The volatility of the equities markets has been caused by the increase in benchmark interest rates, rising prices, and geopolitical concerns. Given the tough environment, it is prudent to prioritize passive income stability and portfolio growth.
Investing in dividends offers investors a regular cash flow over the long term. And when dividend income is reinvested, the miracle of compounding may turbocharge returns. About forty percent of the total return of the S&P 500 over the past century can be attributed to dividend payments.
The top dividend stocks are an excellent hedge against inflation since they offer both appreciation and capital gains to compensate for rising costs. From 1991 to 2015, dividend-paying stocks returned over twice as much as non-dividend stocks.
Not all dividend stocks are equal. For instance, a high dividend cannot compensate for a stock's poor performance. Similarly, a high dividend yield may conceal inconsistent dividend payments, poor performance, or limited growth potential.
Dividend stocks make regular cash and stock payouts to their shareholders. Income investors who need cash flow invest in dividend stocks, while the finest dividend stocks also offer excellent long-term appreciation.
Here are the most important things to comprehend while examining the top dividend stocks:
Dividend payout ratio
This is a percentage that represents the annual dividend amount of a stock divided by its annual EPS. The payout ratio increases and decreases as earnings and dividend rates fluctuate, and a payout ratio of 60% or below suggests that a corporation's dividend is sustainable.
Dividend yield
This is another percentage metric representing a stock's annual dividend amount divided by its current share price. Dividend yield informs investors of the proportion of a stock's price that it pays out in annual dividends.
Sustained dividend increases
While the dividend payout ratio and dividend yield can enhance your comprehension of a stock's current dividend, it's equally important to locate stocks that have consistently increased their payouts over time.
Consistent growth in earnings per share and revenue
The dividends of a firm are only as robust as its core business. Consider dividend-paying stocks with stable and growing earnings and revenue.
Durable competitive advantages
Companies that have maintained the highest dividends for the longest durations have unquestionably earned long-lasting competitive advantages. Whether it derives from technology, entry obstacles, high customer switching costs, or a strong brand, the best dividend stocks possess it.
Investing in stocks under $20 is an excellent way to build a portfolio. Even though these stocks are reasonably priced, they still have a great deal of future growth potential. This is especially true for businesses that are expanding into new areas and experiencing exponential growth.
Although they are still inexpensive stocks, they have moved out of the "penny stock" area, indicating that they are more likely to remain stable than stocks valued under $5 or $10. It is always advisable to keep a watch out for expanding stocks at this price level.
If the company's expansion proves to be successful, purchasing these stocks when they are still reasonable can occasionally result in enormous rewards in the future. Consider the company's business concept as well as crucial market data points when selecting the finest stocks priced under $20.
Revenue and profits per share increase from one year to the next can suggest the potential for continued share price appreciation. You can also examine the earnings per share ratio to determine whether the stock is overvalued or undervalued relative to its most current financial data.
NorthWest Healthcare Properties REIT
REITs are required to distribute 90% of their taxable profits to shareholders, making them an attractive source of passive income. My top selection is NorthWest Healthcare Properties REIT (TSX: NWH.UN), which owns and administers healthcare facilities in eight countries. Due to the company's protective healthcare portfolio, long-term contracts, and government-backed tenants, occupancy and collection rates are higher.
Recent acquisitions of 27 healthcare facilities for $753 million are growing their foothold in the United States. The company has created $2 billion in development potential in Australia, Europe, Brazil, and Canada, among other nations. In addition to bolstering its balance sheet, the company raised $173,7 million in May. Given NorthWest Healthcare's development prospects and reliable cash flow, I believe its dividend is secure. With a monthly dividend of $0.0667 per share, its forward yield is currently 6.63 percent.
Exco Technologies (TSX: XTC)
Exco Technologies (TSX: XTC), headquartered in Ontario, designs, develops and produces automotive components and consumable equipment. I had targeted this dividend stock back in 2019. At the time of writing, the stock price increased 7.7% in 2021. The stock is 50% higher than it was a year ago. At the time of this writing, Exco was trading just below $10.
The business released its results for the third quarter of 2021 on July 28. Its sales increased by 78% to $114 million. Meanwhile, sales for the year's first nine months increased to $354 million. Exco's EBITDA increased by 225 percent to $15.2 million. The year-to-date net income increased to $31.3 million from $16.7 million for the same time in 2020.
This dividend stock's price-to-earnings ratio of 9.3 is quite attractive. It offers a $0.10 quarterly dividend per share, and this represents a yield of 4%.
