Trends

My Top 10 Dividend Payers For March

Trending 1 year ago
beritaja.com

Mature mates taking a break while sightseeing and utilizing tablet

RgStudio/E+ via Getty Images

The My Top 10 Dividend Payers Series continues pinch our March 2023 Edition. This bid is dedicated to exploring stocks that connection perchance charismatic dividends. An charismatic dividend does not guarantee that a institution is poised to execute good but companies that execute good often connection charismatic dividends.

This period we're taking a look astatine nan latest apical 10 dividend payers for dividend reinvestment and retirement. Both lists are dominated by power equities owed to their caller outstanding improvements to rate flow. While these companies still supply value, nan macroeconomic information brings into mobility their adjacent word performance. After a reappraisal of our apical 10 lists we'll return a person look astatine 2 apical picks: Innovative Industrial Properties, Inc. and Coterra Energy Inc.

Dividend Strategy Recap

Read our April edition to reappraisal important statistic about dividends. To recap that article, dividends connection nan pursuing indications:

  1. Dividend stocks thin to execute amended during carnivore markets and trim portfolio volatility.
  2. S&P 500 stocks that salary dividends person performed amended than stocks that do not salary dividends aliases trim dividends.
  3. Generally, stocks that salary an supra mean dividend output astatine an supra mean payout ratio execute best.

One logic that dividend investing is truthful powerful is nan compounding effect of dividend reinvestment. By reinvesting dividends investors tin execute outsized returns for agelong word investments. There is overmuch statement complete nan advantage of dividends vs nary dividends. Without dividends, companies person much superior to grow. Many investors for illustration this to reinvesting their dividends into nan institution and subjecting themselves to taxable events. However, investigation demonstrates a beardown dividend tin beryllium utilized to gauge nan value of a company.

Dividend Goals

Choosing a bully dividend banal is not arsenic elemental arsenic looking for nan highest output you tin find. Often precocious dividend yields are a informing that nan marketplace expects nan institution to acquisition problems. Based connected this accusation I person formulated 4 dividend payer goals:

  1. Maximize full return
  2. Deliver a meaningful yield
  3. Experience beardown dividend growth
  4. Provide a separator of information against dividend cuts

Top 10 Dividend Payers

The intent of this workout is to place perchance charismatic dividend paying equities that are worthy further examination. This workout does not analyse wide finance suitability and is not an appraisal of risk.

Screening

The workout originates pinch a banal surface that eliminates attributes which discuss my goals. I usage nan Seeking Alpha Stock Screener to benignant equities based connected nan pursuing qualifications.

Metric Screen
Dividend Yield FWD >2%
Payout Ratio <150%
5Y Dividend Growth >2%
Years of Dividend Growth >3
Net Income FWD >-3.0%
Cash From Operations >-200M
Return connected Assets >3%
Debt to Equity <500%
Debt to FCF >-10%

Ranking

The surface results successful 93 stocks to rank this month. The ranking uses an equation that determines comparative scores according to an bid of prioritization successful nan array below. The maximum ranking people is 10.

Metric Reinvestment Strategy Priority Retirement Strategy Priority
Dividend Yield FWD Low High
Payout Ratio High Low
5Y Dividend Growth Low Medium
Years of Growth Low Medium
Revenue Growth FWD High High
Net Income 3Y Growth Low Low
Net Income Growth FWD High High
Net Income Margin High High
Return connected Assets Medium

High

Top 10 Dividend Payers for Reinvestment

Ticker Name Dividend Yield FWD Score
1 IIPR Innovative Industrial Properties, Inc. 8.73% 5.0
2 CTRA Coterra Energy Inc. 2.43% 4.9
3 OVV Ovintiv Inc. 2.13% 4.8
4 EOG EOG Resources, Inc. 2.57% 4.6
5 TRNO Terreno Realty Corporation 2.30% 4.5
6 TXN Texas Instruments Incorporated 2.78% 3.9
7 CNS Cohen & Steers, Inc. 3.03% 3.8
8 INFY Infosys Limited 2.16% 3.7
9 FAST Fastenal Company 2.49% 3.6
10 AVGO Broadcom Inc. 2.89% 3.6

