7 Dividend Stocks to Invest into in 2017
Dividend Stocks 2017
During a performance review, an employee likely hopes for two things: a good review and a raise. The latter is expected due to the hard work and time given to the company and, perhaps more importantly, so the employee’s salary can keep up with the cost of inflation.
This mentality can be applied to investing by looking at companies that share their revenue in a form of a dividend that is growing over time. This way, the income earned from the investment keeps pace with inflation.
When it comes to choosing dividend stocks to invest into, there are many different sources of info, such as the highest dividend stocks list, and many details to consider, like which stocks have the longest history of paying a dividend and which companies are initializing a new one.
Ultimately, a company’s history is one of the most important details overall. More specifically, it’s vital to consider how it has rewarded shareholders in the past: how much, how often, and which methods have been used.
Also keep in mind the present state of a company, considering both its business model and how revenue is generated. If a company has very volatile earnings, the dividend may change in step; for long-term investors, this is a very bad thing. Companies would only meet this criteria if the revenue is recurring and predictable.
If the past and present and important, then it should come as no surprise that the future is as well. If there have been dividend hikes in the past, can the business sustain this level of dividend growth? Make sure to research the debt levels and revenue expectations of the company.
A company growing its dividend could see its share price grow over time as well. This is because other investors will eventually take notice of these businesses and bid their share prices up based on the companies’ individual track records. This could add greatly to investors’ overall net worth over the long term.
Below is a list of the seven best long-term dividend stocks that are expected to enjoy future dividend growth.
Highest Dividend Stocks List 2017
|Company Name||Symbol||Price||Dividend Yield|
|Tesoro Logistics LP||TLLP||$59.34||6.13%|
|Seagate Technology PLC||STX||$47.23||5.34%|
|Gaming and Leisure Properties Inc.||GLPI||$32.18||7.71%|
|GEO Group REIT||GEO||$45.76||6.11%|
|Apollo Group Management LLC||APO||$22.20||6.40%|
|Iron Mount REIT||IRM||$37.71||5.83%|
|Cedar Fair L.P.||FUN||$67.34||5.08%|
1. Tesoro Logistics LP
Tesoro Logistics LP (NYSE:TLLP) stock is a energy company with the majority of the revenue being generated by transporting crude oil and natural gas through its pipeline assets. For businesses in the energy sector, this is the most reliable form of revenue, since the pipeline business is known for being inflation-indexed and the most efficient method of transporting crude oil and natural gas.
The business is known for its low operating cost, pipeline maintenance being the only recurring fee. However, the pipeline business has a high barrier to entry, which means there is a high probability of not seeing any new competition taking market share away from Tesero–a benefit to shareholders.
At present, TLLP stock is able to pay shareholders with a high yield of 6.13%, based on the current market price of $59.34. The more impressive aspect of the dividend is that there has been 23 consecutive quarterly increases. One key advantage of owning a dividend grow stock such as TLLP stock is that if dividend increases continue, the yield on the cost of the investment will only go up.
2. Seagate Technology PLC
Seagate Technology PLC (NASDAQ:STX) is a top dividend-paying stock because it’s both a high-yield stock and a dividend growth stock.
STX stock currently offers a dividend yield of 5.34%, going by the trading price of $47.23. Since 2012, the dividend payment per share has more than doubled, a trend that looks like it can continue.
One reason would be the focus on investing in areas of the business which will provide the greatest returns. This can be seen in the improving gross margins, which are up more than 50% in just the last year. In addition, the business’ cash flow over than past year has more than tripled. (Source: “Seagate Technology Reports Fiscal Second Quarter 2017 Financial Results,” Seagate Technology PLC. January 24, 2017.)
Another reason for the increase in the dividend is Seagate’s improved efficiency thanks to reducing the overall employee headcount. This also means that areas of the business with lower returns are not being invested into.
3. Gaming and Leisure Properties
Gaming and Leisure Properties Inc (NASDAQ:GLPI) stock is a company that owns, acquires, and finances gaming properties. At this time, GLPI has over 36 properties in its portfolio that are spread across 14 states, including heavy tourist areas such as Las Vegas, New Orleans, and Hollywood.
The focus on locations that see consistent foot traffic has rewarded shareholders in three different ways.
The first has been a regular quarterly dividend. The first was paid out in 2014 and and has seen an annual increase every year since.
The second has been the use of special dividends. This is a dividend that is paid in addition to the regular quarterly dividend and only occurs if there is surplus cash. Since 2014, there has been two such dividends.
