Investing for Income - 3 Dividend Stocks Rated as Buys

Let's admit it, 2023 has been a challenging time for investors. Stocks were showing signs of recovery from the start of the year but have given back most of their gains. The S&P500 was up to 4,189.89 but gave back its closed at 4,012.32 yesterday. YTD, the Dow Jones Industrial Average closed as high as 34,342.32 but closed near its 2023 opening of 33,153.91, giving back nearly all its gains from the start of the year. And as a result, many stocks are now oversold.

The RSI indicator is displayed on a scale of 0 to 100, where 100 is the most overbought and 0 is the most oversold. An RSI indication above 70 is considered overbought, 50 is considered neutral, and below 30 is considered oversold. It’s meant to identify companies that can potentially bounce or move lower. Either way, it helps investors help maximize their earning potential.

Abbot Laboratories (ABT)

Abbott Laboratories (ABT) is a diversified healthcare company that provides various products and services to the healthcare industry, including pharmaceuticals, medical devices, and nutrition products, with operations in more than 160 countries. It was founded in 1888 and has been a dividend aristocrat since 1972. 

Abbott is a company that has a long-term vision. They have a diversified business model with several businesses that should continue to grow over time.  Employing more than 115,000,  Abbott has a significant global reach.

Analysts gave a "Strong Buy" rating for ABT with a Mean Price Target of $122.53 and a High Target of $140.00, a 36.51% upside from its last trading price.

Abbot Laboratories' (ABT) annual dividend yield is 1.99% which is low for many investors. However, investors should also consider that the company has continuously increased its dividends for 51 years, making it part of the coveted Dividend Kings and Dividend Aristocrats list. ABT recently announced its dividend of $0.51, which is scheduled to be paid on May 15, 2023. Based on their historical dividend announcements, their expected dividend announcement is the 2nd week of June. 

ABT continued to be in the oversold territory with a 28.54 14-day RSI reading yesterday, and ABT is near its immediate support area around $101.22. Investors should keep their eyes on ABT if they want to add the company to their long-term portfolio.

Johnson and Johnson (JNJ)

Johnson & Johnson (JNJ) is a multinational corporation based in the United States that manufactures and sells health-related products and services. It is also one of the world's most valuable corporations.

JNJ's operations are segmented into three groups:

Consumer Health provides products based on science approved by medical experts to help people improve their health.

MedTech’s diverse healthcare expertise and purposeful, innovative technology help save lives and aim to create a future where healthcare solutions are smarter, less intrusive, and more personalized in surgery, orthopedics, and interventional solutions.

Pharmaceutical products are distributed through the Janssen Pharmaceutical Companies.   Janssen envisions a future in which disease prevention, early detection, treatment, and cure will change thanks to its cutting-edge biologics and other medical components.

The company has over 140,000 active employees and is headquartered in New Jersey, U.S. 

Analysts gave a “Moderate Buy” rating and a Mean Target of $185.94 with a High Target of $215.00, a 36% upside from its last trading price.

JNJ's annual dividend yield is 2.9% which is modest for most investors. However, long-term investors must consider that the company has continuously increased its dividends for 61 years, cementing it as both a Dividend Aristocrat and Dividend King. Based on JNJ's historical announcements, their following dividend announcement is around the 2nd-3rd week of April for the June Pay date. 

With a 29.63 14-day RSI reading, JNJ has been hovering between the oversold and neutral territory since dropping below the 40 reading last January 17, 2023, and is nearing its 2022 low of $155.72 last year. Long-term investors looking to position in JNJ should have it on their watchlist.

Emerson Electric Company (EMR)

John Wesley Emerson established the multinational Emerson Electric Company (EMR) in 1890, intending to produce electric motors under the terms of a patent held by the Scottish-born brothers Charles and Alexander Meston. 

Currently, the company provides various services through its main two segments:

Automation Solutions aid manufacturers reduce waste, energy use, and other costs throughout their processes with the help of automated machinery and tasks.

Commercial and Residential Solutions create products that enhance production efficiency while preserving food quality and safety. The product list includes professional equipment, cold chain monitoring, heating, ventilation, air conditioning, refrigeration (HVACR), and food waste management. They are also branching into new fields like smart home technology, sustainable food production, and air quality.

Analysts issued EMR a "Moderate Buy" rating with a Mean Target of $101.13 and a High Target of $120.00, an upside of 45% from its last trading price. 

EMR's annual dividend yield is 2.5% which is also low. However, serious investors should not forget that the company has been steadily increasing its dividends for 66 years, making it one of the longest dividend-paying stocks that have continued to increase its dividend payments. This makes EMR part of the Dividend Kings and Dividend Aristocrats. EMR is set to pay its Q1 2023 dividends this March 10, 2023, at $0.52 per share. Based on historical announcements, EMR's next dividend announcement will be on the first week of May for their June Payment.

EMR’s 14-day RSI is at 30.61 and has been hovering in the oversold and neutral territory between 26.69-48.09 since last month. Long-term investors should watch EMR closely and wait for signs and confirmation before starting to position to get it at the best price possible.

Final Thoughts

"Buy low, sell high" is one of the most famous adages about making money in the stock market. However, investors should remember that oversold stocks are meant to make you "look" at potential buying opportunities. Oversold signals can persist longer than expected or signal further downside. 

Another thing to consider is that individual stocks can behave differently than the market. This means there may be specific reasons why a particular stock is down, and it's imperative to do your due diligence before buying.  Finally, it's worth remembering that oversold stocks can still go lower. You want to buy stocks that are cheap in terms of value and not just in price.

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