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Dividend stocks are generally attractive to income-seeking investors. However, in the current environment where everybody is looking at the decline in their portfolio values, it makes sense to consider stocks that actually generate something. Anything. That’s what makes dividend stocks attractive today.
But a couple of things should be remembered while we jump into these stocks. First, companies pay a dividend when they are mature or they don’t have sufficient growth opportunities. Sometimes, as tech companies like Apple have been doing, they borrow money to pay a dividend. Therefore, just because a company pays a dividend doesn’t make its stock attractive. If Apple pays a dividend out of borrowings, we may be less concerned than a smaller company that doesn’t have such humongous amounts of cash flowing in every quarter (Apple has a different rationale although its debt pile has grown quite a bit in the last few years).
Again, management might genuinely believe that its stock is undervalued given its potential. So if it pays a dividend, more investors will be attracted to it, which would raise the share price. On the other hand, a company that is not as sound a condition, might pay a dividend that will artificially raise its share price.
Bottom line, although it’s a great idea to invest in dividend stocks now, any company that pays a dividend is not a great stock. So we should take a look at how the company is doing, we should consider its potential, management skill, and such things that would normally ensure a non-interruption in the payment of dividends.
Those were the main considerations in picking the following stocks:
Chattanooga, Tennessee-based Covenant Logistics is a U.S.-based provider of transportation and logistics services. It operates through the Expedited, Dedicated, Managed Freight and Warehousing segments. As of December 31, 2021, it operated 2,291 tractors and 5,331 trailers.
The Zacks Rank #1 stock carries Value and Growth Scores of A, meaning that it is strongly recommended for both value and growth-oriented investors.
Covenant Logistics belongs to the Transportation – Truck industry, which is in the top 4% of Zacks-classified industries. As we all probably know by now, the transportation and logistics sector continues to benefit from supply chain bottlenecks in some areas, which along with capacity constraints related mainly to labor, has ensured solid pricing and profitability for the constituent companies.
Covenant Logistics shares have gained 5.7% year to date. That’s not terribly exciting until you compare it with the industry, which is down 25.5% and the S&P 500, which is down 19.4% during the same time period.
And there’s very good reason for optimism. Covnant has topped the Zacks Consensus Estimate in each of the last four quarters at an average rate of 20.4%. Last quarter’s performance, at a 19.9% surprise, was only slightly off that number and certainly better than we’ve seen from most companies this season.
What’s more, there’s an 18.6% upward revision to the 2022 estimate in the last 60 days. The 2023 estimate is also up 16.7%.
This year, Covenant started paying a small dividend that currently yields 1.15%.
Findlay, Ohio-based Marathon Petroleum is an integrated downstream energy company with operations in the U.S. and Mexico. It operates through the Refining & Marketing, and Midstream segments. Refining & Marketing refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent and West Coast regions. It also purchases refined products and ethanol for resale. Refined Products include transportation fuels, such as reformulated gasolines and blend-grade gasolines; heavy fuel oil; and asphalt. At the end of 2021, the company operated 7,159 brand jobber outlets in 37 states, the District of Columbia and Mexico through independent entrepreneurs.
Marathon Petroleum’s stock has a Zacks #1 rank and A for Value and Growth.
As the name indicates, it belongs to the simmering oil and gas sector, specifically, to the Oil and Gas - Refining and Marketing industry, which is in the top 3% of Zacks-classified industries. Our research shows that a stock that belongs to the top 50% of Zacks-ranked industries generally outperforms the bottom 50%. Not only that: when it is paired with a Zacks Rank #1, there is even greater chance of upside.
In this case, we already know how well energy stocks have been doing of late. In fact, ever since the pandemic hit, there has been uneven supply and demand (for varying reasons) that have all contributed to robust pricing and profitability. While nobody can tell where the Ukraine war will go, it’s already known that this will be a tough winter, particularly for Europe. This along with OPEC+ decisions on oil production and pricing makes the environment particularly favorable for U.S.-based refiners.
