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Buy 5 Top-Ranked High Dividend-Yielding Stocks in 2017
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The U.S. economy is on a solid ground. Strong GDP (gross domestic product) growth supported by encouraging labor market, retail sales and industrial production data has accelerated economic activities. Consumer spending has increased backed by broadly encouraging economic conditions and strong government outlays.
In the third quarter of 2017, the U.S. economy improved at an impressive annual rate of 3%. This came in above the consensus estimate of 2.6%, although the figure was slightly below the second quarter figure of 3.1%. This was also the first time since 2014 that the U.S. economy expanded at 3% year over year for two consecutive quarters. Moreover, business investment increased 3.9%, inventories rose 0.7% and the trade sector gained 0.4%.
Double-Edged Sword of Trump
President Donald Trump’s proposed policy changes have made the overall economic outlook fairly bullish. The two pro-growth agendas of Trump, namely, significant cut in corporate tax and deregulation are major catalysts to the U.S. economy. The proposal to reduce corporate taxes from their current 35% to 20% is likely to bring corporate tax rate at its historic low in 78 years. The tax proposal is likely to provide incentives to companies to repatriate accumulated profits from overseas with an even lower tax rate.
Additionally, Trump has stated that he wants to do away with nearly 75% of all governmental regulations during this term as President. Industry circle believes that the financial sector will be one of the major beneficiaries of such changes.
Other important sectors such as healthcare may also be greatly benefitted. Major proposals like a pledge to spend $1 trillion in infrastructure projects over a period of 10 years coupled with the above-mentioned policy changes are likely to spur higher consumer spending that may create about 25 million new jobs over a decade. This in turn will fuel long-term economic growth.
Strong Consumer Sentiment Data
American consumers are gradually gaining confidence in the economy. A decline in gas prices, record low jobless rate and series of highs for the stock market buoyed optimism on household finances and the economy. The U.S. economy has started to expand close to the range expected by Trump and some other Republicans, while both manufacturing and service sectors accelerated at a record pace for the last couple of months.
According to the University of Michigan, the U.S. consumer sentiment index hit 98.5 compared with an estimate of 98.0. The data shows consumers’ growing confidence in future income and job prospects. The U.S. economy rebounded from the hurricanes and added 261,000 jobs in October 2017. Unemployment rate was 4.1%, the lowest since December 2000. The more the confidence households generate the more will they spend. Notably, consumer spending accounts for roughly 70% of the U.S. economy.
Momentum to Continue in 2018
Solid employment growth, a stable monetary policy of Fed, a slowly rising interest rate, and an expected increase in business profit from a massive corporate tax cut are likely to pave the way for encouraging growth in 2018. Upbeat corporate earnings have been instrumental in driving the S&P 500 index. Trump administration’s tax reform and deregulation proposals and sustained strong earnings performance are the factors powering this ascent. Such factors are unlikely to disappear in the near term.
Why Dividend Matters
One of the easiest ways for any company to raise its shareholders’ wealth is to hike dividend rate. Typically, well established, profitable companies pay dividends. However, companies that do not pay dividends are not necessarily without profits. Investors looking for income producing (dividends) stocks are well served by looking for both growth and income, i.e., companies with stable earnings growth that pay a solid dividend. (Read More: The #1 Trading Strategy for Today's Market)
As the U.S. economy is growing steadily supported by strong data of various macro-indicators, many of these large companies are likely to generate massive cash but because of their size, may not have the growth opportunities they once had. For that reason high dividend-yielding companies will be attractive for investors.
Our Choice
At this stage, we are offering five stocks to investors with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. All these stocks also have a favourable P/E ratio compared with their respective industries which will enable the investor’s to tap the potential value.
CVR Refining LP : Headquartered in Sugar Land, TX, the company is engaged in the refining of petroleum primarily in the United States. It has refining and related logistics assets that operate in the mid-continent region. Its current dividend yield is 30.32%. One-year forward P/E is 8.20x compared with the industry average of 17.81x.
Orchid Island Capital Inc. (ORC - Free Report) : Headquartered in Vero Beach, FL, the company is a specialty finance company that invests in residential mortgage-backed securities the principal and interest payments of which are guaranteed by a U.S. Government agency or a U.S. Government-sponsored entity. Its current dividend yield is 16.99%. One-year forward P/E is 4.93x compared with the industry average of 11.30x.
Arbor Realty Trust Inc. (ABR - Free Report) : Headquartered in Uniondale, NY, the company is a specialized real estate finance company investing in real estate-related bridge and mezzanine loans, preferred equity, mortgage-related securities and other real estate-related assets. Its current dividend yield is 8.69%. One-year forward P/E is 8.72x compared with the industry average of 15.79x.
One Liberty Properties Inc. (OLP - Free Report) : Headquartered in Great Neck, NY, the company is a real estate investment trust which invests primarily in improved, commercial real estate under long-term net lease. Its current dividend yield is 6.44%. One-year forward P/E is 12.66x compared with the industry average of 15.79x.
Rice Midstream Partners LP : Headquartered in Canonsburg, PA, the company is a midstream energy company. It owns, operates, develops and acquires midstream assets in the Appalachian Basin. Its current dividend yield is 5.38%. One-year forward P/E is 13.42x compared with the industry average of 31.82x.
Consolidate Chart
The chart below shows the price performance of all the above-mentioned stocks in the last three months.
