Dividend Aristocrats and Kings tend to snag most income investors’ eyes with their consistent dividend payouts, proven-and-tested business operations, and global brand recognition.
However, intrepid investors who don’t limit themselves to established names and explore lesser-known sectors are often rewarded with gems that boost their portfolios. These attractive dividend stocks sit on the sidelines, quietly gaining momentum that builds into sudden triple-digit yearly returns.
So, let’s see if these high-yielding, high-return stocks are worth a buy.
How I Screened For The Following Stocks
The following stocks were generated using Barchart’s Free Stock Screener. This tool allows investors to set their preferred searches using different filters.
For this instance, I used ANNUAL DIVIDEND YIELD (%) and 1-YEAR PERCENT CHANGE. I then set them at 5% and 100%, respectively, and ran the search.
The logic behind choosing a high dividend yield (>5%) should be self-explanatory, but I also want to focus on 1-year return percentages.
We all know that past performance does not indicate future results. And, historical returns are also considered good indicators—except when they’re not.
However, having a baseline of what to expect can benefit stock trading. Returns can also indicate whether investors are bullish on a stock.
Lastly, I’m only using the 100% 1-year return rate to generate a list of likely candidates and then lay out their financials to see if these stocks have what it takes to perform an encore for 2024 or beyond.
As usual, investors should weigh the pros and cons of their stock picks and seek financial advice from professionals if they need it.
With the process out of the way, let’s examine the stocks with high returns and high yields arranged in ascending order.
XP Inc (XP)
XP Inc. is a holdings company that offers financial products and services, investor education through content creation, and financial management services. Its wide customer base includes institutional clients, corporate issuers, and high-income individuals.
The company’s latest filings showcased a 29% YOY revenue increase for Q4’23, with all segments growing by double digits. This quarter also saw a 19% bump in total client assets and a significant 76% fixed-income growth in the Retail segment.
All this, plus a 128.78% 1-year return, paints a pretty solid picture of why the company has a strong buy recommendation from analysts.
The company currently has a 5.28% dividend yield. However, this is only based on two dividend payouts from last year, amounting to $1.32. You could take that as good (5% for two dividend payouts covering four months) or bad (no assurance of continued payments).
Income investors should also take note that XP still does not have a dividend policy. With its earnings, though, I wouldn’t be surprised if the company continues to pay out dividends.
SL Green Realty Corp (SLG)
REITs are no strangers to “top dividend yields” lists. SL Green Realty is a REIT with a distinct claim to fame as “Manhattan’s Largest Office Landlord.” The company is focused on acquiring and developing properties in New York City’s beating heart.
SL Green Realty manages 58 buildings with a grand total of 32.5 million square feet of rental space.
According to their 2023 financials, SL Green saw small decreases in several key metrics. Funds from operations or FFO ended at $4.94, marginally higher than expected, yet a notable dip from $6.64 in 2022.
Meanwhile, the reported net revenue increased from $588.8 million last year to $603.7 million. Management is mildly optimistic about 2024, with year-end FFO expected to end between $5.90 and $6.20.
The company pays a $3 annual dividend (well-covered if FFO guidance is met for 2024), translating to a 5.86% forward yield and a nice, low 36.98% dividend payout ratio.
SLG stock has been on a bull run since early last year, registering a 118.45% 1-year return, with a current trading price of $51.16. Some investors might see this as a road to recovery, as the price used to trade between $60 and $80 in 2022.
Dorian LPG (LPG)
Dorian LPG is a petroleum gas shipping company. The company operates in various locations, including the US, UK, Greece, and Denmark. Dorian also owns and operates 25 VLGCs (very large gas carriers) that ship its products worldwide.
The company’s Q3’24 report brought some outstanding news for investors, showcasing Dorian LPG's financial performance. Revenues surged to $163 million, a remarkable 58.25% YOY increase. Operating income also soared by over 90%. These robust figures culminated in a reported net income of $99.9 million, another 90-plus percent growth.
LPG stock has a forward dividend rate of $4, reflecting a 10.05% yield based on the current trading price. It also has a 78.81% dividend payout ratio—a bit higher than my usual preference but still well within reasonable values.
While LPG stock’s price registered only a 98.80% 1-year return, its 3-and 5-year returns registered 209.49% and 405%, respectively. Dorian’s solid fundamentals and excellent financials give it a good chance of doubling. Not only that, its attractive dividend is just the icing on top.
Final Thoughts
Yes, past returns do not indicate future performance. However, past performance is still how investment advisors sell their products—and it’s a key metric when analyzing stock picks.
Afterall, what’s life without a little risk?
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
