A high dividend yield is not always a good deal, but Hasbro and Home Depot are two stocks that are attractive investments today.
Investors looking for dividend-paying securities sometimes see high returns and think it is a good deal. A high dividend yield can also be a warning sign, however, as it can only be the result of a company with problems and a drop in the share price.
It is often more instructive to examine current dividend yields than their history*, as well as to investigate business prospects, to see if it is possible to find companies that pay dividends considered attractive investments in the present. *(A high-yield stock is a stock whose dividend yield is higher than the yield of any benchmark average such as the ten-year US Treasury note. The classification of a high-yield stock is relative to the criteria of any given analyst – source Wikipedia).
Howard Smith, from the pages of The Motley Fool, suggests two names that fit this description, explaining why they are two cheap stocks to buy right now: Hasbro and Home Depot shares.
Home Depot and Hasbro: shares with increasing and safe dividend yield
Dividend yields of Hasbro and Home Depot both increased when recent market volatility hit the share price. A high level of confidence in the business has led to a strong recovery in prices for Home Depot, while Hasbro shares remain under pressure. Both stocks still boast dividend yields above the levels observed in recent years and are expected to have a bright future in their own way.
Both Home Depot and Hasbro have a record high in dividend growth, but in the past five years Home Depot has outperformed Hasbro on this front. The COVID-19 pandemic caused more damage to Hasbro than to Home Depot, whose stores remained open. It must be said, however, that Hasbro currently has a solid 4% dividend yield and bright prospects for its business once the pandemic begins to retreat. Both Hasbro and Home Depot have a consistent cash flow to support continuous dividends.
Why buy Home Depot shares
Home Depot announced a new strategy, called One Home Depot, at the end of 2017: the $ 11 billion investment program includes not only online sales, which are growing by more than 20%, but also business-to- improvements. business (B2B) for its professional clients. Comparable store sales grew 3.5% in 2019, including 5.2% in the fourth quarter.
This business growth has allowed the company to substantially increase dividend payments.
Why buy Hasbro shares
Hasbro’s share price was partially affected by the coronavirus crisis, due to supply chain problems and consumer demand, but nonetheless on February 21st Hasbro renewed a multi-year deal on Disney franchises that should benefit from popularity the Disney+ streaming service.
It should also be remembered that Hasbro has recently completed the acquisition of Entertainment One (eOne) to add pre-school brands and engaging TV and film experiences, which are expected to be fully integrated by the end of 2020.