Top 10 Dividend Payers for Retirement

Ticker Name Dividend Yield FWD Score
1 IIPR Innovative Industrial Properties, Inc. 8.39% 4.8
2 OVV Ovintiv Inc. 2.13% 4.7
3 EOG EOG Resources, Inc. 2.57% 4.4
4 CTRA Coterra Energy Inc. 2.43% 4.2
5 TXN Texas Instruments Incorporated 2.78% 3.7
6 RDN Radian Group Inc. 3.70% 3.5
7 MMM 3M Company 5.48% 3.4
8 CNS Cohen & Steers, Inc. 3.03% 3.3
9 NNN National Retail Properties, Inc. 4.78% 3.2
10 AVGO Broadcom Inc. 2.89% 3.2

A Peak Under The Hood

Okay, we've kicked nan tires connected these names. Now it's clip to return a person look. The extremity of this measurement is to place reddish flags and analyse if nan information is providing a realistic anticipation of strength. This month, we'll return a look astatine nan apical 2 picks from nan Dividend Reinvestment list.

#1. IIPR Innovative Industrial Properties, Inc.

g

Image by writer (data from Seeking Alpha)

Innovative Industrial Properties, Inc. is an business REIT engaged successful nan ownership and guidance of regulated medical-use cannabis facilities. The institution has a marketplace headdress of $2.37B and value to book of 1.21. The existent dividend output is 8.73% and expert estimates expect nan dividend to summation from $7.10 per stock successful 2022 to $7.32 successful 2023 and $7.85 successful 2024.

ChartData by YCharts

IIPR receives a coagulated A people from Seeking Alpha for dividend safety. It grades retired astatine #1 connected our database because of nan supra mean yield, beardown maturation of revenues and nett income complete nan past 3-5 years, and decent FFO maturation expected.

g

Seeking Alpha

Seeking Alpha authors person been bullish to very bullish connected IIPR complete nan past twelvemonth while nan banal had declined by >70%. The shares person fallen from a P/FFO of 46x to 10.5x. The normal value aggregate is high, astir 35x P/FFO, because nan REIT has knowledgeable exceptional growth. In nan past 4 years FFO has grown by much than 60% annually.

f

Seeking Alpha

One rumor is that maturation is slowing materially. The institution appears to beryllium losing "first mover" advantage successful nan space. Forward estimates for FFO maturation are meager astatine 2-3% CAGR. The shares don't look overvalued astatine coming but if nan institution experiences a worldly diminution to profit margins that could alteration successful a hurry. The guardant AFFO payout ratio is 85% which does not time off overmuch room for error. A imaginable consequence is that nan Federal legalization of cannabis would create much title for IIPR successful nan cannabis lease space. It increases nan likelihood that cannabis growers will see financing their ain facilities, which will apt return a trim from IIPR's margins. Support for Federal legalization has grown importantly and nan majority of States person now legalized aliases decriminalized nan substance.

f

FAST Graphs

Worth further investigation: nan implications of Federal cannabis legalization.

My stance: neutral, consequence floor plan does not align pinch portfolio objectives.

#2. CTRA Coterra Energy Inc.

f

Image by writer (data from Seeking Alpha)

Coterra Energy is an lipid and state exploration and accumulation institution chiefly successful Texas, Oklahoma, and Pennsylvania. It has a marketplace headdress of $19.45B and value to book of 1.52. The guardant dividend is 3.24% but nan institution has been paying retired typical dividends precocious successful excess of 5.79%. Analysts are expecting nan dividend to autumn from $2.49 successful 2022 to $1.29 successful 2023 and $1.21 successful 2024.

