10 Dividend Stocks You Must Own In 2017: GILD, AT&T, SBGL, PFE, BP

- December 26, 2016

Dividend stocks to own in 2017: AT&T stock

AT&T stock burn from Time Warner acquisitionAT&T Inc (NYSE:T) has done fairly well this year with AT&T stock up 24%. However, those gains are deserved, and AT&T stock is still far cheaper than the S&P 500 at 14x forward earnings versus an 18 multiple, respectively. With a yield of 4.6%, AT&T’s dividend and valuation will be attractive in times of distress.

That said, what makes AT&T stock superior to Verizon is how responsible the former has been as it pertains to debt-to-asset ratios. Verizon has nearly doubled its debt-to-asset to (roughly) 50% over the last three years whereas AT&T’s has risen marginally to 30%. That’s commendable in a low rate environment and will allow AT&T to weather a potential storm with rising interest rates.

With total dividends and stock buybacks amounting to just 75% of AT&T’s free cash flow over the last 12-months, this is a company that dividend investors will flock to as they take closer looks at its business.

Furthermore, with FCF likely to rise another $2 billion to $18 billion, and AT&T having terrific business opportunities in Latin America and Mexico, the reasons to own just keep piling up.

Dividend stocks to own in 2017: SBGL

SBGL_SWC_acquisitionBNL analysts Brian Nichols and Eddy Parton took a bullish stance on Sibanye Gold Ltd (NYSE:SBGL) shortly after the Stillwater acquisition was announced. I was initially skeptical about SBGL stock being a good investment, but after a closer look I agree it is a dividend stock to own.

Over the last three months SBGL has lost half of its valuation. Not only do I believe the Stillwater acquisition is great for Sibanye’s underlying business, a gold miner in South Africa, but SBGL pays a massive 7.2% dividend yield.

South Africa tends to have less political unrest and gold prices tend to rise when equity prices fall. Collectively, these are two reasons to like SBGL when seeking a gold miner stock and expecting equity losses in 2017.

However, the biggest reason to like SBGL stock is valuation. It trades with a forward P/E ratio of just 3! If you factor the Stillwater acquisition and expected synergies, the multiple could be closer to 2. This is a no brainer and will go in David’s Dividend Portfolio.

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