Wall Street is awaiting further rate hikes amid record-high inflation. This has been leading to fears of an impending recession. However, Marko Kolanovic, JPMorgan Chase & Co.’s co-head of global research, has projected an eventual uptrend for markets, with a possibility of inflation evasion. He said, “We can climb out of this hole; there will be no recession this year, some summer increase in consumer activity on the back of reopening.”
However, the market volatility has caused increased interest in high dividend stocks, as evident from the iShares Core High Dividend ETF’s (HDV) 7.7% returns over the past six months. Therefore, investors looking to dodge the short-term market fluctuations and settle for the long run could bet on high-yielding dividend stocks.
Under-the-radar, high-yielding dividend stocks Delek Logistics Partners, LP (DKL) and Donegal Group Inc. (DGICA) could be solid picks to generate a steady income stream. These stocks have outperformed the S&P 500’s 18% year-to-date decline and should continue delivering market-beating returns.
Delek Logistics Partners, LP (DKL)
DKL owns and operates logistics and marketing assets for crude oil and intermediate and refined products in the United States. It operates through three segments: Pipelines and Transportation; Wholesale Marketing and Terminalling; and Investment in Pipeline Joint Ventures.
On May 3, 2022, Uzi Yemin, Chairman, President, and CEO of DKL’s general partner, said, “With ongoing consolidation in the MLP space, DKL should screen more attractively to investors as a larger, more diversified company with increasing third-party revenue and a long track record of increasing shareholder returns. The recent announcement to increase the quarterly distribution to $0.98/unit marks the 37th consecutive increase in the quarterly distribution.”
DKL has been paying dividends for 10 consecutive years. DKL’s dividend payouts have grown at a 7.7% CAGR in the past five years. Its current dividend translates to a 7.40% yield, while its four-year average yield is 11.19%.
DKL’s net revenues came in at $206.58 million for the first quarter ended March 31, 2022, up 35.1% year-over-year. Its net income came in at $39.51 million, up 9% year-over-year. Also, its EPS came in at $0.91, up 9.6% year-over-year.
DKL’s revenue is expected to increase 32% to $925.18 million in 2022. Its EPS is estimated to grow 40% to $1.40 for the quarter ended September 2022. The stock has gained 23.9% year-to-date to close Friday’s trading session at $52.94.
DKL’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Momentum and a B grade for Stability and Quality. It is ranked #9 of 33 stocks in the A-rated MLPs – Oil & Gas industry. Click here to see the additional ratings for DKL (Growth, Value, and Sentiment).
Donegal Group Inc. (DGICA)
DGICA, an insurance holding company, provides personal and commercial lines of property and casualty insurance to businesses and individuals. It operates through three segments: Investment Function; Personal Lines of Insurance; and Commercial Lines of Insurance.
On April 28, 2022, Kevin G. Burke, President, and CEO, said, “As we deploy state-specific strategies and introduce new personal lines products in select states, we are confident that our go-forward business plan will increasingly enhance our total financial results.”
DGICA has been paying dividends for 20 consecutive years. Its dividend payouts have grown at a 4.1% CAGR over the past three years. Its current dividend translates to a 4.22% yield, while its four-year average yield is 4.16%.
For the quarter ended March 31, 2022, DGICA’s net income increased 24.8% year-over-year to $13.14 million. Its non-GAAP operating income came in at $13.21 million, up 53.9% year-over-year. Moreover, its non-GAAP EPS came in at $0.43, up 48.3% year-over-year.
Analysts expect DGICA’s revenue to increase 4.6% to $887.98 million in 2023. Its EPS is estimated to increase 294.4% to $0.35 for the quarter ended September 2022. The stock has gained 9.4% year-to-date to close Friday’s session at $15.63.
It’s no surprise that DGICA has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Stability and Sentiment.
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DKL shares were trading at $53.90 per share on Monday afternoon, up $0.96 (+1.81%). Year-to-date, DKL has gained 31.43%, versus a -16.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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