- These six dividend stocks have higher than average yields and lower P/E multiples. These large-cap stocks have 20% better P/Es and dividend yields than the average of the S&P 500. Additionally, these stocks have positive earnings growth.
- JPMorgan (JPM) – This bank has a 3.41% dividend yield and a low 10.4x forward P/E. Earnings should rise 14% in 2023.
- Verizon (VZ) – This telecom company has a 5.17% dividend yield and a forward P/E of just 9.2 times, with earnings forecast to rise in 2023.
- Novartis AG (NVS) – This drug company has 9.3% earnings growth, a 14.1x forward P/E and a 3.72% dividend yield.
- United Parcel Service (UPS) – This shipping company has good earnings growth with a 13.37x forward P/E and a 3.55% yield.
- Royal Bank of Canada (RY) – This Canadian bank has a forward P/E of 11.2x, a 3.8% yield and a 6.8% earnings growth rate forecast for 2023.
- Goldman Sachs (GS) – This investment bank is cheap with a forward P/E of nearly 8.0x, 6% growth in 2023, and a 2.61% yield.
The average yield of the SPDR S&P 500 ETF (NYSEARCA:SPY) is 1.33%. Other sites put the average yield for the index at 1.59%. However, our dividend stocks have yields higher than 1.59%.
The average price-to-earnings (P/E) ratio of the SPY ETF is 26.45x and the index has a 19.7x multiple. However, the stocks on this list are 20% better with 16x P/Es and 2.5% yields.
Investors in these large-cap stocks will enjoy higher-than-average performance. However, that does not necessarily mean that they won’t fall. These stocks should tend to perform better than the average stock, compared to the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) or the S&P 500 Index.
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Moreover, each of these large-cap dividend stocks have positive earnings outlooks for 2023. Let’s dive in and look at these stocks:
JPMorgan Chase & Co.
Verizon Communications Inc.
United Parcel Service, Inc.
Royal Bank of Canada
The Goldman Sachs Group, Inc.
Dividend Stocks: JPMorgan Chase (JPM)
- Market Cap: $370.16 billion
JPMorgan Chase & Co. (NYSE:JPM) is a very cheap large money-center bank trading for just 10.4x forward P/E. Earnings should rise 14% in 2023 to $12.52, according to Refinitiv’s survey of 22 analysts. So, at $117.34 as of May 20, JPM stock has a 2023 forecast P/E of just 9.37x. That is very cheap and equates to an earnings yield of 10.67%.
Moreover, JPM stock now has a dividend yield of 3.41% with its annual $4 dividend rate. The company can clearly afford this dividend given its earnings power and positive earnings outlook.
In addition, JPMorgan is buying back large amounts of its shares each quarter. In the first quarter (Q1) alone it repurchased over $2.45 billion of shares. This works out to about $10 billion a year, or a buyback yield of 2.9% annually for shareholders. These factors make JPM stock one of the top dividend stocks on this list.
Source: Ken Wolter / Shutterstock.com
- Market Cap: $210.10 billion
Verizon Communications (NYSE:VZ) is a major telecom stock with a very cheap valuation and a very good dividend yield. At 5.17%, the yield is the best on this list of dividend stocks with low valuations and good earnings growth.
For example, at $49.53 as of May 20, VZ stock has a forward P/E multiple of just 9.2x. Moreover, with $5.56 earnings per share (EPS) forecast for 2023, the forward P/E over one year out drops to just 8.9x.
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In addition, Verizon company is free cash flow (FCF) positive, having produced $1 billion in FCF this past quarter. This helps pay for its large dividend payments to shareholders. It has raised dividends every year for the past 18 years. These factors make VZ stock one of the best dividend stocks on this list.
Dividend Stocks: Novartis (NVS)
Source: Denis Linine / Shutterstock.com
- Market Cap: $1200.66 billion
Novartis (NYSE:NVS) is a major pharmaceutical company with good earnings growth and a low valuation. The stock has an attractive 3.72% dividend yield on May 20 of $89.42 and its annual $3.33 dividend payment.
Moreover, Novartis expects to see a 9.3% earnings growth forecast from $6.23 EPS this year to $6.81 in 2023. Therefore, it has a forward P/E multiple of just 13.1x for 2023. That reflects the earnings power of its drug portfolio.
Moreover, Novartis can clearly afford to keep its $3.33 dividends, as it has a payout ratio of 53% this year and 49% next year. In addition, it has paid dividends to its shareholders in each of the past 25 years. And for the last 3 years, it has raised the dividend each year.
Additionally, Novartis has started buying back large amounts of its shares. In Q1, it repurchased over $2.5 billion of its shares. That gives it a buyback yield of 5.2% on top of its 3.72% dividend yield. This makes NVS one of the more attractive dividend stocks on this list.
United Parcel Service (UPS)
Source: Sundry Photography / Shutterstock
- Market Cap: $151.87 billion
United Parcel Service (NYSE:UPS) is a major shipping company with good earnings growth and a 13.5x forward P/E for 2022. At $171.04 per share as of May 20, UPS stock trades for just 12.8x the 2023 EPS forecast of $13.37.
Moreover, with its annual dividend of $6.08 (a 48.5% payout ratio), UPS stock has an above-average 3.55% dividend yield. In addition, UPS has raised its dividend in each of the past 22 years. That should give investors a good deal of comfort that it will keep increasing the dividend even if there is a recession.
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The fact that UPS is also producing large amounts of free cash flow allows it to buy back its common stock shares. That helps provide value to shareholders in addition to the high dividend yield. It also makes it one of the best dividend stocks.
Dividend Stocks: Royal Bank of Canada (RY)
Source: Mitch Hutchinson / Shutterstock
- Market Cap: $144.27 billion
Royal Bank of Canada (NYSE:RY) is a profitable Canadian bank with good earnings growth that is very cheap and has a higher than normal yield. At $99.17 as of May 20, RY stock trades for just 11.4x analysts’ forecasts of $8.67 for 2022. Moreover, for 2023, analysts forecast 6.8% growth to $9.26, putting RY stock on a forward P/E of just 10.7x.
Additionally, given that the bank pays out $3.77 per share in annual dividends, RY stock has an attractive 3.8% dividend yield. RY stock has paid out dividends in each of the past 32 years. In fact, the Royal Bank of Canada has raised the dividend in each of the past 6 years. That makes it highly likely the bank will keep increasing the dividend going forward.
Goldman Sachs (GS)
Source: Novikov Aleksey / Shutterstock
- Market Cap: $110.35 billion
The Goldman Sachs Group (NYSE:GS) is a cheap investment banking and commercial bank. In 2022, 23 analysts have an average earnings forecast of $38.35 in EPS, putting Goldman on a forward P/E of just 8x. Moreover, analysts forecast that earnings will climb 6.1% in 2023 to $40.71. At $306.80 on May 20, the 2023 P/E multiple drops down to just 7.5x earnings. That is very cheap for an investment bank with such a stellar reputation.
In addition, given that Goldman Sachs pays an annual dividend of $8 per share, its dividend yield is attractive at 2.61%. Moreover, Goldman has paid dividends in each of the past 22 years and raised them in each of the past 5 years.
Goldman Sachs is very shareholder-friendly. Last quarter alone it bought back $2 billion of its shares. At this rate, the stock has a buyback yield of 7.59% on top of its 2.61%.
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Given these factors, this is one of the most attractive of the dividend stocks on this list.
On the date of publication, Mark Hake did not hold (either directly or indirectly) any securities in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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