Just see how these estimate revisions are going: for 2022, the Zacks Consensus Estimate is up 27.4%, for 2023 it is up 10.4%. And it’s all happening for good reason. Marathon Petroleum topped estimates by 15.7% in the last quarter, which is very good despite the fact that it’s way lower than the four-quarter average of 56.7%. It could be that analysts are beginning to figure this growth out!
And finally, Marathon’s dividend still yields 2.43% despite the fact that its shares are up 49.5% year to date.
From its base in Marousi, Greece, Euroseas provides ocean-going transportation services worldwide. Its owned and operated containerships transport dry and refrigerated cargoes, including manufactured products and perishables. As of May 03, 2022, Euroseas had a fleet of 18 vessels, including 10 feeder and 8 intermediate containerships with a cargo capacity of approximately 58,871 twenty-foot equivalent unit (teu).
Like Covenant Logistics and Marathon Petroleum, Euroseas shares carry a Zacks #1 rank, as well as Value and Growth Scores of A.
The company belongs to the Transportation – Shipping industry, which is in the top 19% of Zacks-ranked industries. The post-pandemic rush in logistics particularly affected two areas, one was trucking and the other containers/container ships. Since Euroseas belongs to the latter, it was also initially affected by the pandemic. But from the March quarter of 2021, its revenues have grown every quarter, as it made the most of this operating climate.
Euroseas beat the Zacks Consensus Estimate by 6.5% in the last quarter. Its 2022 and 2023 estimates have increased a respective 6.6% and 5.4% in the last 60 days.
The shares have lost 14.4% year to date, which is better than the S&P 500 but not even close to the industry’s performance of a 15.9% gain.
The company just started paying a dividend this year, which currently yields 9.31%.
Chattanooga, TN-based Unum Group provides broad-range insurance products for both groups and individuals primarily in the U.S., UK and Poland. It covers death, disability, accidental death, dismemberment, voluntary benefits, dental and vision products, sickness, and cancer and critical illnesses. It also provides group pension, individual life and corporate-owned life insurance, reinsurance pools and management operations, etc.
The Zacks Rank #1 stock has a Value Score of A but Growth Score of C.
The Insurance - Accident and Health industry to which it belongs, is in the top 7% of Zacks-classified industries, and the rising rate environment is favorable for it.
The company has posted very strong results in the last quarter and after the 55.3% beat, analysts have raised their estimates for 2022 and 2023. Accordingly, the 2022 estimate has increased 18.4% while the 2023 estimate increased 5.3%.
The shares have gained 65.4% this year, compared to the industry’s gain of just 1.6%. But its dividend still yields 3.30%.
Grand Rapids, MI-based UFP Industries designs, manufactures and markets wood and wood-alternative products in North America, Europe, Asia and Australia. It operates through Retail (DIY retailers, distributors, customers), Industrial (packaging, crating, etc.), Construction (residential, commercial and concrete forming and manufactured housing) and Other (international and Ardellis) segments. The revenue split between the four is roughly 40%-25%-31%-4%.
The Zacks Rank #1 stock has a Value Score of A but Growth Score of C. So this doesn’t seem to be a stock that growth investors will like. But value investors could right ahead.
The shares belong to the Building Products – Wood industry, which is in the top 34% of Zacks-classified industries. Being a supplier into the very hot construction market and the strong industrial packaging market, its current strength is understandable.
UFP posted a 43.6% surprise in the last quarter, sending the 2022 estimate up 15.6% and the 2023 estimate up 18.6%.
Likely because of its broader exposure to various markets, the shares are down 18.1% year to date compared to the industry’s 33.3% decline. Its dividend payments have been relatively steady and display a rising trend. It yields 1.36%.
One-Month Price Performance
Image Source: Zacks Investment Research
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5 Dividend Stocks with Strong Revisions Trends
Dividend stocks are generally attractive to income-seeking investors. However, in the current environment where everybody is looking at the decline in their portfolio values, it makes sense to consider stocks that actually generate something. Anything. That’s what makes dividend stocks attractive today.