The last method is the repurchase of shares of GLPI stock. This does not add to an investor’s cash balance, but rather increases their ownership percentage of the company. By buying back shares, it reduces the overall outstanding shares, making each share worth a greater percentage of the company. Therefore, buybacks increase investors’ total net worth.
All this shows investors that the administration is focused on running the business, leading to shareholder rewards.
4. Geo Group REIT
GEO Group REIT (NYSE:GEO) stock is a real estate company that owns, leases, and manages correctional and detention facilities in the U.S., Australia, and South Africa.
The real estate sector is a great place to consider for an investment because the industry generates consistent cash flow. Due to this, the management team is able to reward their shareholders with a high yield.
GEO stock’s dividend yield is 6.11% and the shares trade at $45.76. Even though GEO stock is a high-yielding stock, the dividend has seen growth of 250% since 2012.
The increase in the dividend is a result of the net income having nearly doubled over this period thanks to interest costs becoming less of a burden. Over the same period, revenue saw growth each year, which was another factor.
Compared to its industry peers, an investment in GEO Group looks very attractive. GEO stock has a current price-to-earnings (P/E) ratio of 23.4 times, while the industry average is 67.9 times. This multiple provides insight on how much is being paid based on the company’s earnings; the lower the ratio is, the better from an investor’s perspective.
For the P/E to trade higher and closer to its peers, the company’s operating margins needs to be up as well. Currently, operating margins are half of the industry average, management having focused on improving this metric. Investors need to be patient, but in the meantime, they can get paid to wait.
5. Apollo Global Management LLC
Apollo Group Management LLC (NYSE:APO) is based in the U.S., but enjoys a global presence. The area of focus for APO stock is managing assets in the private equity, credit, and real estate segment of the market.
One reason to consider APO stock is because of the cheap valuation when compared to the S&P 500. APO stock currently has a P/E multiple of 10.6, which is more than half that of the S&P 500 index’s 26.5 times.
Apollo’s profit margins are more than double those of the industry average. The return on investment within the business is more than three times the industry average.
I believe that as investors notice APO stock, it could get a boost in its P/E ratio as the stock gets bid up. In the meantime, I would put APO stock as a dividend-paying gem, given its dividend yield of 6.34%.
6. Iron Mount REIT
Iron Mount REIT (NYSE:IRM) stock is a real estate investment trust (REIT) with a presence around the world, helping its over 200,000 customers with their storage and information management needs.
Clients hail from multiple industries and government agencies around the world, which has helped cash flow remain steady and predictable, as well as helped make shareholders the biggest beneficiaries. No single customer accounts for more than one percent of total revenue.
This REIT has benefited from a growing quarterly dividend, having more than doubled since 2013. A special dividend has also been paid out to shareholders in the past.
Iron Mount has also seen a stock dividend. A rare thing to see from a company, a stock dividend is when shareholders are paid in additional shares. They are one of the ways the company heads show the world that they believe that the shares are undervalued. Stock dividends also indicate a company’s shareholder-friendliness and have a long-term goal of making investors stay on for the long term, rather than simply being traders.
Ultimately, IRM stock is worth considering as one of the best long-term dividend stocks.
7. Cedar Fair L.P.
Cedar Fair L.P. (NYSE:FUN) stock is a unique real estate company with assets in amusement parks, water parks, and hotels in the U.S. and Canada.
FUN stock is currently trading at $67.34 while offering a yield of 5.08%. Cedar Fair has increased its dividend for the past four years.
This streak’s continuation remains possible, if not likely, in part because of the company reducing its overall debt, and with it the debt’s interest cost. As a result, cash flow increases, which should reflect positively in future financial statements.
Another reason for future dividend hikes is Cedar Fair’s revenue growth, which goes up year after year; the company believes this trend will continue. One reason is because of the new sports facility that will be opened to the public this year and will host various sporting events. With the facility’s opening, revenue should start to be generated, investment costs should decrease dramatically, and cash flow should rise.
Final Thoughts on Dividend Stocks to Invest into in 2017
The past is no guarantee on what future dividend growth will look like. However, it’s still a great indicator for if a company’s top brass is willing and able to return money to their shareholders. Past dividend hikes mean a greater probability of more increases in the future.
The past and present also provide investors with insight about shareholder rewards, be they special dividends, rate increases, stock dividends, or share buybacks. These are very important for a company’s future because shareholders should be treated with respect; after all, they are basically co-owners of the company.