Got $5,000? These 3 High-Yielding Dividend Stocks Are Trading Near Their 52-Week Lows

Key Points

• Shares of Lockheed Martin, Colgate-Palmolive, and Pembina Pipeline have all been lagging.

• However, their businesses remain solid and deserve a closer look now from investors.

• These three stocks offer above-average payouts that are safe and sustainable.

• 10 stocks we like better than Lockheed Martin ›

If you've got $5,000 you can afford to invest in the stock market right now, you may want to consider putting it into some high-yielding dividend stocks which can turn that into some solid recurring income. And if you buy quality stocks that are trading near their lows for the year, you can also potentially benefit from gains later on. By investing in cheap dividend stocks, you can increase the odds of securing a great overall return.

The key, however, is picking quality dividend stocks. There are many income-generating stocks that aren't doing well and that have high yields, but they come with considerable risks. Three stocks that I believe can be well-suited for long-term investors and be good buys right now are Lockheed Martin (NYSE: LMT), Colgate-Palmolive (NYSE: CL), and Pembina Pipeline (NYSE: PBA).

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

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Lockheed Martin

Shares of defense stock Lockheed Martin have been tumbling since the company reported its latest earnings numbers. Its profits totaled $342 million for the period ending June 29 and were down by nearly 80% as the business incurred a $950 million loss on a classified program.

Year to date, the stock is now down around 12% (as of July 25) as it recently hit a new 52-week low of $410.11. While it has rallied since then, it's still modestly valued, trading at an estimated 16 times its future earnings, based on analyst expectations.

Although Lockheed is coming off a tough quarter, I believe the company, which is known for its fighter jets, should bounce back given the important role it plays in the military and aerospace sectors. The company anticipates its free cash flow will be at least $6.6 billion this year, which is more than double what it pays in cash dividends, making its 3.1% yield look incredibly safe.

Colgate-Palmolive

Colgate-Palmolive sells many top consumer brands that are staples across the country. Between oral care, personal care, pet care, and home care, its broad portfolio makes its business fairly steady. Last year, its sales totaled $20.1 billion and rose by a modest 3%.

The risk is that consumers may trade down to no-name products amid more challenging economic conditions. But unless that becomes a drastic and sudden trend, it shouldn't impact the ability of the company to continue paying its dividend; Colgate-Palmolive's payout ratio is less than 60%, giving it a good buffer to make payments even if its earnings slide in future quarters.

The stock is a Dividend King and it has not only paid but also raised its payouts for decades, making it one of the most dependable income-generating investments to hold on to over the years. It currently yields 2.4% and the stock itself trades within a few dollars of its 52-week low of $85.32. If you want a solid income stock you don't have to worry about, Colgate-Palmolive is a great option to consider.

Pembina Pipeline

The highest-yielding stock on this list is Pembina Pipeline, which pays investors 5.6%. The stock has been fairly steady this year as its returns have been flat and it continues to hover around its 52-week low of $34.13. The energy transportation company, which is based in Canada, relies heavily on contracts, which gives it some valuable stability in a sometimes turbulent oil and gas sector.

Through the first three months of the year, Pembina's revenue rose by 48%, totaling 2.3 billion Canadian dollars. And its earnings rose by 15% to CA$502 million. In light of its strong results and the company's confidence in its "low-risk" business, Pembina also raised its dividend by 3% this year.

If you're looking for a good combination of a cheap stock, a high yield, and some solid stability, Pembina could make for an underrated buy right now.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Colgate-Palmolive. The Motley Fool recommends Lockheed Martin and Pembina Pipeline. The Motley Fool has a disclosure policy.