But a couple of things should be remembered while we jump into these stocks. First, companies pay a dividend when they are mature or they don’t have sufficient growth opportunities. Sometimes, as tech companies like Apple have been doing, they borrow money to pay a dividend. Therefore, just because a company pays a dividend doesn’t make its stock attractive. If Apple pays a dividend out of borrowings, we may be less concerned than a smaller company that doesn’t have such humongous amounts of cash flowing in every quarter (Apple has a different rationale although its debt pile has grown quite a bit in the last few years).
Again, management might genuinely believe that its stock is undervalued given its potential. So if it pays a dividend, more investors will be attracted to it, which would raise the share price. On the other hand, a company that is not as sound a condition, might pay a dividend that will artificially raise its share price.
Bottom line, although it’s a great idea to invest in dividend stocks now, any company that pays a dividend is not a great stock. So we should take a look at how the company is doing, we should consider its potential, management skill, and such things that would normally ensure a non-interruption in the payment of dividends.
Those were the main considerations in picking the following stocks:
Covenant Logistics Group, Inc. (CVLG - Free Report)
Chattanooga, Tennessee-based Covenant Logistics is a U.S.-based provider of transportation and logistics services. It operates through the Expedited, Dedicated, Managed Freight and Warehousing segments. As of December 31, 2021, it operated 2,291 tractors and 5,331 trailers.
The Zacks Rank #1 stock carries Value and Growth Scores of A, meaning that it is strongly recommended for both value and growth-oriented investors.
Covenant Logistics belongs to the Transportation – Truck industry, which is in the top 4% of Zacks-classified industries. As we all probably know by now, the transportation and logistics sector continues to benefit from supply chain bottlenecks in some areas, which along with capacity constraints related mainly to labor, has ensured solid pricing and profitability for the constituent companies.
Covenant Logistics shares have gained 5.7% year to date. That’s not terribly exciting until you compare it with the industry, which is down 25.5% and the S&P 500, which is down 19.4% during the same time period.
And there’s very good reason for optimism. Covnant has topped the Zacks Consensus Estimate in each of the last four quarters at an average rate of 20.4%. Last quarter’s performance, at a 19.9% surprise, was only slightly off that number and certainly better than we’ve seen from most companies this season.
What’s more, there’s an 18.6% upward revision to the 2022 estimate in the last 60 days. The 2023 estimate is also up 16.7%.
This year, Covenant started paying a small dividend that currently yields 1.15%.
Marathon Petroleum Corporation (MPC - Free Report)
Findlay, Ohio-based Marathon Petroleum is an integrated downstream energy company with operations in the U.S. and Mexico. It operates through the Refining & Marketing, and Midstream segments. Refining & Marketing refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent and West Coast regions. It also purchases refined products and ethanol for resale. Refined Products include transportation fuels, such as reformulated gasolines and blend-grade gasolines; heavy fuel oil; and asphalt. At the end of 2021, the company operated 7,159 brand jobber outlets in 37 states, the District of Columbia and Mexico through independent entrepreneurs.
Marathon Petroleum’s stock has a Zacks #1 rank and A for Value and Growth.
As the name indicates, it belongs to the simmering oil and gas sector, specifically, to the Oil and Gas - Refining and Marketing industry, which is in the top 3% of Zacks-classified industries. Our research shows that a stock that belongs to the top 50% of Zacks-ranked industries generally outperforms the bottom 50%. Not only that: when it is paired with a Zacks Rank #1, there is even greater chance of upside.
In this case, we already know how well energy stocks have been doing of late. In fact, ever since the pandemic hit, there has been uneven supply and demand (for varying reasons) that have all contributed to robust pricing and profitability. While nobody can tell where the Ukraine war will go, it’s already known that this will be a tough winter, particularly for Europe. This along with OPEC+ decisions on oil production and pricing makes the environment particularly favorable for U.S.-based refiners.
