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Top 5 Blue Chip Stocks To Watch For 2019

Dividend stocks are great options for retirees’ portfolios: The best ones offer the reliability of a quarterly payment coupled with the stability of a sound business model that can support — and hopefully grow — those payments. 

We asked three of our investors to scour the stock market and bring us back their recommendations for the best dividend stocks for retirees’ portfolios now. They came back with three companies from a diverse array of sectors.

Top 5 Blue Chip Stocks To Watch For 2019: The Goodyear Tire & Rubber Company(GT)

You’ve likely heard new-vehicle sales in the U.S. are currently plateauing, which makes it difficult to sell a near-term growth story for automakers. Nonetheless, the auto industry has trends that could provide strong growth for Goodyear despite the company’s being sold off with the rest of the industry — it currently trades at a paltry forward P/E of 6.6, per Morningstar estimates.

Total sales are plateauing, but the sales mix is wildly shifting in favor of larger vehicles such as SUVs, crossovers, and pickup trucks. That means more larger tires on the road, and that means better margins for Goodyear. In 2009, light trucks were 45% of the U.S. new vehicle market; that exploded in the years since to 68% during the first quarter of 2018. Further, LMC Automotive predicts light trucks will generate roughly 73% of the market as soon as 2022.

A sales mix in the Americas with such a large percentage of light trucks is one growth catalyst for Goodyear, but there’s a long-term catalyst as well: driverless vehicles. Consider that by 2030, 25% of global miles traveled will be shared, according to The Boston Consulting Group, and the autonomous market will be a $7 trillion business by 2050, according to an Intel report. As the market shifts to fleet ownership, rather than individual consumers, Goodyear could leverage its physical-store tire services to sign partnerships with fleet owners, which could become a lucrative business.

Granted, the driverless-car future is an uncertain one, but one thing is certain: Tires, and other products associated with driverless cars, will become much more complex. That means growth — long-term growth — for Goodyear if it can leverage its distribution network, innovative tires, and service bays to carve out its place in the market.

Top 5 Blue Chip Stocks To Watch For 2019: Newmont Mining Corporation(NEM)

When we think about businesses that make Fortune’s most admired companies list, we usually don’t consider the mining industry. Yet Newmont Mining Corp (NYSE:NEM) impressively made the list this year. Only a handful of companies within the sector joined NEM in this rare honor.

The question, though, is whether it will matter to potential investors. While I doubt anyone’s going to buy NEM based on this distinction, it helps to draw attention to what management is doing right. For starters, company executives are optimistic about their chances in 2018, raising their gold production guidance.

Second, I appreciate that the optimism is translating to relative stability in the markets. NEM stock is up 4.6% YTD, and compared to its rivals, Newmont has held up well. Aside from some soft patches in February and March, NEM hasn’t given shareholders reason to panic.

With an improving gold sector, and a potential seasonality boost, I’m confident that Newmont will at least meet expectations. Ideally, I’d like to see a little bit more discipline in cost efficiencies, which would help return them to profitability. However, they’re growing their top line, and reducing their long-term liabilities.

Overall, I like what I’m seeing. NEM is easily one of the more intriguing gold stocks to buy!

Top 5 Blue Chip Stocks To Watch For 2019: Taiwan Semiconductor Manufacturing Company Ltd.(TSM)

Another burgeoning cryptocurrency mining stock that isn’t exactly keen on divulging the percentage of its sales tied to mining is Taiwan Semiconductor Manufacturing Company(NYSE:TSM). Last week, TSMC reported strong first-quarter operating results that included a 6% increase in sales from the prior-year period, as well as its single-best sales month in history in March ($3.5 billion). C.C. Wei, TSMC’s president and co-CEO, specifically said that "these results were mainly driven by strong demand from high performance computing such as cryptocurrency mining." 

In addition, Coindesk notes that Chinese mining hardware maker Bitmain, a client of TSMC, unveiled its next-generation, ASIC (application-specific integrated circuit)-based, Ethereum mining equipment called Antminer E3 in early April. The unit, which has a list price of $800, is set to ship in July. Bitmain’s need for ASIC chips to satisfy demand for Antminer E3 may very well be the reason TSMC experienced a surge in sales during March and in Q1 as a whole. 

