Last month, the Federal Reserve cut spending for the first time more than 10 years ago, reducing the target range of its Fed funds by 25 basis points, citing concerns about "global developments" such as the US trade war and China.
The US central bank may also not be ready to lower interest rates. Futures traders bet that a quarter point will be lowered in September.
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While the Fed is easing, these three stocks have the potential to offer some of the best returns on the market.
1. AT&T: Rich Dividend Yield
AT&T (NYSE 🙂 needs no introduction. Shares of & # 39; the world's largest telecommunications company have risen nearly 19% this year. The stock closed at $ 33.96 on Tuesday, in view of a 52-week high of $ 34.64 on July 30, giving it a market capitalization of nearly $ 247 billion.
Good quality blue chip dividend stocks generally perform well in an environment with low or falling interest rates. The telecom and media giant announced a quarterly dividend of $ 0.51 per share, implying an annual dividend of $ 2.04 per share. The dividend yield of the AT&T share is currently 5.97%, almost three times the implicit return for the, which is 2.04%.
The giant from Dallas, Texas, placed a positive note on July 24. AT&T reported earnings per share (EPS) of $ 0.89, which is in line with expectations. Sales in the quarter amounted to $ 44.96 billion, an increase of 15% over the same period a year earlier and just above expectations for sales of $ 44.89 billion.
AT&T now expects to generate $ 28 billion in free cash flow, $ 2 billion more than its previous expectation of $ 26 billion.
The company, which focuses on reducing debt after purchasing $ 85 million from media and entertainment conglomerate Time Warner in June of last year, spent $ 6.8 billion on debt repayments in the second quarter. It added that it was on track to reduce its net debt to around $ 150 billion by the end of the year.
“The debt we have will be in a very reasonable place if we exit this year, I fully expect that we will buy back some shares if we continue this year and (as expected) that the cash flows will continue, "said Randall Stephenson CEO.
2. Duke Energy: Attractive Dividend-Oriented Utility
While interest rates are falling, Duke Energy (NYSE 🙂 – one of the largest electric and natural gas companies in the US – is the second big name to look at. Tools & # 39; s tend to perform better in environments with low interest rates because of their attractive dividend yield.
Shares of the Charlotte, North Carolina-based company ended last night at $ 88.92, not far from their recent 52-week high of $ 90.27 on July 9, giving it a market capitalization of $ 64.7 billion .
In July, Duke Energy stated that it increased its quarterly cash dividend by almost 2% to $ 0.945 per share. This represents an annual dividend of $ 3.78 and a return of 4.29%, one of the highest in the
The company beat estimates on both the top and bottom lines when it was released on Tuesday. Earnings per share amounted to $ 1.12, exceeding the expectations for earnings per share of $ 0.98 and higher than $ 0.93 in the same period a year earlier. Sales increased to $ 5.8 billion, above forecasts of $ 5.77 billion and compared to sales of $ 5.61 billion a year earlier.
“So far we have grown our profits and increased our dividend. We are on track to meet our commitments and have reconfirmed our 2019 earnings outlook and 4 to 6 percent long-term earnings growth, "said Chairman and CEO Lynn Good in a statement.
3. Eldorado Gold: Explosive QoQ Growth
The definitive name to consider when the Fed lowers interest rates comes from the mining sector. Expectations of monetary stimulation and lower interest rates tend to be traded at the highest level since May 2013.
Eldorado Gold (NYSE :), with headquarters in Vancouver, British Columbia, Canada, has outperformed its shares better than its competitors in recent weeks, with a price increase of 175% since the end of May. It amounted to $ 8.57 yesterday after touching a new 52-week high of $ 8.99 earlier in the session.
The gold miner reported $ 173.7 million when it published its latest quarterly results on August 1, representing an explosive quarter-on-quarter (QoQ) revenue growth of 117%.
The company has benefited from both a sharp rise in gold prices and higher sales volumes. Eldorado gold sales in the second quarter increased 21% year-on-year (YoY) to 113,685 ounces, while average realized gold prices rose 2.6% compared to the same period a year ago to $ 1,321 per ounce.
Looking ahead, Eldorado reiterated its 2019 full year production target of 390,000-420,000 ounces of gold at all-in sustainable costs (AISC) of $ 900-1000 per ounce sold.
The robust performance of Eldorado Gold seems to continue as long as gold prices continue to rise.