How does Buffett “buy fear” and profit from inaction?
A well-known fact: buying low and selling high – the dream of any investor – is more feasible in words than in deeds, especially in a falling market. As a reminder, the S&P 500 has fallen 16.5% since the beginning of the year. But you don’t always need a rising market to make money from stocks, because in this case you can follow the example of investment legend – Warren Buffett – and receive dividends.
This type of investor just needs to sit back, relax, and let the dividends flow into their account. None other than Buffett once said, “Wall Street makes money from activity. But you can also earn on inaction. Another famous phrase of his, which should also be applied: “Be afraid when others are greedy, and be greedy when others are afraid.”
With that in mind, here are 3 stocks that could please investors with big dividend checks.
- AT&T (T) is one of the largest telecommunications companies in the world, with more than 100 million US consumers using mobile and broadband services. Thanks to wireless and internet services, her business is booming no matter what. The company pays a quarterly dividend of 27.75 cents per share, which equates to an annualized yield of 5.9%. Wall Street analysts gave it a “Strong Buy” recommendation and a target price of $24. With AT&T (NYSE:T) shares currently trading at around $18.90 a share, the target price suggests upside potential of 27%.
- Realty Income (O) is a real estate investment fund with over 11,700 properties in the US that are on long-term leases. The main tenants are well-known companies – Walmart (NYSE:WMT), CVS Pharmacy and Walgreens – who have survived and thrived against all odds. The company said it receives about 43% of its total rent from investment grade tenants. Realty Income pays out to its shareholders every month. Today, the stock returns 4.6%. The stock has a target price of $74, about 13% above current levels, according to analysts at Morgan Stanley (NYSE:MS).
- MPLX (MPLX) was created by Marathon Petroleum to own, operate, develop and acquire mid-range energy infrastructure assets. It pays a quarterly dividend of 77.50 cents per share. With a share price of $33.73, this translates into a decent annual dividend yield of 9.2%. Analysts at Wells Fargo (NYSE:WFC) see further gains and have set a price target of $40, about 19% up from where they are today.