The resurgence of the COVID-19 cases, uncertainty over the upcoming Presidential election, and discussions around the fiscal stimulus have spurred a new wave of volatility in the markets. If the Democrats assume office, they could bring about massive changes in the existing regulations. The imminent changes could also impact the profitability of many companies and their ability to pay dividends. Investors, therefore, should seek a combination of a steady income and momentum to cushion their portfolio. It is also crucial to buy these stocks at a judicious price point to reap the benefits of prospective appreciation.
2020 has been a challenging year so far for dividend investors. Due to the impact of the pandemic, many businesses had to restrain dividend pay-outs. However, some companies have not only been able to maintain their dividend payments but have increased the same thanks to seeing increased sales and profits due to the pandemic. While many businesses are struggling to survive, these companies benefitted from the changes in consumer behavior.
I have picked four stocks that have been witnessing strong momentum and offer a high dividend yield. Their dividend story has remained pretty favorable for the past many years: Artisan Partners Asset Management Inc.(APAM), Clearway Energy, Inc. (CWEN), Rent-A-Center Inc. (RCII), and Pitney Bowes, Inc. (PBI).
Artisan Partners Asset Management Inc. (APAM)
APAM offers asset-management services to trusts, private funds, endowments, foundations, charitable organizations, government entities as well as pension and profit-sharing plans. The company also caters to mutual funds, non-US funds, and collective trusts.
APAM’s revenue for the second quarter ended June 2020 edged 0.5% higher year-over-year to $203.0 million. The assets under management at the end of the quarter climbed 27% to $120.6 million compared to the previous quarter. Operating margin for the quarter also expanded to 37.8% as against 35.3% in the prior-year period driven by a 3% year-over-year drop in operating expenses. The company’s adjusted EPS rose to $0.71 compared to $0.67 a year ago. APAM also paid a variable quarterly dividend of $0.61 per share during the quarter.
EPS for the third quarter is likely to grow 22.9% to $0.86. Meanwhile, the consensus estimates for revenue of $228.51 million indicates a 12.4% increase year-over-year.
APAM has been consistently paying quarterly dividends since 2013. On July 28, the company declared a dividend of $0.67, which cumulated to an annual dividend of $2.68 and yields 5.83%. The company’s 3-year and 5-year divided CAGRs stand at 1.99% and 3.68%, respectively.
The stock has gained 42.3% year-to-date to close Friday’s trading session at $46.00. Over the past 3 months, the stock has gained 34.1%. APAM has more than doubled in the last six months and is currently trading quite close to its 52-week high mark of $46.64.
How does APAM stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Overall POWR Rating
The stock is also ranked #2 out of 45 stocks in the Asset Management industry.
Clearway Energy, Inc. (CWEN)
CWEN owns, acquires, and operates contracted renewable and conventional generation as well as thermal infrastructure assets in the United States. The company’s asset portfolio includes over 7,000 megawatts of wind, natural gas-fired, and solar power generation facilities, as well as district energy systems. CWEN’s diversified and contracted portfolio helps it generate a steady and growing dividend income for its investors.
The revenue for the second quarter ended in June 2020 jumped 15.8% year-over-year to $329 million. The company swung to profit in the second quarter with EPS coming at $0.41 compared to a loss of $0.22 in the prior-year period. Cash from operating activities for the period was $100 million, and cash available for distribution was $86 million.
As Pacific Gas & Electric (PG&E) emerged from bankruptcy, CWEN announced that it will resume distributing dividends as earlier. As $168 million of cash had been released, the company’s President and Chief Executive Officer Christopher Sotos stated, “This cash will be allocated to existing growth commitments which puts the Company in a position to deliver at the upper end of its 5-8% long term dividend growth target through next year.” CWEN also reaffirmed full-year 2020 guidance for CAFD at $310 million.
CWEN has been steadily paying dividends since 2015. The company declared a dividend of $0.3125 per share in the third quarter of 2020, up 49% from the last quarter. This results in an annual dividend of $1.25 and a yield of 4.21%
The stock has surged 48.7% year-to-date to close Friday’s trading session at $29.67, very close to its 52-week high at $31.00. Over the past six months, the stock has gained 55.3%. CWEN has shown strong momentum as the COVID-19 had a negligible impact on its business. The company has shown resilience on the back of long-term contracts and stable revenue streams. As there is a rising demand for cleaner and greener sources of energy, CWEN is poised to see better momentum in times to come.
CWEN’s POWR Ratings reflect its promising outlook. It has an overall rating of “Strong Buy” with an “A” in Trade Grade, Peer Grade, and Buy & Hold Grade, and a “B” in Industry Rank. Among the 61 stocks in the Utilities – Domestic industry, it’s ranked #4.
