The benchmark indexes corrected last month due to multi-decade high inflation, geopolitical tensions, and the Fed’s decision to hike interest rates several times this year. Fortunately, the rapid economic recovery and stellar earnings reported by companies have been the key support for the markets over the past few weeks.
However, with the Labor Department set to release consumer price index data for January on Feb. 10, 2022, inflation is estimated to rise 7.2% year-over-year. If the inflation data meets the estimate, it will mark the fastest inflationary gain since February 1982, thus potentially driving further market volatility in the near term.
Given this backdrop, we think investors looking to hedge their portfolios against rising volatility could consider adding high-yielding stocks CVR Partners, LP (UAN), Dorchester Minerals, L.P. (DMLP), and Sabine Royalty Trust (SBR) to their portfolios. These stocks might ensure a steady stream of income and capital appreciation.
CVR Partners, LP (UAN)
UAN produces and distributes nitrogen fertilizer products. The Sugar Land, Tex.-based company offers ammonia products for agricultural and industrial customers and urea and ammonium nitrate products to agricultural customers and retailers and distributors.
While UAN’s four-year average dividend yield is 5.85%, its current dividend translates to an 11.5% yield.
UAN’s revenue for its fiscal third quarter, ended Sept. 30, 2021, increased 82% year-over-year to $144.71 million. The company’s adjusted EBITDA increased 325.6% year-over-year to $63.74 million. Also, its net income came in at $35.02 million, versus an $18.95 million loss in the year-ago period.
Analysts expect UAN’s revenue for its fiscal year ending Dec. 31, 2021, to increase 0.7% year-over-year to $346.95 million. The stock has gained 22.8% in price year-to-date to close the last trading session at $101.60.
UAN’s POWR Ratings reflect solid prospects. According to our proprietary rating system, the stock has an overall B rating, which translates to a Buy. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Growth. It is ranked #4 of 10 stocks in the A-rated MLPs – Other industry. Click here to see the other ratings of UAN for Value, Momentum, Stability, Sentiment, and Quality.
Dorchester Minerals, L.P. (DMLP)
DMLP is engaged in the acquisition, ownership, and administration of producing and non-producing natural gas and crude oil royalty, net profits, and leasehold interests in the United States. Its Royalty properties consist of producing and non-producing mineral, royalty, overriding royalty, net profits, and leasehold interests. DMLP is based in Dallas, Tex.
On Dec. 31, 2021, DMLP announced that it had completed its previously announced acquisition of mineral and royalty interests totaling approximately 4,600 net royalty acres in 27 counties spread across Mexico, Oklahoma, Texas, and Wyoming. The transaction was structured as a non-taxable contribution and exchange. The contributing entity transferred its interests to the partnership in exchange for 1,580,000 common limited partnership units of DMLP.
Over the last three years, DMLP’s dividend payout has grown at a 1.1% CAGR. Its four-year average dividend yield is 10.3%, and its current dividend translates to an 11% yield. It is expected to pay a cash distribution of $0.639287 per common unit on Feb.10, 2022.
For its fiscal third quarter, ended Sept. 30, 2021, DMLP’s operating revenues increased 91% year-over-year to $23.96 million. The company’s net income increased 220.8% year-over-year to $18.03 million. Also, its EPS came in at $0.49, representing a 206.2% increase year-over-year.
The stock has gained 16.5% in price year-to-date to close the last trading session at $23.06.
DMLP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Growth. Within the A-rated MLPs – Oil & Gas industry, it is ranked #3 of 34 stocks. To see the additional ratings of DMLP for Value, Momentum, Stability, and Sentiment, click here.
Sabine Royalty Trust (SBR)
SBR in Dallas, Tex., holds royalty and mineral interests in various producing oil and gas properties in the United States. Its royalty and mineral interests include landowner’s royalties, overriding royalty interests, minerals, production payments, and other similar non-participatory interests, producing and proving undeveloped oil and gas properties located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas.
Over the last three years, SBR’s dividend payout has grown at a 4.6% CAGR. Its four-year average dividend yield is 7.5%, and its current dividend translates to a 9.4% yield. SBR is expected to pay a cash distribution of $0.374350 per common unit on Feb. 28, 2022.
SBR’s royalty income increased 75.6% year-over-year to $14.48 million for the third quarter, ended Sept. 30, 2021. Its distributable income increased 84.8% year-over-year to $13.77 million. Also, its distributable income per unit increased 84.3% year-over-year to $0.94.
The stock has gained 14.6% in price year-to-date to close the last trading session at $47.77.
SBR’s POWR Ratings reflect solid prospects. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
It has a B grade for Sentiment and Quality. It is ranked #15 of 81 stocks in the B-rated Energy – Oil & Gas industry. Click here to see the additional ratings of SBR for Growth, Value, Momentum, and Stability.
UAN shares were trading at $102.02 per share on Thursday morning, up $0.42 (+0.41%). Year-to-date, UAN has gained 23.38%, versus a -4.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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