Top Stocks That Pay Dividends: Investors like dividend stocks for the continuous stream of income they provide. But then the million dollar question is how do you pick a top dividend stock?
Companies that pay good dividends and possess a strong earning potential are highly rewarding in the long run. As an investor, you cannot adopt a lackluster approach towards making an investment decision, more so if you depend on dividends to a considerable extent for your living expenses.
Payout ratio, dividend growth potential and dividend volatility are a few important factors you need to pay attention to while choosing a dividend stock. To ease your decision-making process, we present seven top-performing dividend stocks.
Cheap Stock Price and High Dividend Make CNOOC an Attractive Investment Option
CNOOC (China National Offshore Oil Corporation) Limited [Hong Kong SEHK: 883] and [NYSE: CEO] is a Hong Kong-based investment holding company, which through its subsidiaries explores, develops, produces, and sells crude oil, natural gas, and other petroleum products.
China’s largest producer of offshore crude oil and natural gas, the CNOOC Group has oil and gas assets in Asia, Africa, North America, South America, Europe and Oceania.
CNOOC Limited [NYSE: CEO], as a whole, is a very good investment option. It is a notable dividend payer with a dividend yield of 5.4%, which means your earnings are bound to generate a healthy income stream.
There may be some concerns about the US-China trade war, but it may turn out to be a blessing in disguise for the company, as under such circumstances, China may have to rely on its own company for its fuel.
Then there is this virus fear which is spooking investors. But all in all, the virus fear will subside, and this will ease pressure on CNOOC, and its shares are definitely going to bounce back. With CNOOC stock priced so cheaply already, and the dividend it offers, it is perhaps the best time to invest in CNOOC and enjoy the dividend while gaining exposure to the Chinese energy market.
UBS Offers Good Dividend and High Growth Potential
UBS Group AG [NYSE: UBS] is a holding company, which engages in the provision of financial management solutions. It operates through the following divisions: Wealth Management; Wealth Management Americas; Personal and Corporate Banking; Global Asset Management; Investment Bank, and Corporate Center. The Group also offers securities services such as fund administration and third-party fund management.
UBS Group AG [NYSE: UBS] recently declared a dividend of $0.73 per share, which represents a dividend yield of 5.7%. This is pretty high given the fact that an average stock on the S&P pays much less than that.
Additionally, UBS Group’s earnings over the next few years are expected to rise by approximately 30%, indicating things are going to get only better for the venerable institution dating back to more than 150 years.
Its wealth management business is providing steady profitability and it has been making investment in newer technologies to keep the momentum going. UBS has adequate capital and has been doing a good job of keeping its costs under check. All these factors are likely to enhance cash flows and enhance the value of its stocks.
All in all, UBS is an evergreen bank stock built that is only going to get better with time. Meanwhile, investors can keep enjoying the high dividends it keeps dishing out.
H&R Block Investment in Price and Technology To Boost Its Price
H&R Block, Inc. [NYSE:HRB] is a financial services company, which through its subsidiaries provides tax, investment, and accounting and business consulting services and products to the general public primarily in the United States, Canada, and Australia.
The company offers assisted income tax return preparation and related services to its clients on their terms with in person, online, and virtual options.
Recent performance of H&R Block [NYSE: HRB] has been baffling to say the least. Tax-filing season is in full swing, but surprising though it might seem, taxpayers or for that matter investors are not flocking in droves to the tax preparation company.
With consumers herding towards free or nearly free filing solutions, it becomes clear what is dragging down H&R Block. Revenue has fallen for the fourth time in the past five fiscal years.
However, experts and analysts believe that H&R Block might not stay down for long. The tax industry is growing at a good pace since 2005, and the coming years are more likely to carry the momentum forward.
The company, in both assisted and DIY channels, is investing in three broad areas— price, technology and operational excellence.
It is building a new tax engine, trying to streamline client experience across platforms by developing its cross-channel capabilities, and is in the process of moving its data centers to the cloud for better data management.
Moreover, a strong cash position allows H&R Block to spend money on things it believes will help it sustain clients and boost its revenues and earnings growth.
With its price expected to rise considerably in the next 12 months, it is the right time to invest in the income tax returns preparation company.
Despite Turbulent Price Movement, Prudential Is Still Offering an Enticing Yield
Prudential Financial, Inc. [NYSE: PUK] is a British multinational life insurance and financial services company.
The company, through its subsidiaries, offers a range of financial products and services, including life insurance, casualty insurance, annuities, retirement-related services, group insurance, mutual funds, investment management, and institutional fund management services, among others.
The London, United Kingdom-based company has a presence in Asia, the United States, the United Kingdom, Europe, and Africa. Prudential has a primary listing on the London Stock Exchange and secondary listing on the Hong Kong Stock Exchange, the New York Stock Exchange and the Singapore Exchange.
Prudential shares [NYSE: PUK] are currently undervalued, offering value investors an attractive opportunity to dive in. Despite the fact that Prudential’s share price had a turbulent 12 months, experts believe that the life insurance company is fully capable of generating a positive top-line growth over the next five years.