Companhia Brasileira de Distribuição (NYSE:CBD)
CBD (NYSE: CBD) was established in 1948 and is headquartered in So Paulo, Brazil. Through its network of department stores in Brazil, the company operates as a retailer of food, apparel, home appliances, electronics, and other household necessities. Companhia Brasileira de Distribuico's (NYSE: CBD) revenue of $2.05 billion in Q1 2022 exceeded analyst projections by around $72 million.
On May 5, Companhia Brasileira de Distribuicão (NYSE:CBD) declared a $0.061 per share quarterly dividend. The dividend is payable to shareholders of record as of the close of business on May 9 on June 22. On May 9, the dividend yield for Companhia Brasileira de Distribuico (NYSE: CBD) was 1.81 percent, making it one of the best dividend stocks under $10.
On May 4, BofA analyst Robert Ford Aguilar raised Companhia Brasileira de Distribuico (NYSE: CBD) from Underperform to Buy and increased the price objective from R$25 to R$28. He anticipates that the company and its subsidiaries would profit from the escalating food inflation and that the recent reopening of tourism in Uruguay and exits in Colombia will contribute to increased growth.
According to Insider Monkey's Q4 data, ten hedge funds placed long calls on Companhia Brasileira de Distribuico (NYSE: CBD), totaling $5.5 million in positions, compared to eight firms in the previous quarter, which held interests in the company worth $5.7 million. Marshall Wace LLP, which Paul Marshall and Ian Wace lead, owns 436,765 shares of Companhia Brasileira de Distribuico (NYSE: CBD), worth $1.74 million.
Pizza Pizza Royalty
In the previous month, Pizza Pizza Royalty (TSX: PZA) increased its monthly dividend by 3.8% to $0.0675 per share, with an annualized payout of $0.81 per share. It was the company's second price increase of the year. The corporation increased its monthly dividend by 8.3% in February.
The company's financial position appears to have increased as a result of the reopening of dining spaces and non-traditional restaurants, as well as the strengthening of same-store sales in combination with the removal of pandemic-related limits, enabling management to enhance dividends. The company has a dividend yield of 6.67 percent, looking ahead.
With the restart of its restaurant development program, Pizza Pizza anticipates a 5% growth in the number of its restaurants this year. Its investment in enhancing digital channels may continue to increase its financial performance. The company trades at an attractive NTM EV-to-EBITDA multiple of 13.4, making it an intriguing investment for income-seeking investors despite its healthy growth potential.
Algonquin Power & Utilities
Algonquin Power & Utilities (TSX: AQN)(NYSE: AQN) manages a diversified portfolio of assets that serve more than one million customers. In addition, it owns and runs renewable power generation facilities and sells the electricity generated from these facilities through long-term contracts. Due to the company's low-risk and regulated assets generates consistent and predictable cash flows, allowing it to pay a good dividend rate. In May, Algonquin Power & Utilities increased its quarterly dividend by 6% to $0.1808 per share, bringing its forward yield to 4.18 percent.
In the meanwhile, the firm has promised to invest approximately $12,400,000,000 between 2022 and 2026 to grow its utilities and renewable power-generating assets. In addition, these investments involve strategic acquisitions. The corporation has bought New York American Water Company and is in the process of acquiring Kentucky Power Company so far this year. In the meantime, the company's management forecasts its adjusted EPS to increase between 7 and 9% through 2026, based on its growth potential. Consequently, I believe Algonquin Power & Utilities is well positioned to sustain its dividend increases.
Medical Properties Trust, Inc. （MPW)
Real Estate Investment Trusts are typically an excellent source of income due to the dividend payout requirements they must meet. Medical Properties Trust is a REIT that acquires and develops net-leased hospital properties.
MPW shares have outperformed the market throughout the current recovery, rising over 30% in the past two years, and are trading at a substantial discount relative to its industry.
In addition, MPW's dividend yield of 6.47% is above the S&P 500's average of 2.01% and its industry's average of 5.40%. The stock now carries a Zacks Rank #3 (Hold) and a Styles Scores growth grade of B.
Grindrod Shipping Holdings Ltd. (GRIN - Get Rating)
GRIN is an international shipping firm headquartered in Singapore that owns, charters, and operates a fleet of dry bulk carriers and tankers globally.
The company's $1.19 annual dividend yields 10.06% at the current share price. The last quarterly dividend was paid on June 20, 2022.
For the fiscal quarter that ended March 31, 2022, GRIN's revenue increased 61.2% year-over-year to $110.29 million. Its adjusted EBITDA from continuing operations grew 137.1% year-over-year to $50.16 million.
