strong quarters after the recent developments. With more and more people staying at home, I expect an increase in demand for services offered by the companies.

Upgrading data and network plans to stay connected to business and families might be necessary for many as bandwidth and communication are essential to staying connected. Furthermore, the demand for data from entertainment and streaming services as well as cable could yield better quarters for the companies in this sector.

Verizon (NYSE: V)

Verizon is a major player in the US telecommunications market. Nearly 70% comes from its wireless segment which serves individuals and businesses across the US. Another 22.5% are generated by their wireline segment which includes managed network, video and data services for businesses. Stock owners can look back on 15 years of consecutive dividends growth.

AT&T (NYSE: T)

AT&T is the largest network provider in the US. Their products and solutions cover mobile networks, broadband, pay-TV for over 370 million customers. Additionally, WarnerMedia Entertainment, a division of AT&T’s WarnerMedia, is launching the HBO Max streaming service in May 2020. Shareholders can look back on 36 years of consecutive dividends growth making it a Dividend Aristocrat with a great starting yield.

Bell (NYSE: BCE, TSE: BCE)

Bell is one of Canada’s leading network providers. Similar to AT&T, it’s business is very focused on network solutions via the wireless and wireline segment but offers additional media content. Though Bell Media, Bell offers content though popular Canadian media outlets like TSN, CTV, and the streaming service Crave. Bell’s dividend history is defined by a high starting yield and 11 years of consecutive dividend increases. Its average annual growth rate is at 5% a considerable growth rate when compared with peers in the telecommunications sector.

Telus (NYSE: TU, TSE: T)

Another major Canadian network provider, Telus’ business is focused on network and VoIP solutions making it a pure-play in terms of telecommunication stocks. Investors can look back on 16 years of consecutive dividend growth. Driven by increasing network coverage and a rising population, Telus has the potential for growth in the Canadian telecom market.

Information Technology

With support from the telecommunications sector, Information Technology is the key to activating connections between individuals, especially during these times of isolation. In the following section, I’d like to introduce two Dividend Contenders in the IT sector with a history of at least 10 years of dividend growth.

Cisco Systems (Nasdaq: CSCO)

Cisco Systems develops and manufactures networking hardware, software, and telecommunications equipment. The company offers a strong balance sheet and globally diversified business units. With an attractive starting yield backed by a low payout ratio and a high dividend growth rate, Cisco is a stock to consider for the dividend growth investing strategy.

Microsoft (Nasdaq: MSFT)

Microsoft is arguably one of the biggest players when it comes to enterprise and personal software. You can find their software solutions in nearly any company. On top of operating systems, the Microsoft Azure cloud solution and the Office suite, Microsoft also offers workplace collaboration tools. Tools like Microsoft Teams and Skype allow you to stay in touch and collaborate on projects while being location independent.

Other major players in terms of workplace collaboration tools are Slack Technologies (NYSE: WORK) and Zoom Technologies (OTC: ZOOM). However, both stocks do have a history of paying any dividend at the time of writing this article.

Entertainment

Whether its sports, music or social events, in an effort to contain the COVID-19 pandemic most public events have been postponed or canceled globally. The entertainment sector could benefit from this shutdown in the short term as people will seek other kinds of entertainment, whether it’s streaming services or video games. I suspect a lot of people will look for other opportunities to calm down their busy lives and take their mind off current events.

Walt Disney Company (NYSE: DIS)

Disney is an interesting stock to watch during this time. As of mid-March 2020, the stock price is down around 33% from its 52 weeks all-time high and offers investors a cost basis last seen in Summer 2018. One reason for the big drop is the closing of the Disney theme parks, which will definitely cut into the revenue for the company. It remains to be seen if their streaming service Disney+ will be able to make up for the losses. Nevertheless, I would still consider Disney a solid long-term investment. The company owns an imperium of brand and intellectual property which is unmatched in the world of streaming services. On top of that, owners of the stock experienced 9 years of consecutive dividend increases with a strong dividend growth rate of over 15% pa over the last 5 years.

Activision Blizzard (Nasdaq: ATVI)

Activision Blizzard is one of the biggest publicly listed video game publishers (have you heard of Call of Duty, Diablo, World of Warcraft, or even Candy Crush?). The company introduced a dividend in 2010 and has increased it ever since. The average annual growth rate of the dividend over the last 5 years is more than 13%.

Consumer Staples

Kimberly-Clark (NYSE: KMB)

Kimberly-Clark offers paper-based consumer products. Its most iconic and most well-known brand is Kleenex. Owning Kimberly-Clark you can look back on a history of 48 years of annual dividend increases, classifying it as a Dividend Aristocrat.

Clorox Company (NYSE: CLX)

The Clorox Company has been on my watchlist for a long time. Clorox owns a variety of professional and household brands for cleaning products including bleach, surface cleaners, water filters and many more. It is also considered a Dividend Aristocrat with it’s 42 consecutive years of dividend increases.

Closing Words

Are you watching any stocks during the recent downturn or watching particular reports from companies that could benefit from an increased time of social distancing and self-quarantine?

I would love to hear about your opinions or experiences with dividend growth investing, the recent downturn, or any other investment-related topic!

Disclaimer

I hold long positions in Verizon (NYSE: V), AT&T (NYSE: T), Bell (TSE: BCE), Telus (TSE: T), Cisco Systems (Nasdaq: CSCO) and Microsoft (Nasdaq: MSFT). This article expresses personal opinions and observations of someone who is not licensed to provide professional financial advice. I am not receiving compensation for writing this analysis and have no business relationship with any company whose stock is mentioned in this article other than the long positions I own. Furthermore, I cannot guarantee the accuracy of the financial metrics gathered from 3rd party services like Morningstar and Yahoo Finance.

Post Comments(2)

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Courtney @ YourAverageDough.com March 23, 2020, 7:11 a.m.

I really enjoyed this list! My husband and I recently bought Disney for my daughter’s portfolio (unfortunately before the huge drop in the markets) but I agree that it’s a great long term investment. Although we’re not seeing any major spikes due to the inevitable increase in streaming services with the world in self isolation, I do think that streaming will keep them afloat and will become a bigger % of their revenue as time goes on. Going to have to add some of these others to my watch list!

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Just-Dividends March 24, 2020, 10:20 p.m.

Hello Courtney, thank you for the comment. Disney is really high on my watchlist too. I plan to initiate a position later this month or in April. I'm just waiting on my tax return to determine whether I have enough contribution room in my retirement account to help me save the US-withholding tax for Canadian investors.

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