Bottom Line
Investment in high-dividend paying stocks, over a reasonable time period, is likely to fetch good returns. With the momentum in U.S. economy expected to continue in the near-term, we believe investors should choose stocks which promise strong dividend yield and carry a favorable Zacks Rank to cash on future growth.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Buy 5 Top-Ranked High Dividend-Yielding Stocks in 2017
The U.S. economy is on a solid ground. Strong GDP (gross domestic product) growth supported by encouraging labor market, retail sales and industrial production data has accelerated economic activities. Consumer spending has increased backed by broadly encouraging economic conditions and strong government outlays.
In the third quarter of 2017, the U.S. economy improved at an impressive annual rate of 3%. This came in above the consensus estimate of 2.6%, although the figure was slightly below the second quarter figure of 3.1%. This was also the first time since 2014 that the U.S. economy expanded at 3% year over year for two consecutive quarters. Moreover, business investment increased 3.9%, inventories rose 0.7% and the trade sector gained 0.4%.
Double-Edged Sword of Trump
President Donald Trump’s proposed policy changes have made the overall economic outlook fairly bullish. The two pro-growth agendas of Trump, namely, significant cut in corporate tax and deregulation are major catalysts to the U.S. economy. The proposal to reduce corporate taxes from their current 35% to 20% is likely to bring corporate tax rate at its historic low in 78 years. The tax proposal is likely to provide incentives to companies to repatriate accumulated profits from overseas with an even lower tax rate.
Additionally, Trump has stated that he wants to do away with nearly 75% of all governmental regulations during this term as President. Industry circle believes that the financial sector will be one of the major beneficiaries of such changes.
Other important sectors such as healthcare may also be greatly benefitted. Major proposals like a pledge to spend $1 trillion in infrastructure projects over a period of 10 years coupled with the above-mentioned policy changes are likely to spur higher consumer spending that may create about 25 million new jobs over a decade. This in turn will fuel long-term economic growth.
Strong Consumer Sentiment Data
American consumers are gradually gaining confidence in the economy. A decline in gas prices, record low jobless rate and series of highs for the stock market buoyed optimism on household finances and the economy. The U.S. economy has started to expand close to the range expected by Trump and some other Republicans, while both manufacturing and service sectors accelerated at a record pace for the last couple of months.
According to the University of Michigan, the U.S. consumer sentiment index hit 98.5 compared with an estimate of 98.0. The data shows consumers’ growing confidence in future income and job prospects. The U.S. economy rebounded from the hurricanes and added 261,000 jobs in October 2017. Unemployment rate was 4.1%, the lowest since December 2000. The more the confidence households generate the more will they spend. Notably, consumer spending accounts for roughly 70% of the U.S. economy.
Momentum to Continue in 2018
Solid employment growth, a stable monetary policy of Fed, a slowly rising interest rate, and an expected increase in business profit from a massive corporate tax cut are likely to pave the way for encouraging growth in 2018. Upbeat corporate earnings have been instrumental in driving the S&P 500 index. Trump administration’s tax reform and deregulation proposals and sustained strong earnings performance are the factors powering this ascent. Such factors are unlikely to disappear in the near term.
Why Dividend Matters
One of the easiest ways for any company to raise its shareholders’ wealth is to hike dividend rate. Typically, well established, profitable companies pay dividends. However, companies that do not pay dividends are not necessarily without profits. Investors looking for income producing (dividends) stocks are well served by looking for both growth and income, i.e., companies with stable earnings growth that pay a solid dividend. (Read More: The #1 Trading Strategy for Today's Market)
As the U.S. economy is growing steadily supported by strong data of various macro-indicators, many of these large companies are likely to generate massive cash but because of their size, may not have the growth opportunities they once had. For that reason high dividend-yielding companies will be attractive for investors.
Our Choice
At this stage, we are offering five stocks to investors with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. All these stocks also have a favourable P/E ratio compared with their respective industries which will enable the investor’s to tap the potential value.
CVR Refining LP : Headquartered in Sugar Land, TX, the company is engaged in the refining of petroleum primarily in the United States. It has refining and related logistics assets that operate in the mid-continent region. Its current dividend yield is 30.32%. One-year forward P/E is 8.20x compared with the industry average of 17.81x.
Orchid Island Capital Inc. (ORC - Free Report) : Headquartered in Vero Beach, FL, the company is a specialty finance company that invests in residential mortgage-backed securities the principal and interest payments of which are guaranteed by a U.S. Government agency or a U.S. Government-sponsored entity. Its current dividend yield is 16.99%. One-year forward P/E is 4.93x compared with the industry average of 11.30x.
Arbor Realty Trust Inc. (ABR - Free Report) : Headquartered in Uniondale, NY, the company is a specialized real estate finance company investing in real estate-related bridge and mezzanine loans, preferred equity, mortgage-related securities and other real estate-related assets. Its current dividend yield is 8.69%. One-year forward P/E is 8.72x compared with the industry average of 15.79x.
One Liberty Properties Inc. (OLP - Free Report) : Headquartered in Great Neck, NY, the company is a real estate investment trust which invests primarily in improved, commercial real estate under long-term net lease. Its current dividend yield is 6.44%. One-year forward P/E is 12.66x compared with the industry average of 15.79x.
Rice Midstream Partners LP : Headquartered in Canonsburg, PA, the company is a midstream energy company. It owns, operates, develops and acquires midstream assets in the Appalachian Basin. Its current dividend yield is 5.38%. One-year forward P/E is 13.42x compared with the industry average of 31.82x.
Consolidate Chart
The chart below shows the price performance of all the above-mentioned stocks in the last three months.
Bottom Line
Investment in high-dividend paying stocks, over a reasonable time period, is likely to fetch good returns. With the momentum in U.S. economy expected to continue in the near-term, we believe investors should choose stocks which promise strong dividend yield and carry a favorable Zacks Rank to cash on future growth.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>