However, the downdraft in bitcoin and other crypto token prices in 2018 has certainly cast a shadow on industry demand moving forward. Having previously forecast sales growth of 10% to 15% in 2018, TSMC also lowered its sales growth expectations to 10% for the current year on uncertainty in the crypto mining space. Like NVIDIA and AMD, TSMC’s share price may be adversely impacted if cryptocurrency prices continue to sink. 

Top 5 Blue Chip Stocks To Watch For 2019: Activision Blizzard, Inc(ATVI)

With eight $1 billion-plus franchises in its enviable portfolio — think wildly popular titles like Call of Duty, Overwatch, Destiny, and World of Warcraft — it’s no mystery that Activision Blizzard is a leader in the burgeoning video game space. Activision also enjoys a commanding lead in the mobile gaming market through its $5.9 billion acquisition of Candy Crush-maker King Digital in late 2015.

And it doesn’t just make money from the initial sale of its games. Many of its titles enjoy a fervent base of paying monthly subscribers, and in-game content sales exceeded $1 billion last quarteralone. That’s not to mention the promise of management’s plans to implement more in-game advertising to generate incremental revenue.

A female gamer and her team participate in an esports tournament.

IMAGE SOURCE: GETTY IMAGES.

What’s more, with the launch of its new Overwatch League earlier this year, Activision is poised to benefit from the unstoppable rise of esports. According to SuperData Research, the esports market is expected to attract nearly 300 million unique viewers this year, and should exceed $2 billion in revenue by 2021.

With the stock trading around 15% below its 52-week high amid a broader pullback in tech stocks in recent weeks, I think now is a great time to open or add to a position in Activision Blizzard.

Top 5 Blue Chip Stocks To Watch For 2019: Pattern Energy Group Inc.(PEGI)

With a 9.3% yield at recent prices following the 31% decline in its stock price over the past year, independent renewable-energy producer Pattern Energy looks like a yield trap on the surface. And it seems blatantly obvious why investors have sold out of the stock recently, when you consider two factors. First, changes to tax equity investing rules in the U.S. have already started to hurt funding for new projects; second, rising interest rates could affect Pattern Energy’s access to capital. 

But my analysis leads me to a very different conclusion: Now is an excellent time to buy Pattern, and I think the company is going to be able to maintain its payout in the near term, and start increasing it again within a few years.

Pattern generates sufficient cash flow — measured as cash available for distribution (CADF) — to maintain its dividend. And it operates in Canada, Japan, and South America, as well as the U.S., dampening the impact of tax law changes.

Furthermore, CEO Mike Garland said Pattern "… is in an excellent position to make further acquisitions without raising any common equity, allowing us to grow our CAFD per share." With other sources of capital at its disposal, this alleviates one of the risks that would have led to a dividend cut: selling shares of its own stock. 

Don’t get me wrong. This isn’t a zero-risk investment, and it shouldn’t be counted on for income you can’t live without. But if you can stomach a small amount of risk that the payout might be cut, the opportunity to capture a very high yield is worth it, in my book. Add in the long-term growth prospects as renewable energy takes more share from fossil fuels, and Pattern is an excellent investment for retirement savers. 

Top 5 Medical Stocks To Watch Right Now

I happened to read a May 4 article discussing the reasons why Bed Bath & Beyond Inc. (NASDAQ:BBBY) lost 17% of its value in the month of April — BBBY hasn’t had a positive annual return since 2013 — and it got me thinking about other potential stocks to buy that lost ground last month.

Why?

Investors have a way of overreacting to bad news which sometimes leads to stocks being oversold. The problem is identifying when that is happening because there are situations in which a stock is ripe for collapse.

At the beginning of 2018, I suggested ten stocks I thought could surprise in 2018 — Bed Bath & Beyond was one of them. Unfortunately, it’s been nothing but pain for the housewares retailer so far this year.

While it’s still generating positive free cash flow, I’m not sure I want to double down on BBBY and recommend it.

However, here are seven stocks to buy that lost 10% or more in April that I do feel are worthy of your consideration.

Top 5 Medical Stocks To Watch Right Now: Pattern Energy Group Inc.(PEGI)

Pattern Energy is a yieldco focused on wind projects, with 2,700 MW currently in the portfolio. The company has grown aggressively through third-party acquisitions as well as its own project development, helped by the affiliate Pattern Development, which is a separate company that feeds projects into Pattern Energy. In total, the company has a pipeline of 10,000 MW of renewable energy projects, which could quintuple the company’s size and provide growth in cash flow for investors. 

