Contemplating what dividend stocks to invest in June 2021? As the U.S. dollar has weakened against the Canadian dollar, it could be an opportune time for Canadians to buy U.S. stocks and for Americans to stick with U.S. stocks instead of buying Canadian stocks.
As usual, investors should stick with investing in well-valued stocks for long-term outperformance. Having a long-term view puts the odds in retail investors’ favour versus fund managers who are pressured to deliver market outperformance on an annual or even quarterly basis.
Canadians could also invest in quality Canadian stocks that are well valued if they already bought all the U.S. stocks they want currently. Just know that when the U.S. dollar strengthens against the Canadian dollar, Canadian investors would benefit from foreign exchange normalization as well as price appreciation from U.S. stocks bought at good valuations. If Canadians buy quality U.S. dividend stocks now, the dividend income will also increase on favourable foreign exchange normalization.
Here’s a U.S. dividend-growth stock that could perform well in the long run.
1 top dividend stock to buy in June 2021
Bristol-Myers Squibb (NYSE:BMY) is a dividend stock trading at a good valuation. So, it’s worth further investigation. At under $65 per share, BMY stock trades at a low blended price-to-earnings ratio of <10 versus its 3-5 year estimated earnings per share growth rate of about 7-8% per year.
The stock may be depressed now because of the losses of exclusivity (LOE) to some of its drugs. In the second half of the decade, it will be losing exclusivity to two of its drugs: Opdivo and Eliquis. BMY CEO Giovanni Caforio also pointed out that “we do expect that our continuing business, which excludes Revlimid and Pomalyst, would represent 90% of our revenues. And of that 90% of revenues, one-third will already be represented by our launch portfolio. So, that gives me confidence that as we think about 2025 and begin to really focus on the second half of the decade, we will have a company with a young portfolio and with a number of catalysts for growth.”
What’s important to note is that the dividend stock has maintained or increased its dividend at least since 2001. It has increased its dividend every year since 2007.
After acquiring Celgene in 2019, BMY began increasing its dividend at a rate of about 9% in 2020 and 2021 — triple the rate of its historical dividend growth rate of approximately 3%. Its payout ratio was 29% in 2020 and is estimated to be about 26% this year. So, there’s a big margin of safety for its payout.
BMY’s dividend yield of 3% is attractive in today’s low interest rate environment. Continued dividend growth will eventually push the well-valued stock higher.
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Disclosure: As of writing, we own shares of BMY.
Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.
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