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All Contents © 2019The Kiplinger Washington Editors
By Louis Navellier
| June 7, 2017
As you know, I’m very much focused on growth. But that doesn’t mean you ignore the income side of investing altogether.
There are a handful of companies that make the grade that are delivering solid dividends as well as hold great prospects for growth. Call them income plays, total return plays or growth stocks with a kicker, it’s not important. What is important is these are seven dividend stocks that make the grade.
They come from various industries, but the one common feature is, the industries they’re in are growing. And they are set to benefit handsomely from that growth. The dividends simply provide an extra boost, or in some cases, a payment for your patience while the sector turnaround.
And as dividend stocks, the point in holding them is to hold them, not trade them. You only get the benefit of dividends if you plan on sticking around long enough to collect them.
Prices and data are from the original InvestorPlace story published on June 2, 2017. Click on ticker-symbol links in each slide for current prices and more.
Boeing Co. is the largest aerospace company in the world and the biggest exporter in the U.S. With more than 140,000 employees in all 50 states, and 13,600 subcontractors that employ 1.5 million people, BA is one of the most established corporate brands in the world.
On the upside, its aerospace business — military aircraft, satellites, space station, drones, homeland security, etc. — will see a boost from the current administration in Washington. Also, its commercial airplanes will also benefit from the continuing long-term trend of growing air travel demand around the world.
Also, as we near the next election cycle, because BA has workers in every state, it keeps politicians aware that cutting programs means their constituents lose jobs. And in this environment, that’s not the smart choice.
After a 21% run-up since the beginning of the year, BA is in a great spot now.
DTE Energy Co. is a diversified power company that is based out of Detroit, Michigan. It has a regulated energy business providing utility services to 2.2 million customers in Southeastern Michigan, as well as a gas business serving 1.2 million customers. It’s one of the oldest and largest natural gas utility businesses in the U.S.
As you well know, times have been tough in the Midwest in general and Detroit in particular in the past decade. But DTE has adapted to the challenges and is currently expanding its nonregulated energy operations.
DTE supplies and stores natural gas that it distributes around the U.S. and into Canada. This is where the nearest opportunities lie. It’s generating high-margin energy from biomass and its pipelines are increasingly valuable.
Delivering a 3% dividend yield, DTE is taking advantage of the market opportunities on the unregulated side and is doing a very good job, up 12% year to date.
CenterPoint Energy, Inc. is a Houston-based energy provider that has been powering homes and businesses in one form or another for the past 140 years.
It delivers electricity and natural gas across the U.S., on its own and with a network of partners. CNP serves 100,000 customers in 32 states. Considering that CNP sits close to the Eagle Ford Shale, which is the heart of one of the biggest energy rich regions in the U.S., and there is a focused effort to increase reliance on U.S. energy, CNP is in the catbird seat for growth in the energy distribution sector.
But those gains will come over time, although CNP is up 17% year to date. Fortunately, CNP kicks off a nice 3.7% dividend yield to pay for your patience.
Permian Basin Royalty Trust is basically a exploration and production company that has properties in the Permian Basin, which extends from West Texas into New Mexico.
Considering the past few years, PBT has had a tough go of it when prices were so low that it was hard to be profitable as a U.S. producer.
But now times have changed, as have technologies. PBT can now extract oil and gas much cheaper, so it can make more money when prices are low. Previously, breakeven was around $50 a barrel. Now producers can be profitable closer to $40 a barrel.
Right now, PBT is off almost 100% from its 2012 highs, but the stock is moving up again. It’s up 31% in the past 12 months. And just to reward your patience, PBT is delivering a 6.5% dividend yield.
Alliance Holdings GP, LP is the general partner that owns a number of limited partnerships focused on coal production and distribution to utilities and industry.
AHGP has had a tough couple of years, to say the least. With the abundance of U.S. natural gas and the ensuing low prices, coal companies had a tough time competing. While coal is cheap, it’s a much different logistical process to get coal where it needs to be versus natural gas. Plus, natural gas is far more efficient and clean.
But the new administration is backing coal and repealing legislation that made competition difficult for coal companies. And as usual, this oversold sector is now starting to gain traction and has a solid multi-year run ahead of it.
Up 50% in the past 12 months and still delivering a nearly 8% dividend, AHGP has its best days before it.
Armour Residential REIT, Inc. is a REIT with a twist. Instead of buying properties, ARR manages a portfolio of mortgages on residential properties that are mostly owned by Government special entities (GSEs) like Fannie Mae, Freddie Mac and Ginnie Mae.
Since it’s structured like a REIT, by law it must distribute 90% of its revenue to its trust holders (aka, investors), which it does in the form of a dividend. In the past few years, this has not been a very active market because the housing market was so slow.
But now, as the economy shows signs of recovery, and interest rates are rising, ARR is seeing renewed interest in the market. In the past 12 months the stock is up 33%.
More stock gains are likely, but right now, the compelling reason to own ARR is its 8.7% dividend. As long as the economy keeps chugging along, ARR is safe.
Arbor Realty Trust Inc. is a real estate investment trust (REIT) that provides financing for multifamily and commercial real estate properties.
In layman’s terms that means ABR finances new and existing properties, whether they’re hotels, apartment buildings, industrial office space or commercial space around the country. It currently has a portfolio valued at $13 billion.
As the economy recovers, this is a unique company that has a lot of headroom. Interest rates will rise, which will mean its margins will improve. As more people get back to work or make more money, property values will rise and that only helps ABR’s bottom line and its investors’ bottom line as well.
As a REIT, ABR passes its profits on to investors like they were business partners, because by law they are. Right now, the stock is yielding a stunning 8.7%. And it’s up almost 11% year to date.
This article is from Louis Navellier of InvestorPlace. He may hold some of the aforementioned securities in one or more of his newsletters.
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