Just see how these estimate revisions are going: for 2022, the Zacks Consensus Estimate is up 27.4%, for 2023 it is up 10.4%. And it’s all happening for good reason. Marathon Petroleum topped estimates by 15.7% in the last quarter, which is very good despite the fact that it’s way lower than the four-quarter average of 56.7%. It could be that analysts are beginning to figure this growth out!
And finally, Marathon’s dividend still yields 2.43% despite the fact that its shares are up 49.5% year to date.
Euroseas Ltd. (ESEA - Free Report)
From its base in Marousi, Greece, Euroseas provides ocean-going transportation services worldwide. Its owned and operated containerships transport dry and refrigerated cargoes, including manufactured products and perishables. As of May 03, 2022, Euroseas had a fleet of 18 vessels, including 10 feeder and 8 intermediate containerships with a cargo capacity of approximately 58,871 twenty-foot equivalent unit (teu).
Like Covenant Logistics and Marathon Petroleum, Euroseas shares carry a Zacks #1 rank, as well as Value and Growth Scores of A.
The company belongs to the Transportation – Shipping industry, which is in the top 19% of Zacks-ranked industries. The post-pandemic rush in logistics particularly affected two areas, one was trucking and the other containers/container ships. Since Euroseas belongs to the latter, it was also initially affected by the pandemic. But from the March quarter of 2021, its revenues have grown every quarter, as it made the most of this operating climate.
Euroseas beat the Zacks Consensus Estimate by 6.5% in the last quarter. Its 2022 and 2023 estimates have increased a respective 6.6% and 5.4% in the last 60 days.
The shares have lost 14.4% year to date, which is better than the S&P 500 but not even close to the industry’s performance of a 15.9% gain.
The company just started paying a dividend this year, which currently yields 9.31%.
Unum Group (UNM - Free Report)
Chattanooga, TN-based Unum Group provides broad-range insurance products for both groups and individuals primarily in the U.S., UK and Poland. It covers death, disability, accidental death, dismemberment, voluntary benefits, dental and vision products, sickness, and cancer and critical illnesses. It also provides group pension, individual life and corporate-owned life insurance, reinsurance pools and management operations, etc.
The Zacks Rank #1 stock has a Value Score of A but Growth Score of C.
The Insurance - Accident and Health industry to which it belongs, is in the top 7% of Zacks-classified industries, and the rising rate environment is favorable for it.
The company has posted very strong results in the last quarter and after the 55.3% beat, analysts have raised their estimates for 2022 and 2023. Accordingly, the 2022 estimate has increased 18.4% while the 2023 estimate increased 5.3%.
The shares have gained 65.4% this year, compared to the industry’s gain of just 1.6%. But its dividend still yields 3.30%.
UFP Industries, Inc. (UFPI - Free Report)
Grand Rapids, MI-based UFP Industries designs, manufactures and markets wood and wood-alternative products in North America, Europe, Asia and Australia. It operates through Retail (DIY retailers, distributors, customers), Industrial (packaging, crating, etc.), Construction (residential, commercial and concrete forming and manufactured housing) and Other (international and Ardellis) segments. The revenue split between the four is roughly 40%-25%-31%-4%.
The Zacks Rank #1 stock has a Value Score of A but Growth Score of C. So this doesn’t seem to be a stock that growth investors will like. But value investors could right ahead.
The shares belong to the Building Products – Wood industry, which is in the top 34% of Zacks-classified industries. Being a supplier into the very hot construction market and the strong industrial packaging market, its current strength is understandable.
UFP posted a 43.6% surprise in the last quarter, sending the 2022 estimate up 15.6% and the 2023 estimate up 18.6%.
Likely because of its broader exposure to various markets, the shares are down 18.1% year to date compared to the industry’s 33.3% decline. Its dividend payments have been relatively steady and display a rising trend. It yields 1.36%.
One-Month Price Performance
Image Source: Zacks Investment Research