ChartData by YCharts

It is peculiarly troubling that nan institution receives astir 59% of gross from earthy state considering that earthy state has fallen precipitously complete nan past fewer months. This has been nan consequence of a supply glut that caught maine disconnected defender connected immoderate of my investments, chiefly owed to abnormally lukewarm wintertime temperatures successful nan bluish latitudes. I deliberation that guardant net estimates request to beryllium adjusted downward to relationship for this alteration successful price.

f

Seeking Alpha (company presentation)

ChartData by YCharts

The banal only receives a C+ people from Seeking Alpha for dividend safety. It's likely, fixed nan value action of lipid lately, that dividends successful 2023 will beryllium importantly little than 2022. The banal comes successful astatine #2 connected our database because of beardown maturation successful nett income, patient nett income margins, and return connected assets.

f

Seeking Alpha

Company rate flows are contingent connected nan value of lipid and earthy gas. U.S. earthy state has fallen by 75% since its highs past August while lipid has pulled backmost to nan $75 area. For CTRA to proceed to execute and rumor adaptable dividends power prices will request to rebound. It's difficult to opportunity wherever power is headed successful 2023. Many recessionary indicators are suggesting economical weakness successful 2023 going into 2024, including nan National Association of Homebuilders scale and nan U.S. manufacturing ISM.

f

Charts by TradingView (adapted by author)

ChartData by YCharts

Shares are presently trading astatine debased valuations including a P/OCF of 3.86x. Forward estimates of rate travel stay strong, contempt weakness successful power prices. The institution has utilized nan summation successful rate travel to trim their agelong word indebtedness to equity ratio to 0.17x, a promising development. If net estimates clasp true, this will beryllium to beryllium an exceedingly profitable investment. If not, shareholders would beryllium fortunate for nan diminution successful net to beryllium priced successful already.

f

FAST Graphs

Worth further investigation: short word outlook for power prices and institution resilience to a prolonged downturn.

My stance: neutral and watching.

Conclusion

Our dividend payers this period included 3 power names successful CTRA, OVV, and EOG. While valuations connected these equities are still attractive, macroeconomics are concerning for power pinch recessionary conditions increasing. I precocious closed a position successful OVV waiting for amended accusation astir nan guidance of crude oil. I americium not presently agelong immoderate of nan names connected nan lists, chiefly owed to valuation aliases concerns astir net maturation successful 2023/2024. The names that are connected my watch database see TXN, AVGO, MMM, and FAST. After owed diligence I whitethorn initiate early positions.

That's it for this month's edition. We will beryllium making immoderate improvements to nan screening process successful nan adjacent future. Which dividend payers do you deliberation are a 'buy?' Leave a remark below.

This article was written by

Garrett Duyck floor plan picture

Generalist investor and Seeking Alpha Contributor. Articles are a heavy dive into his investigation and portfolio decisions. The author's attack focuses connected macroeconomics pinch nan extremity of achieving highest risk-adjusted return by emphasizing beardown rate flow, dividends, separator of safety, and options strategies. ~A image is worthy a 1000 words but a floor plan is worthy a 1000 pictures~

Disclosure: I/we person nary stock, action aliases akin derivative position successful immoderate of nan companies mentioned, but whitethorn initiate a beneficial Long position done a acquisition of nan stock, aliases nan acquisition of telephone options aliases akin derivatives successful TXN, AVGO, MMM, FAST, OVV complete nan adjacent 72 hours. I wrote this article myself, and it expresses my ain opinions. I americium not receiving compensation for it (other than from Seeking Alpha). I person nary business narration pinch immoderate institution whose banal is mentioned successful this article.

Additional disclosure: The contented successful this article is for informational, educational, and intermezo purposes only. This contented is not finance proposal and individuals should behaviour their ain owed diligence earlier investing. The writer is not an finance advisor and is not suggesting immoderate finance recommendations. This article reflects nan opinions of nan writer based connected nan author’s champion judgement astatine nan clip of penning and are taxable to alteration without notice. Readers are responsible for their ain finance decisions and should consult pinch their financial advisor earlier making immoderate finance decisions.

Editor: Naga



Read other contents from Beritaja.com at
More Source
close