Pattern Energy’s projects have over 14 years of average life left on power purchase agreements with utilities and corporate customers, and assets are young, with an average age of 4 years. You can see below that some projects are contracted for over 20 years.

Chart showing duration of power purchase agreements.

IMAGE SOURCE: PATTERN ENERGY.

Unlike Brookfield Renewable Partners, Pattern Energy uses newly issued shares to fund acquisitions, increasing its shares outstanding by 54% since going public in 2013. Management plans to use stock to grow the company’s cash flow, and executives say there’s visibility to a double-digit dividend, which would make the stock a steal trading at under $18 per share today. 

Even if the dividend doesn’t grow, the current 9.4% yield is a high payout for investors and makes this a low-risk stock given the contracted cash flows I highlighted above. 

Top 5 Medical Stocks To Watch Right Now: CVR Refining, LP(CVRR)

CVR Refining is an independent MLP that operates crude oil transportation and storage facilities, along with a vast network of pipelines. The stock was one of the top performing energy plays in April, gaining more than 34% in the month. On top of its strong momentum, CVRR is also sporting a Zacks Rank #1 (Strong Buy). This is also one of the few stocks on the list that income investors will love, with its status as an MLP meaning that investors witness a dividend yield about 10.4%.

Top 5 Medical Stocks To Watch Right Now: Cannabis Wheaton Income Corp.(CBWTF)

Many of you have undoubtedly heard of Wheaton Precious Metals Corp (NYSE:WPM), formerly known as Silver Wheaton. WPM specializes in precious metals streaming: an agreement with a miner to purchase metals production at a fixed price. If operated correctly, streaming can be a very profitable venture.

Cannabis Wheaton Income Corp. (OTCMKTS:CBWTF) takes that same business model and applies it to the marijuana industry. Indeed, Cannabis Wheaton is the first streaming company of its kind, creating enormous potential for CBWTF. Moreover, Canada is relatively a weed-friendly nation, having legalized medical marijuana back in 2001.

Political tailwinds comes in the form of recreational legality, which may arrive in August of this year. However, despite strong legislative support, many Canadians were expecting full-legality for adults to arrive sooner. As a young company, this delay may negatively impact CBWTF stock.

That being said, I believe that management have built-in contingency plans, since depending solely on favorable legislation is extremely risky. In addition, CBWTF is down 45% from its closing high of this year. The markets have likely accounted for the delay.

Of course, marijuana stocks aren’t exactly the most stable investments. However, if you have some speculative money to play with, CBWTF is worth a shot.

Top 5 Medical Stocks To Watch Right Now: Anheuser-Busch Inbev SA(BUD)

Shares of Anheuser-Busch InBev have sunk over 18% in the last year and 11.5% during the last four weeks alone as the company struggles to adjust to shifting consumer habits. But one strong quarter could help this international beer powerhouse turn things around. Unfortunately, BUD is expected to see its quarterly revenues sink 0.72% from the year-ago period to $12.83 billion, based on our current Zacks Consensus Estimate.

Meanwhile, investors should be happy to note that the company’s earnings are projected pop by 6.8% to reach $0.79 per share. Anheuser-Busch InBev’s Most Accurate Estimate—the representation of the most recent analyst sentiment—calls for quarterly earnings of $0.82 per share, which is 3 cents better than our current consensus estimate. The company is also currently a Zacks Rank #3 (Hold) and sports an Earnings ESP of 4.46%. This means BUD is a stock that could top quarterly estimates when it reports its Q1 earnings results before the market opens on Wednesday.

Top 5 Medical Stocks To Watch Right Now: DHT Holdings, Inc.(DHT)

DHT Holdings Inc. (NYSE: DHT) is an independent crude oil tanker company that currently maintains a fleet of 27 crude oil tankers, which move crude internationally.

The company’s stock price has experienced significant volatility in recent months, as the global geopolitical landscape has thrown the oil market into flux.

However, DHT’s large tanker fleet is well positioned to take advantage of any significant spike in demand or unexpected shortage in the near future.

And it’s increasingly likely that a shortage is imminent. According to the International Energy Agency, oil production growth could stall due to a lack of aggressive investment by 2020.

Right now is an excellent opportunity to buy into DHT, since the stock has a perfect VQScore of 4.75.

If the oil shortage occurs, analysts see the company’s stock heading to $6.00 – a gain of over 54% from the stock’s current price of $3.38.