Forget the Black Friday deals, these dividend stocks are on sale

Retailers typically offer their bestsellers of the season on Black Friday, which allows consumers to jumpstart their holiday shopping. This calendar makes it easy for buyers to plan their purchases, as they can scan different sales documents to find the best deals.

Although the stock market does not work the same way, it currently offers some pretty good deals despite the recent crossing of a threshold, especially for investors looking for dividends. Three Low-Cost Dividend Stocks Our Contributors Have Top of Their Shopping Lists Are Energy Giants Total (NYSE: TOT), pipeline operator Enterprise Product Partners (NYSE: EPD)and defense contractor Lockheed Martin (NYSE: LMT). Here’s why they look like must-see deals right now.

Don’t miss the big picture

Reuben Gregg Brewer (Total): Investors hate oil stocks like integrated energy giant Total right now. There is good reason for the reluctance, given that oil persists at low levels thanks to a supply / demand imbalance induced by COVID-19. But long-term dividend investors should like the story here – and the historically high 7.4% dividend yield.

TOT Dividend Yield Data by YCharts

Oil will remain a vital source of energy for decades to come. This remains true even in the most disastrous projections. Natural gas, which is seen as a transitional fuel as the world becomes greener, is likely to experience increased demand. And that’s exactly what Total has planned for its business, with a focus on a reduced number of low-cost oil opportunities and a growing position in natural gas.

At the same time, Total will use the cash generated by its carbon activities to invest in its new “electrons” division. This represented around 5% of sales in 2019, but is expected to represent around 15% of revenue by 2030, as the energy giant increasingly invests in the electricity and clean energy spaces. Basically he’s going green with the rest of the world. In the meantime, management said (again) on Total’s third-quarter 2020 conference call that they believe the dividend will be sustainable if oil averages around $ 40 a barrel – roughly where he’s been hanging around for a while now. If we can look beyond today’s difficult energy market, Total seems well positioned to reward investors who can think long term.

Exceptional performance at a great price

Matt DiLallo (Company Product Partners): Investors tossed pipeline giant Enterprise Products Partners into the discount bin this year. Units of the first mid-channel MLP are down more than 25% in 2020. This price drop comes even though the company has generated relatively stable revenues this year despite all the turbulence in the oil market. Its distributable cash flow only decreased by approximately 4% in the third quarter compared to the prior year period.

With its unit price falling more than the cash flow, MLP valuation has become much cheaper. Meanwhile, its drop in unit price has pushed its dividend yield to over 8%. While high yield payments often involve more risk, this is not the case with Enterprise. The company is currently generating enough cash to cover its distribution 1.7 times, leaving it almost enough excess cash to fully fund its expansion plans. Add to that the fact that he has the highest credit rating among MLPs, and his growth spending is set to decline in the coming years, and his payments are on solid ground.

The company’s financial base is so strong that it should have no problem continuing to increase its high yield dividend, which it has been doing for 21 consecutive years. Meanwhile, given how cheap it is these days, there is a lot of potential to energy market is recovering, which looks increasingly likely thanks to the recent spate of positive COVID-19 vaccine data. These factors make Enterprise look like a more attractive buy than most Black Friday deals right now.

To infinity and beyond

Daniel Foelber (Lockheed Martin): Shares of the world’s largest pure-play defense company Lockheed Martin underperformed the market and the SPADE Defense Index so far this year.

LMT data by YCharts

Concerns about a new political party taking office and a possible decrease in future defense spending have distracted investors from Lockheed’s strong results. In its final quarter, the company generated record quarterly revenue of $ 16.5 billion and updated its forecast for the full year. Sales, operating profit and profits are now expected to exceed the high end of the company’s previous estimates, capping what is expected to be one of its most profitable years on record. Yet its outlook for 2021 only calls for an increase of around 2% in sales and a stable to slight increase in operating cash flow.

Even with uncertain short to medium term prospects, there are plenty of reasons why Lockheed is a good deal at current prices. Contracts with the US government and its allies provide predictable operating cash flow, which means Lockheed can repurchase shares in a safe way and distribute hundreds of millions of dollars in dividends. The company just announced that it now has a record backlog of $ 150.4 billion, meaning there is no shortage of customers keen to get their hands on its latest technology.

After halving its dividend in 2000, Lockheed began increasing its quarterly dividend in 2003. Since then, Lockheed Martin has increased its dividend each year. It just raised its quarterly dividend from $ 2.40 to $ 2.60 per share. The first payment of $ 2.60 will be distributed on Christmas Eve, providing investors with timely and significant storage stock. At current stock prices, Lockheed is now producing an impressive return of 2.8%.

Black Friday should have some tempting deals, but buying Lockheed Martin shares before November 30 entitles you to its new, higher dividend. More importantly than this short-term windfall, you will be investing in leading defense stock with predictable operating cash flow, a track record of increasing dividends, favorable valuation, and aviation and missile technology. peak.