Dividend-growth investing has been one of the most underrated strategies in recent years, however the tide is shifting. Specifically, with interest rates rising, and style leadership now shifting from growth to value, dividend-growth stocks are increasingly attractive and many of them are still significantly undervalued by the market. In this report, we share data on over 100 top dividend-growth stocks (those that have raised their dividend for at least 10 consecutive years), and then dive into four specific stocks that are particularly attractive, undervalued and worth considering as long-term staples in a prudently-diversified income-focused portfolio.
Top 10 Big Yields: BDCs, MLPs, REITs and CEFs
The market has been ugly this year. Steep interest rate hikes are not yet slowing inflation, but they are dragging down stock and bond prices, as energy costs continue to soar. And as counterintuitive as it may seem, these conditions are creating select attractive contrarian opportunities, particularly for disciplined high-income investors. In this report, we share data on over 100 big-yield investments (including REITs, MLPs, CEFs and BDCs), and then rank our top 10, starting with 10 and counting down to our top idea.
Owl Rock (ORCC) Earnings Note
This big-dividend BDC just raised its quarterly dividend by 6.5% and announced a new supplemental dividend, following its strong Q3 results (shares +8%). Net Investment Income was $0.37 (beating expectations by $0.02) and total Investment Income of $314.05M (+16.7% Y/Y) beating by $21.96M. As per the CEO, the strong results were supported by the “tailwind of rising interest rates.” The board also approved a 2022 Repurchase Program under which the BDC may repurchase up to $150 million of the its common stock. Long.
Members Mailbag: 10.3% Yield Lazard CEF (LGI)
Members Mailbag: It looks like this 10.3% Yield CEF sets its distribution rate annually on 12/31 as 7% of the NAV at that time. With the market down this year, this fund is down nearly 30%, so a significant distribution cut is likely coming… However, this one does have some attractive qualities like you mentioned (such as discount to NAV and a modest use of leverage), plus it gets you some interesting non-US market exposures… From an equity CEF standpoint, one of my current favorites is…
SoFi (SOFI) Earnings Note
Shares of this fintech +13% today after beating EPS expect and raising guidance. Some argue despite strength across all 3 segments (lending, tech platform, fin services) EPS is still negative (-$0.09 in Q3), but there is a clear path to profitability. The company’s new bank charter is providing flexibility against the challenging macro backdrop and the student loan business seems less handicapped as competing fed loan forgiveness on hold (at least for now). Rapid revenue growth (+51% y/y), very large market opportunity.
Phillips 66 (PSX) Earnings Note
This diversified energy co ($50B mkt cap) announced strong Q3 earnings Tues am (non-GAAP EPS of $6.46 beat by $1.43). Shares up 4% this am. The co generated $3.1B in op cash flow and returned $1.2B through dividends and share repurchases (div yield is 3.7%). Trading at 4.7x EV-to-EBITDA (fwd), the co is special b/c as it continues to expand midstream, it deserves a higher valuation multiple due to the steadier nature of that largely-fee-based business. During Q3, the co increased its economic interest in DCP Midstream. Long.
Top 10 Big-Yield Bond CEFs and BDCs
This has been a terrible year for bonds. As interest rates have risen sharply, bond prices have fallen sharply (and lending in general has been tumultuous). Both Bond Closed-End Funds (“CEFs”) and Business Development Companies (“BDCs”) have been impacted dramatically (i.e. their prices have plummeted as rates have risen). However, this has created select opportunities offering bigger than normal yields and higher than normal price appreciation potential. In this report, we offer an overview of Bond CEF and BDC opportunities, we share important data on over 50 of them, and then we countdown our top 10 big-yield Bond CEFs and BDCs.
ServiceNow (NOW) Earnings Note
Business remains strong for this profitable SaaS company despite slowing economic growth. Shares jumped 13% on Thursday following earnings. Revenue grew at an impressive 21.2% y/y, and subscription revenue grew at 28.5%. The magic of this company is two-fold: (1) customers love the solution (98% renewal), and (2) land and expand. Long.
Disruptive Healthcare Stock: Improving Numbers, But Any Path to Profitability?
Shares of this technology-based healthcare provider are up significantly following quarterly earnings, but this once famous (now infamous) “pandemic darling” is down 80% from its recent highs (as post-covid life resumes) and questions remain as to whether there is any legitimate path to profitability. The company reported a $0.45 loss per share for Q3, it beat on top and bottom lines, but slightly lowered full year guidance. We offer our opinion on investing in this report.
Enphase Earnings Note
Visa Earnings Note
Microsoft Earnings Note
Microsoft Earnings: Temporary or Permanent Slowdown?
Despite Social Pressures: This Dividend-Growth Energy Company Delivers
In the face of intense pressure to direct more cash to renewables, this blue chip energy stock has remained steadfast in its commitment to oil and gas. And this Friday’s earnings announcement will likely prove once again this strategy pays dividends (big, healthy, growing dividends). In this report, we review the company’s business strategy (and how it differs from peers), strong cash flows, dividend safety, valuation and big risks, including a special focus on social and political risks (i.e. the “woke mob”). We conclude with our strong opinion on who might want to own the shares and who might want to stay away.
Energy Stocks: About to Get (More) Volatile
Diversified Blue Chip REIT: Despite Big Risks, 6% Yield Is Attractive
When it comes to big-dividend REITs, the one we review in this report is a stalwart favorite. Having increased its annual dividend (paid quarterly) for over ten years straight, and now trading down 20% in the last month, investors are wondering if they should initiate a position (or even buy more shares). In this report, we review the business and then consider the current valuation versus two big risks. We conclude with our strong opinion on investing.
The 7 Healthiest Big-Dividend REITs (By Industry)
Attractive Commercial REIT: 6.7% Yield, Discounted Price
Shares of the commercial REIT we review in this report have declined sharply this year (and the dividend yield has mathematically risen to 6.7%) as investors have shifted from optimistic to pessimistic. However, there are reasons to believe the sell off has gone too far. In this report, we review the risks (including single-tenant properties, economically sensitive property types, and high short interest), and the opportunities. We conclude with our strong opinion on investing.
Big Dividends: Top 10 Healthiest (6% Yields and Up)
With the market in disarray this year (stemming from inflation, central bank policy changes and now the threat of an ugly recession) a lot of investors are increasingly looking to dividend stocks for safety. With that trend in mind, we are sharing the 10 most “financially healthy” big dividends (yields of 6% and up). We conclude with our strong opinion on how you should, and should not, be playing this current market environment.
Google Stock: Market Puking
Stalwart, blue-chip, US stock market juggernaut, and Google parent, Alphabet (GOOGL), made a new 52-week low this week. This is a company that has over 10% revenue growth, a seemingly insurmountable ecosystem and moat, and now trades at only 10 times forward EV to EBITDA. In this report, we review Google’s business model, revenue growth, capital allocation, current valuation and big risks. We conclude with our strong opinion on investing.