Market speculation is fun, but I think good, high-yield dividend stocks should be a part of everyone’s portfolio. They offer a consistent and reliable earnings boost during bull and bear cycles, ensuring you get something regardless of market conditions.
However, looking for companies with the highest yields along isn't the best strategy. Often, the high yields are caused by a single “high” dividend payout, which is unlikely to be replicated. Sometimes, massive price fluctuations cause percentages to go up. Or maybe the company has been paying increasing dividends over the last few years, but its non sustainable. So the bottom eventually falls out, and the yields crash and burn, just like their stock prices.
That’s why due diligence (and using trustworthy financial platforms) is an essential tool when looking for high-yield dividend stocks. And that's why today, I scanned the market for the best candidates for dividend leaders that you should add to your portfolio.
How I Screened For The Following Stocks
To get my list, I accessed Barchart’s Stock Screener and used the following filters:
- Number of Analysts: 8 or more.
- Current Analyst Rating: 4.5 to 5 (Strong Buy)
- Annual Dividend Yield: 5% or more.
Once done, I got 18 results. I arranged them from the highest to lowest dividend yield. To diversify, I’d rather not have an entire portfolio REITs, so I picked the top three operating in different industries. Now, let’s start with the company with the highest yield:
Trinity Capital (TRIN)
I’ve featured Trinity Capital a few times in my “highest-yielding dividend stocks” lists, and it deserves its spot. Trinity Capital operates as a business development company (BCD) and primarily offers debt and equipment financing to startups. This BCD has provided $3.4 billion in funding to over 350 growth-stage companies. Trinity Capital’s Q2 2024 results show great promise: total investment income reached $54.6 million, an 18.7% year-over-year increase, while net investment income reached $26.7 million. Over 28.2% (22.9% Strong Performance + 5.3% Very Strong Performance) of investments also perform pretty well. "Trinity delivered another excellent quarter,” said CEO Kyle Brown, “highlighted by record net investment income for our shareholders.”
Source: Trinity Capital Inc. Q2 2024 Report
Like REITs, BCDs must pay 90% of their earnings to shareholders, so impressive financial results mean continued and/or increased dividend payouts in the future. TRIN stock pays $2.04 annually, excluding special dividends, which translates to a 14.70% yield.
Meanwhile, analysts rate the stock a strong buy, giving it an average 4.50 score with a modest $17 high price target.
Civitas Resources (CIVI)
Civitas Resources is a Colorado oil and gas producer primarily operating in the Denver-Julesburg and Permian Basins. The company is the state's first carbon-neutral oil and gas producer and holds sustainability and ecological and social responsibility as its guiding principle.
Civitas showcased significant growth in Q2 2024, with operating revenues reaching $1.31 billion compared to $660.53 million from the same period last year. This represents a 99% year-over-year increase. Net income per share also increased by 23%, from $1.73 to $2.17. Despite that performance, CIVI’s prices are trending down and trading near a new 52-week low, making this ample opportunity to buy it at a discount.
Source: Civitas Resources Q2 2024 Report
Dividend-wise, CIVI has consistently paid 50 cents per share quarterly since December 2022, translating to a $2.00 annual rate and a 3.72% yield. However, the company has also consistently paid special “extra” dividends since 2022, reaching 200% to even 300% of the regular payout. Considering its latest regular and extra dividend of $1.50, the annual rate becomes $6.00, reflecting an 11.65% yield.
Analysts love CIVI, judging from its impressive 4.92 strong buy average rating, while giving it a massive 96% upside potential based on a $106 high target price.
Energy Transfer LP (ET)
Another popular name in dividend investing circles, Energy Transfer LP is a midstream energy company primarily operating in the transportation, storage, and distribution of natural gas, natural gas liquids (NGLs), crude oil, and refined products.
Energy Transfer had a good showing in Q2 2024. Revenues rose to $20.73 million from last year’s $18.32 million, and EBITDA reached $2.22 million from $1.34 million. Net income also increased from 25 cents to 35 cents year-on-year. These improvements stemmed from double-digit increases in crude oil and transportation volumes and exports.
Source: Energy Transfer LP Q2 2024 Report
ET stock pays $1.28 per share in annual dividends, which translates to an 8.09% yield at current prices. It also has a strong buy rating based on an average score of 4.80, with a high target price of $24.00.
Final Thoughts
These three powerhouses have analysts' sentiments, improving financial performance, consistent dividend payouts, and high yields—a collection of the most sought-after criteria for perfect dividend stocks. However, past and current performance do not indicate future returns. Do your research and always monitor your investments.
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.
