The recent stock market rally has produced impressive results for everyone. However, many investors have shed their reliance on income stocks. Instead they have gone for more Risk On selections during this latest bull run.
I believe that is all about to change with a rotation back to attractive dividend yield income stocks. That’s because this market has run so far, for so long that it is about to tire out with profits likely taken from the recent big winners. Typically this type of consolidation period will have money rotate back to safer selections where income stocks dominate.
At the bottom of the article I will share full details on the research study I applied to whittle down to these 5 stellar income stocks. MPLX Limited Partnership (MPLX), Shell Midstream (SHLX), Sunstone Hotel (SHO), Tallgrass Energy (TGE) and Veon Ltd. (VEON).
Enjoy more details on each stock below.
MPLX LP (MPLX - Get Rating) this is your classic energy pipeline MLP paying out an impressive dividend yield of 10.2%. But what stands out even more for MPLX is the size. They are sporting a $28 billion market cap that is larger than most in the industry. They got to this size because of a long track record of operational excellence that shows up in growing earnings, cash flow, and, most importantly, 11.6% annual increase in dividend payment. These qualities makes it likely the safest pick in the group.
Shell Midstream Partners (SHLX) stands out as being the best at increasing the dividend payout each year. SHLX has done that at an eye catching 46.3% annual pace. So it may have the lowest yield of our 5 today, but it probably won’t stay that way for long given that SHLX has raised their quarterly dividend more than 19 times in a row. Shell Midstream is certainly worthy of consideration in any portfolio desiring attractive income.
Tallgrass Energy (TGE) comes in second place behind SHLX for the pace of annual dividend increases at 36.1% per year. TGE is also the second largest cap stock on the list to offer more stability. Just like SHLX, Tallgrass has a long, long history of quarterly dividend increases. So for as nice as the current 9.87% dividend yield appears, quite likely TGE will continue to increase it into the future.
Sunstone Hotel (SHO) this REIT provides the biggest dividend on the board at 17.35%. Before you immediately declare SHO the winner for this dividend picking contest, please realize that their earnings trajectory has gotten a little less favorable. This means SHO has a bit more risk in their ability to generate the level of earnings and cash flow to sustain this uber-high dividend yield. However, that risk is well balanced by Sunstone’s 5 year history of 13% annual dividend increases.
VEON Ltd. (VEON) these are the only telecom shares in the group. And VEON is also the only international shares on our list today (based in the Netherlands and operating all throughout Russia, Algeria, Pakistan, Ukraine, Georgia, Kazakstan etc.). Beyond their attractive 8.2% dividend yield, VEON management has generously raised the payout by 27.8% per year. Those who are attracted by a low price will be pleasantly surprised at VEON currently at $2.67. While those interested in value will note that the average Wall Street target price is 21% higher at $3.23 with a street high target of $3.60.
Want more great stock picks? Then check out these additional resources:
Specifics on Dividend Stock Research Study
Here are the steps I took to narrow down to these 5 elite high yield dividend income stocks out there today:
2,370 stocks with a POWR Ratings of A and B. Always need to start the party with our proprietary ratings model that finds stocks with the best momentum and timeliness. Typically the strength in price action is a reflection of positive fundamental catalysts at play.
1,422 stocks with market cap greater than $2 billion. I didn’t want small caps onboard because they often have riskier earnings outlooks that call future dividend payments into question. So mid-caps and large caps only.
28 of those stocks have 8% dividend yield or higher. So this single criteria quickly got rid of 98% of the potential candidates. So at this stage its already a pretty impressive group of stocks.
5 of those stocks had grown dividend payments by greater than 10% per year for the past 5 years. This is probably the most important step because the stocks with healthy increased dividends in the past are more likely to keep up that trend in the future. But also it is hard to pay more dividends if the company is not producing enough earnings and cash flow to make it happen. So this is a vital health check on the operational strength of the firm.
OK…you get the idea. These are not just your ordinary high yield stocks. They have been specifically selected to also provide proof of operational strength, history of dividend increases, along with ample price momentum to make them timely and attractive selections today.
MPLX shares were trading at $26.55 per share on Monday afternoon, down $0.35 (-1.30%). Year-to-date, MPLX has gained 4.28%, versus a 3.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|MPLX||Get Rating||Get Rating||Get Rating|
|SHLX||Get Rating||Get Rating||Get Rating|
|SHO||Get Rating||Get Rating||Get Rating|
|TGE||Get Rating||Get Rating||Get Rating|
|VEON||Get Rating||Get Rating||Get Rating|