Rent-A-Center Inc. (RCII)
RCII deals in leasing household durable goods such as furniture, consumer electronics, computers, appliances, and accessories to customers on a rent-to-own basis. The industry leader in renting household goods has more than 2,000 stores across the US, Mexico, and Puerto Rico. RCII offers branded goods for rent which includes those from Whirlpool Appliances, Ashley Furniture, Samsung Electronics, etc. The company offers customers a chance to own these goods on a rental basis instead of fixed payments over time.
In the second quarter ended June 2020, RCII saw a 4.2% year-over-year rise in revenue to $684 million. Rent-A-Center Business Same-Store Sales rose 7.8% for the quarter, while the two-year same-store sales climbed 13.4%. RCII’s preferred sales invoice volume surged 25% despite the store closures due to the pandemic. RCII’s EPS for the second quarter stood at $0.70, up 13.4% year-over-year.
Considering the uptick in its business, RCII also raised its full-year 2020 guidance for revenue to $2.875 from $2.755. Meanwhile, the free cash flow is now expected to be $165 million instead of $135 million expected previously. Street estimates the EPS for the third quarter to be $0.96, which indicates a year-over-year growth of 104.3%. Meanwhile, the revenue is expected to rise by 8.2% to $702.76 million.
The company started paying dividends in 2010. For the fourth quarter, RCII has declared a cash dividend of $0.29 per share. The company will pay this dividend on October 26, 2020, to stockholders of record as of October 7, 2020. This cumulates to an annual dividend of $1.16 and yields 3.45%.
The stock has gained 16.7% year-to-date to close Friday’s trading session at $33.66. The stock has returned more than 96% in the past six months. During the previous three months, RCII climbed 23%. The company got a boost amid the pandemic, especially its e-commerce sales. Its online business climbed 60% from the prior-year period, stated RCII’s Chief Financial Officer, Maureen Short.
RCII’s POWR Ratings reflect its promising outlook. It has an overall rating of “Strong Buy” with an “A” in Trade Grade, Peer Grade, and Buy & Hold Grade, and a “B” in Industry Rank. Among the 34 stocks in the Specialty Retailers industry, it’s ranked #9.
Pitney Bowes, Inc. (PBI)
Based in Stanford, Connecticut, PBI is a leading company involved in the sales, rental, financing of its postage meters as well as other mailing equipment and services. The company has also expanded to software and other technologies as well as e-commerce. As the world is moving into a new phase of existence, PBI executes its deliveries with utmost accuracy. The company has supported more than 750,000 businesses and has operations across the Asia Pacific, Canada, Puerto Rico & United States, Europe, and Latin America. PBI has been in the business for a century and processes nearly 17 billion pieces of mail each year.
On October 15, PBI announced new digital technologies which include a SaaS-based sending platform SendPro® Enterprise for Canadian businesses. For smaller enterprises, SendPro® Online has extended its multi-carrier capabilities to increase choice and generate savings by collaborating with Canadian carrier Purolator. PBI’s new technology is mobile optimized and powered by cloud-based parcel management software.
In the second quarter, PBI’s revenue grew 26% year-over-year to $517 million led by the 41% increase in the Global E-commerce segment. The company saw significant growth in the volumes of the domestic parcel and digital deliveries. PBI’s EBIT margins also improved due to lower transportation costs. The company also paid $9 million in dividends for the quarter. PBI posted a loss per share of $0.02 compared to a $0.13 EPS in the same period last year.
The consensus EPS estimate of $0.05 for the quarter ended September indicates a 79.2% decline year-over-year. The street estimates PIB’s revenue for the third quarter to increase by 9.2% year-over-year to $851.48 million.
PBI has been regularly paying quarterly dividends over the past three decades. Most recently, the company declared a quarterly dividend of $0.05, payable on September 9, which cumulates to an annual dividend of $0.20 and yields 3.28%.
PBI closed Friday’s trading session at $6.00, gaining nearly 51.3% year-to-date. The stock tripled in the last six months. PBI saw an upsurge in its price particularly since September after it announced pricing adjustments for domestic and cross-border delivery during the holiday season to address rising eCommerce demand.
PBI’s POWR Ratings reflect its promising outlook. It has an overall rating of “Buy” with an “A” in Trade Grade and a “B” in Buy & Hold Grade and Industry Rank. Among the 30 stocks in the Technology – Hardware industry, it’s ranked #14.
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APAM shares were trading at $45.66 per share on Monday afternoon, down $0.34 (-0.74%). Year-to-date, APAM has gained 52.20%, versus a 7.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...
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|RCII||Get Rating||Get Rating||Get Rating|
|PBI||Get Rating||Get Rating||Get Rating|