5 Cheap Dividend Stocks For Uncertain Times Ahead

 | Jul 05, 2019 03:02AM ET

There are a number of things irking Mr. Market right now, including continuing trade tensions with China, declining consumer confidence, deflationary tendencies and delays/postponement of an interest rate cut that could breathe some life into it.

All of this is happening in a world of progressively greater efficiency, meaning that technology deployment and mechanization of processes is already stealing jobs. This situation can only exacerbate as automation is a must if we are to see the steady growth rates we hunger for.

To make matters worse, there’s an imbalance in the housing market, where inventories of costlier dwellings are on the rise along with demand for cheaper housing.

So the need to invest wisely has never been more important as it is today. Because truly, everything that we have been depending on, like our jobs, homes and livelihoods are increasingly on the line.

One way of dealing with the situation is by hedging our bets. It’s already well known that riskier investments generate higher returns. But if you’re like me, you will be putting only a small part of your available funds into these things and parking the bulk of your resources into income generating investments. You could then reinvest the income or use the cash, depending on your needs.

So what kind of income-generating assets make the most sense? Obviously, those that appear undervalued with respect to the basket/group of stocks to which they belong. And in the vast ocean of stocks to choose from, obviously those industries/groups that have positive things (catalysts) going for them are more attractive than the others.

With these general thoughts in mind, I have picked a few stocks that have Buy ranks, are placed in attractive industries, those that are suitable for moderately risk-averse investors, those that have posted a big earnings beat in recent history, that pay out attractive dividends and are reasonably or attractively valued. So here’s the list-

Arbor Realty Trust (NYSE:ABR)

Arbor Realty Trust is a specialized investor in real estate-related bridge and mezzanine loans, preferred equity, mortgage-related securities and other real estate-related assets. The following are key criteria that make it a Buy in this environment-

Zacks Rank #1 (Strong Buy)

REIT and Equity Trust – Other Industry Rank 79 (top 31%)

Growth Score B

Last quarter EPS surprise 22.2%

Dividend yield 9.2%

P/E based on forward earnings for the current year 9.94X (industry 16.60X)