Investing in dividend stocks tends to put one in the mindset of an investor, not a trader. That’s true when looking at the narrower world of dividend growth stocks. But such companies can offer great returns, thanks to those dividends as well as a rising price over time.
It’s also helpful when a company has a buyback program in place, reducing the total shares outstanding. The combination of those factors can lead to great returns for patient investors.
One such dividend growth and buyback play right now is Bristol-Myers Squibb (BMY). The company just raised its dividend 10.2 percent compared to last year’s (higher than current inflation readings). And the company added $15 billion to its existing buyback program.
With shares still slightly down over the past year but trading at 7 times forward earnings, it’s clear the pharmaceutical giant is working to reward shareholders even if the market isn’t rewarding shares right now.
Action to take: For investors looking for a safe place to invest right now, any non-tech stock in the dividend growth and buyback category will likely be a solid performer over time. Bristol-Myers will yield over 3.5 percent at current prices with the newest dividend payment, a significant level of income compared to the average S&P 500 stock.
Traders may like the March $60 calls. They’re a near-the-money trade last going for about $2.35 that could play a short-term trend in shares higher to bigger profits.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.