High-yield dividend stocks can be a reliable source of regular income. Besides providing consistent income, these stocks have the potential to deliver significant capital growth over time.
Notably, companies that consistently pay and increase their dividends tend to have solid financials and strong earnings base. This financial stability supports their dividend payouts, and positions them to deliver steady growth. Because of this, these stocks are ideal for both income generation and wealth building.
Among the top dividend stock picks for October, Vitesse Energy (VTS) and CTO Realty Growth (CTO) stand out for their high yields of over 8%, and commitment to rewarding their shareholders. These attributes make them compelling investments to buy in October. Let’s take a closer look.
#1. Vitesse Energy (VTS)
Vitesse Energy (VTS) focuses on acquiring non-operated, minority working interests and mineral rights in oil (CLX24) and natural gas (NGX24) properties. This includes producing wells, near-term development opportunities, and undeveloped acreage. Further, the company partners with top players in the energy space known for their expertise in developing and producing oil and natural gas. This business model diversifies risk and helps the company to target the lucrative opportunities in the energy sector.
Vitesse Energy prioritizes limiting risk through a conservative acquisition strategy, low debt, and strategic hedging of its oil production. This approach helps the company to weather downturns, especially during commodity price collapses.
The company leverages its cash flow to develop new drilling locations and acquire producing wells, while maintaining a healthy balance sheet. Moreover, with a strong inventory of drilling opportunities, VTS is well-positioned to grow its oil and natural gas production.
Notably, Vitesse Energy’s non-operated business model provides the company with a high degree of flexibility. By controlling the pace of capital deployment, Vitesse allocates resources to projects that offer the highest returns. This enables Vitesse to maximize the potential of its portfolio, while adapting to market conditions and enhancing its shareholders’ value.
Vitesse Energy recently increased its quarterly dividend by 5%, signaling confidence in its future cash flow. This dividend growth was driven by the company's highly profitable acquisitions, strong returns from organic development, and a solid hedging strategy. Additionally, the company has raised its production and capital expenditure guidance for 2024, reflecting its confidence in continued growth.
Vitesse is a compelling income stock with a dividend yield of over 8%. Moreover, the company’s ability to find attractive near-term drilling opportunities that meet or exceed its economic benchmarks has been key to its success. These opportunities have allowed Vitesse to increase production, further enhancing shareholder returns.
Wall Street analysts are bullish on VTS stock, with a consensus rating of “Strong Buy.”
#2. CTO Realty Growth (CTO)
CTO Realty Growth (CTO) is a real estate investment trust (REIT). Specializing in owning and operating shopping centers in some of the fastest-growing regions in the U.S., CTO is well-positioned to benefit from consistent retail demand. Additionally, CTO has a significant ownership stake in Alpine Income Property Trust (PINE), which it manages externally.
CTO’s property holdings are large, multi-tenant shopping centers supported by businesses like grocery stores and major retailers. These tenants operate recession-resilient businesses, adding stability to CTO's operations. Further, the REIT's properties have mixed-use spaces, which attract traffic and a wide variety of tenants. This combination of diverse tenants and high consumer activity provides CTO with consistent rental income and diversifies risk.
The REIT continues to benefit from solid tenant demand, reflected through its high occupancy, leasing spreads, and same-property net operating income (NOI) growth. CTO reported a physical occupancy rate of 92.6%, with a leased occupancy rate of 94.6%, for the second quarter (Q2). The 2% gap between these numbers represents approximately $5 million in annualized cash rents, which will significantly boost NOI and earnings in 2025.
Further, for the first half of 2024, CTO reported a 4% increase in same-property NOI, primarily driven by higher rental income and strong leasing momentum.
Looking ahead, CTO Realty will continue to own and operate properties in high-growth markets that offer compelling yields. These properties will provide solid current rental income and potential value enhancements over time.
CTO has paid dividends for decades, and currently offers a high yield of over 8%. Moreover, it has garnered a consensus rating of “Moderate Buy” from Wall Street analysts.
