Interest rates are at record lows. Despite rising inflation, the RBA has vowed to keep interest rates low in the near term. This means that dividend stocks are of utmost importance. Dividend stocks usually come at a lower risk given that the businesses are usually more mature. This makes dividend stocks very attractive to investors. Defensive dividend stocks are used as an alternative to parking money in the bank.
Sure, the ANZ Group share price has struggled in the past few weeks. However, ANZ shares have rebounded this week. Although the short-term outlook might not seem bright for ANZ, the banking giant is a sure play if you are a long-term value investor. As you know, ANZ is one of the big four and exhibits a solid balance sheet. At the current price of $27.51 per share, ANZ is about 27% below its all-time high from back in March 2015. Looking at this angle, it might be an interesting opportunity to grab some shares while it is still cheap.
Let’s look at why the ANZ share price has been struggling recently. Despite a disappointing past few weeks, ANZ has not released any price-sensitive news. As a result, many undercurrents could be putting pressure on the banking giant.
Firstly, we think of the general weakness in the broader domestic market that could explain why ANZ shares have struggled. Although, we remain optimistic for a rapid return to a normal economy post-COVID. Hence, ANZ has recently intensified its focus on retail, business, and the private banking space. Upon the improvement of the economic environment, we believe ANZ will rapidly get back on track.
Besides, ANZ has a strong capital position and cost reductions. The bank announced its intention to buy back up to $1.5 billion worth of shares on the market as part of its capital management plan.
With buyback on the cards and a healthy dividend coming out of ANZ, it is a great consideration for dividend stocks to buy now.
Fortescue Metals Group is an Australian iron ore company. As of 2017, FMG is the fourth largest iron ore producer in the world after BHP, Rio Tinto, and Vale. The group has two main areas of operation located within the Pilbara region of Western Australia, the Chichester Hub and Solomon Hub. Plans to develop a third, Western Hub are currently in the developmental stage. In 2017 Fortescue started the exploration of possible mining tenements in South America and other parts of Australia.
At the time of writing, FMG shares are down to $17.57. This latest decline means that the FMG share price is now down about 25% In 2021 alone after reaching a record high of $26.58 it reached at the end of July.
Even though it is quite a decline in the share price, we see it as a great opportunity if you want to acquire a stock that offers an amazing 10% dividend yield. Furthermore, for shareholders, the weakness in the FMG share price has nothing to do with its operations.
The weakness has been a result of FMG going ex-dividend with a yield of about 20% and also due to the iron ore price volatility. FMG at these prices looks very cheap and is a top dividend stock to buy. FMG remains one of the best dividend stocks on the ASX.
BHP Group is arguably the most well-diversified mining and exploration company there is. It is a part of every investor’s portfolio for different reasons. Either for the stable dividends, or to decrease the overall volatility of the portfolio. However, the BHP share price has come under significant pressure for a few months. However, on Monday, the mining giant’s shares added 0.8% gains to $36.73 per share. This means that BHP’s shares are now down by 14% since year-to-date. What happened? One of the causes is further weakness in the iron ore price after curtailed steel production in China hit demand for the base metal. Not only did BHP experience such a pullback, but other mining giants also went through the same ride.
China, which is the world’s second-largest economy, is aiming to cut steel output growth this year to 2020 levels. Although, after expanding around 12% in the first half of this year, the country is now reducing its steel output by 12.2% from August to December to reach its goal. However, we remain optimistic about the rebound of iron ore prices driven by a return in demand by the end of the first quarter of 2022.
Despite the recent event, BHP remains a solid play. The record dividend was the result of operational excellence throughout the year. BHP exhibited solid performance that led to consistent free cash flow generation and an efficient margin of 64%.
Looking forward, BHP is also streamlining its business. Hence, we have seen Woodside Petroleum and BHP announcing their intention to enter a merger commitment to combine their respective oil and gas portfolios by an all-stock merger to create a global top ten independent energy company. This move from BHP will pave the way for the resource giant to move into the Potash business and further focus on developing a net-zero company.
BHP shares trade at $38.24 a share. BHP is one of the best dividend stocks on the ASX.