Moreover, from an income perspective, shares of Prudential offer an enticing yield, not the highest in the market but lucrative enough for a blue-chip stock.
More importantly, the company has consistently delivered on a dividend growth of almost 7.5% per year over the past five years, meaning on the passive income front, the dividend yield continues to be attractive to investors.
The revenue declined for the company in 2018, but the profit margin was up, driven to a significant extent by emerging markets where rising income is driving demand for insurance products.
Few Bright Spots Still on the Horizon for Pearson despite Decline in US Textbook sales
Pearson plc [NYSE: PSO] is a multinational publishing and education company, which provides educational products and services to institutions, governments, professional bodies, and individual learners across the globe. It is the largest education company in the world.
The London, England-based company operates through three segments, which include North America, Core and Growth. The company provides educational content, test development, assessment, educational software, processing and digital services to schools, colleges and universities, along with individual learners to enhance their skill sets and employability prospects.
It derives 75% of its business from book sales, with professional certificates and administering tests accounting for the rest.
Pearson plc [NYSE: PSO] stock has tanked 34% over the past year, in sharp contrast to the 4% gain in the FTSE 100 Index.
The company gave a tepid guidance for 2020, with stuttering U.S. higher education courseware sales (it declined 12% last year) shadowing the growth witnessed in testing and professional qualifications.
Pearson’s poor performance in U.S. college textbooks’ sales, as students move to online learning and rented books, has been its real bane, provoking the outgoing Chief Executive Officer to issue multiple profit warnings and sending its shares plummeting to historic lows.
The company recently paid a dividend of $0.073 per share, which amounts to a dividend yield of around 2.9%. This is not much, but then Pearson has a respectable history of paying dividends.
Companies pay dividends out of their earnings. They pay dividends post the profit they are left with after paying taxes. In that respect, Pearson has paid 33% of its profit as dividends, over the last twelve-month period.
The education company’s dividend is covered by both profits and cash flow, which indicates that the dividend is sustainable.
Despite the declining US sales, there have been a few bright spots on the horizon for the company. Its earnings have grown at around 9.6% a year for the past five years, a prospect infinitely better than stagnant or declining profits.
The payout ratio is respectable, which means the dividend is protected, with the probability of the dividend going up in the future. Also, Pearson, PLC is undervalued, which makes it a good pick for value investors.
Apollo Offers Good Yield, High Growth Prospects and Steady Dividend
Apollo Global Management, Inc. [NYSE: APO] is one of the world’s largest alternative investment managers.
The company raises, invests and manages funds for hundreds of fund investors in dozens of countries, including pension funds, endowment and sovereign wealth funds, university endowments, charitable foundations, unions, corporations, and financial institutions, among others.
The company’s segments include private equity, credit and real estate. At the end of the third quarter, Apollo had $323 billion in assets under management. The New York City-based company owns companies such as Cox Media Group, Caesars Entertainment Corporation and Claire’s, among others.
The year 2019 was an exceptionally great year for the stock market, which in a way accounts for Apollo Global Management, Inc.’s [NYSE: APO] stellar performance.
Apollo’s assets under management jumped a whopping 21% year over year. The investment firm said its after-tax distributable earnings (DE) – the cash available for paying dividends to shareholders – rose to $454.9 million. Apollo said that it would pay out a dividend of 89 cents per share this quarter.
The company’s PE ratio indicates that the stock is relatively undervalued right now, compared to its peers. It has been paying dividends for 4 years and the current yield of 3.9% is well above average.
The company’s recent earnings have been extremely good and experts predict the company to perform exceptionally well in the next 5 years.
Add to that its extremely well-diversified portfolio, and you will understand why investing in Apollo is such a good option.
High and Steady Dividend Makes Credicorp a Dividend Rock Star
Credicorp Ltd. [NYSE: BAP] is a financial services holding company, which provides a full range of financial services, including commercial banking, insurance, corporate finance, brokerage services, asset management, trust, pension fund and investment banking.
Credicorp is the largest financial services holding company in Peru, with extensive experience in the Peruvian financial market and Latin America.
Credicorp Ltd. [NYSE: BAP] is a dividend paying company with growing earnings, which makes it a highly lucrative investment prospect.
The company offers a dividend yield of around 2.9%, which may not be the best in the industry, but it has a stellar dividend paying history which attests to its staying power. In the year gone by, Credicorp paid out 38% of its profit as dividends.
A medium payout ratio augurs well for the company as the balance is maintained between a good dividend payout and having enough money in hand to invest in growing the company. Moreover, there is always room to increase the payout ratio over time.
Credicorp has an excellent history of paying uninterrupted dividends. During the past ten-year period, the company has recorded a compound annual growth rate (CAGR) of approximately 17%.
The financial services provider has had a remarkable run paying dividends for the past ten years without resorting to any notable cuts. The bank has been growing its EPS at 22% a year over the past five years, which means that it has the wherewithal to keep the momentum going.
In a nutshell, Credicorp can afford the dividend it pays, its dividend payments are relatively stable, and it is well on track to grow both its earnings and dividends in the times to come. All these factors make it a dividend rock star.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.