Will Buybacks and Dividends Rise in 2021? Which Stocks Should We Look Out For?
A lot has been going on in the stock market lately, following the outbreak of coronavirus. The naysayers thought the stock market would collapse and kept off from trading. On the other hand, a majority of optimistic investors and best brokers continued with their operations as if nothing had happened.
According to many top brokers, the world is witnessing an improving economy, earnings and sales are increasing, and the companies that hoarded cash in anticipation of hard times are releasing the cash. This has made many top brokers and financial experts predict that buybacks and dividends will rise this year. Analysts from Goldman Sachs expect the S&P 500 dividends to rise by five percent and buybacks to increase by 15 percent this year.
A buyback or share repurchase is a case in which a company purchases its own shares to reduce its number of outstanding shares available to the public. This reduces the supply of the shares, thus increasing their value. Buybacks show to traders that the concerned companies have set aside sufficient cash for emergencies and can, therefore, overcome economic turbulence. Increasing buybacks are good news to top stockbrokers because it shows that the stock market is stable.
With these positive predictions, many investors are looking forward to a productive year. While some are looking for the best broker for buy and hold, some are just interested in any top trading platforms for beginners so they can test the waters. No matter the case, the question is, which stocks are worth investing in this year?
The companies mentioned here were selected by financial experts who analyzed their performance for the last two years. The companies are expected to bring more cash flow this year than they did in 2019 and 2020, but their stocks should be affordable to new investors.
On top of the list is Raymond James Financial. This bank is projected to bring a cash flow of $1.2 billion this year. In 2019, it managed a whopping $778 million in shares, and it has been on a growth trajectory. Its dividend yield currently stands at 1.6 percent, and it is expected to repurchase its shares worth not less than $50 million per quarter.
Many consumer-focused companies made it to this list, including Target, Lowe’s, Tyson Foods, Kroger, and Buy. Top online stock brokers expect all these five companies to deliver not less than 45 percent more cash flow this year than they did in 2019. Tyson Foods leads all the pack in terms of dividend yield, standing at 2.5 percent.
Lowe’s is very aggressive in terms of buybacks. In 2019, it bought back over $3 billion worth of its shares. Currently. Its dividend payout is about 66 percent of its cash flow. A quick look at the best online trading platforms will reveal that Lowe’s stocks are luring many new investors because the company seems to have a bright future.
On the healthcare front, the names of Cigna, Quest Diagnostics, and Bristol Myers Squibb appeared on the list. Though Cigna has an annual dividend payment of only $0.04 and low yield play, its buyback history is quite impressive. Some top international brokers believe its stocks are worth trying out in 2021.
Both Quest Diagnostics and Bristol Myers Squibb traded for about 8.5 percent of cash flow yields. Their dividend yields went beyond the S&P 500 average. Quest Diagnostics’ is expected to double its 2019 cash flow generation this year, while Bristol’s cash flow generation is expected to exceed 50 percent. In 2019, Bristol Myers Squibb spent over $6 billion in repurchasing its shares.
Other companies that were mentioned include Western Union, Lennar, and NRG Energy. The best online brokerage firms are currently encouraging their clients to diversify their investment portfolios using the stocks mentioned above.