2 No-Brainer Dividend Stocks to Buy in May

Dividends may be boring but are essential to building a well-balanced portfolio. After all, dividend payments have accounted for approximately 85% of the S&P 500‘s total returns since 1960, per a report by Hartford Funds.

Which dividend stocks are worth buying in the current market? Telecom giant AT&T (NYSE: T) and pharmaceutical titan Pfizer (NYSE: PFE) scan as incredible bargains for long-term, income-oriented investors. Read on to find out more about these two no-brainer dividend stocks.

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AT&T: A 6.5% yield with promising capital appreciation prospects

AT&T’s journey can be likened to a phoenix rising from the ashes. Over the past decade, the telecom behemoth’s stock price has seen a 36% decline. This is attributable to a series of missteps, including an overreach into the entertainment sector, a burdensome debt pile, the rise of budget-friendly rivals, and potential legal entanglements linked to its aging infrastructure.

Yet there’s a renewed sense of optimism surrounding the company. Morningstar analyst Michael Hodel, for example, recently reaffirmed his $23 fair-value estimate for AT&T’s stock, buoyed by the company’s robust first-quarter results. This fair-value estimate suggests an upside potential of 33.9% from the stock’s current price.

What are the drivers of this positive outlook? AT&T is showing signs of reaching an inflection point in its core operations, highlighted by a 9% reduction in customer disconnections in Q1 of 2024, compared to the previous year. Additionally, the company saw a 2.2% uptick in its customer base and a 0.9% increase in revenue per subscriber during the same period.

What’s the main reason to consider buying shares? Beyond the attractive yield, AT&T stock is currently valued at just 9x trailing earnings, a stark contrast to the S&P 500‘s multiple of nearly 25x. AT&T thus appears to be an incredible bargain, particularly when considering its generous dividend yield.

As for risks, the U.S. telecom sector could be ripe for disruption by tech-savvy entities with deep pockets. Nevertheless, AT&T’s substantial…


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