Top 3 Dividend Stocks to Watch in 2019 with Prices and Yields Amid Interest Rate Cut

Dividend stocks historically outperform one year after the Federal Reserve initiates a rate-cutting cycle, making them attractive options for investors anticipating a rate reduction.

On Wednesday, July 31, 2019, the Federal Reserve is widely expected to reduce the federal funds target rate by 25 basis points to mitigate the effects of the US-China trade tensions and a slowing global economy. This move typically enhances the appeal of dividend-paying stocks as their yields become more competitive compared to fixed-income securities like bonds and CDs.

According to Ned Davis Research cited by Barron's, over the last four decades, S&P 500 dividend-paying stocks have outperformed their non-dividend-paying counterparts by an average of 5% one year after the initial Fed rate cut in each cycle.

Here are three dividend stocks that recently raised their quarterly payouts and offer yields above the S&P 500 average of 1.9%. These picks span sectors that benefit from low interest rates, including utilities, consumer staples, and financials.

Kellogg Company (K) - Trading at $58.42 with a 3.81% Yield in 2019

Kellogg Company, known for iconic brands like Special K and Frosted Flakes, increased its Q3 dividend by 2% to $0.57 per share, yielding 3.81% annually. The stock trades at a forward P/E of 15.31, below its five-year average of 17.5, highlighting potential undervaluation. Following its announcement to divest certain snack businesses in a $1.3 billion deal, Kellogg’s market cap stands at $19.89 billion. Year-to-date, the stock has risen 4.44%, slightly trailing the industry average.

Technical analysis suggests Kellogg may be forming a double bottom pattern, with a critical resistance level at $60. A breakout above this could signal further gains toward $65.60. Investors should consider placing stop-loss orders just below the recent support level to manage risk.

Wells Fargo & Company (WFC) - $54 Target Price with a 4.14% Dividend Yield in 2019

Wells Fargo, a financial services giant with a $213.38 billion market cap, plans to increase its Q3 dividend by 13.33% to $0.51 per share, pending board approval. The company also announced a substantial $24.5 billion stock buyback program, which is expected to boost earnings per share despite the low interest rate environment.

Wells Fargo shares yield an attractive 4.14% and have gained 6.73% year-to-date. After breaking above a 12-month downtrend and the 200-day moving average, technical indicators like MACD suggest a new upward momentum. Investors may target a price of $54, where resistance has historically occurred, while managing downside risk with a stop-loss below the 50-day moving average.

Avista Corporation (AVA) - 3.39% Yield with $50.44 Price Target in 2019

Avista Corporation, an electric and natural gas utility serving Washington, Idaho, and Montana, raised its quarterly dividend by 4% to $0.3875, marking the 17th consecutive annual increase. This results in a 3.39% annual yield. The stock trades at approximately 23 times forward earnings with a $3 billion market cap and has appreciated 9.36% year-to-date.

After a sharp decline in late 2018 due to a failed acquisition bid, Avista’s share price has recovered, breaking above a cup and handle pattern. A pennant formation suggests continued upside, with a near-term target of $50.44. Traders should set stop-loss orders below key support at $45 and adjust stops to breakeven as the stock surpasses previous resistance levels.

Investors looking for reliable dividend income combined with growth potential should consider these stocks as the Fed’s interest rate cut looms, potentially enhancing dividend stock performance across sectors.

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