Analysts anticipate that GRIN's revenue for the fiscal year ending in December 2022 will be $508.40 million, an increase of 11.5% year-over-year. Its EPS is projected to climb 12.6% year-over-year to $6.63. The firm also exceeded consensus EPS projections in three of the four quarters.
Over the past year, GRIN's trading price has increased by 68.7% to $18.69 per share.
The fundamental strength of GRIN is reflected in its POWR Ratings, which assign the stock an overall grade of B, which corresponds to a Buy in our unique rating methodology.
Gladstone Land (LAND)
The land is technically a REIT and not a stock, but I include it on the list because it can be purchased on any normal trading platform.
The fund invests in farms across the United States, so you are purchasing both real estate and agricultural goods.
Unlike the other businesses on the list, this one is straightforward and simple to comprehend: the land is limited, people require food, and you're purchasing the supply side of both resources.
Due to the current agricultural downturn, this REIT could be an excellent long-term investment, as you purchase a much-needed asset and get monthly dividends.
Empire State Realty Trust, Inc. (NYSE: ESRT)
Empire State Realty Trust, Inc. (NYSE: ESRT) is an American investment trust for real estate that holds and leases high-end office and retail assets in Manhattan and the New York metropolitan area, including the Empire State Building. As of May 9, the dividend yield for Empire State Realty Trust, Inc. (NYSE: ESRT) was 1.69 percent.
The business expects FY 2022 core FFO to decrease between $0.73 and $0.78 per fully diluted share, compared to the consensus of $0.77 on Wall Street.
Shareholders of record on March 15 were eligible to receive the dividend payment; March 31 was the ex-dividend date.
On May 2, Evercore ISI analyst Steve Sakwa upgraded Empire State Realty Trust, Inc. (NYSE: ESRT) to Outperform from In Line with an $11 price target and 29% total return potential. The analyst increased his profits forecasts for 2022 and 2023, giving as his reasoning the company's "good" growth, "inexpensive" valuation, and "strong balance sheet with sufficient liquidity."
The number of hedge funds bullish on Empire State Realty Trust, Inc. (NYSE: ESRT) increased to 14 in the fourth quarter from 7 in the third quarter, data compiled by Insider Monkey shows. There was a total of $153 million worth of holdings at the end of the last quarter.
KT Corporation (NYSE: KT)
The most important telecom company in South Korea is KT Corporation (NYSE: KT). The business provides services in the fields of telecommunications and digital infrastructure. On our list of top dividend stocks under $20, KT Corporation is ranked #9.
KT Corporation (NYSE: KT) has acquired the U.S.-based management consulting firm Epsilon to enhance its global presence and accelerate digital transformation. KT Corporation (NYSE: KT) reported Q2 2021 revenue of KRW6.02 trillion, up 2.6% year-over-year.
KT Corporation (NYSE: KT) was in 14 hedge funds' portfolios at the end of the second quarter of 2021, up from 12 at the end of the previous quarter. The total value of these holdings was $181,3 million.
Orange SA (ORAN)
Orange is a diversified French telecom company. Orange shares are down more than 30% over the past three years, but Ng says risks associated with a challenging European regulatory and operational environment are now fully priced into the stock. Ng says cost cutting can support margins, and the sale of Orange's tower assets can fund further investments.
Global Medical REIT Inc. （GMRE）
As its name suggests, Global Medical is a medical-focused REIT that wants to lease its healthcare facilities to "a single market-leading operator under a long-term triple-net lease." Rental revenue for GMRE climbed by 33% in fiscal 2019 as a result of the acquisition of 18 properties.
Our Zacks projections indicate that Global Medical's sales will increase by nearly 24% in fiscal 2020 and another 9.4% in fiscal 2021. Moreover, its adjusted FFO is anticipated to increase by approximately 12% both this year and next. In addition, the company's earnings revision activity helps it maintain a Zacks Rank #2 (Buy) along with Growth and Momentum ratings of B.
GMRE, which will report its Q1 results on May 6 after the market closes, offers the highest dividend yield on this list at 7.35 percent. This exceeds the industry average of 5.40 percent and is not artificially inflated by a dropping stock price.
In reality, Global Medical shares have increased by 40% over the past two years and by 9% over the past year, despite falling in tandem with the broader selloff. Despite recent gains, GMRE stock remains more than 30 percent behind its 52-week highs.
Conclusion
Numerous excellent dividend stocks are trading for less than $20. If their momentum continues, many of these could potentially break out of this range in the future.
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