In previous articles that I wrote on here at the end of last year and at the very beginning of this year, I provided some quick pick lists of dividend stocks. This article will take a look at some of the strong performing stocks that were highlighted in those articles. It will look at how and why the price has changed since those articles, what dividend the stocks currently pay, and potential catalysts for continued positive performance.
In an article published on January 2, 2013, I discussed four dividend stocks that were trending higher. Among those stocks, Targa Resources Corp (TRGP) was one of them. Its stock price on January 1, 2013, was $52.84. On April 30, 2013, the stock price closed at $65.76. It currently has a dividend yield of 3%.
In an article published on December 25, 2012, I highlighted three mid-cap stocks that were yielding 7% or more. Omega Healthcare Investors Inc. (OHI) was one of the stocks presented there. On December 26, 2012, the stock price closed at $22.97. On April 30, 2013, the stock closed at $32.87. It currently has a dividend yield of 5.7%.
In an article published on December 26, 2012, I discussed five dividend-paying stocks with yields greater than or equal to 7%. The three stocks from that article that I would like to re-introduce here are Newcastle Investment Corp. (NCT), Ship Finance International Limited (SFL), and SouFun Holdings Limited ADR (SFUN). Newcastle Investment Corp. was $8.65 per share on December 25, 2012, and closed on April 30, 2012, at $11.33 per share. It currently has a 9.7% distribution yield. Ship Finance International Limited was $15.99 per share on December 25, 2012, and closed on April 30, 2012, at $16.48 per share. It currently has a 9.7% dividend yield. SouFun Holdings Limited ADR was $23.90 per share on December 25, and closed on April 30, of this year at $25.59 per share. It currently has a 7.9% dividend yield.
The following is a chart of these five stocks' performances from January 1, 2013, through the close on April 30, 2013, and it is compared against the performance of the S&P 500 for that same time period.
NCT data by YCharts
As the chart shows, the combined performance of these five stocks has outperformed the index. When considering dividends, the out performance is magnified.
Let's start with Newcastle Investment Corp. to see what has gone right for it since the start of the year and what it needs to do to continue to be a strong performer. Insiders have been purchasing the shares so far this year, which indicates that company representatives have faith in the company. Newcastle reported fourth-quarter 2012 earnings of .32 per share, which was ahead of the consensus analyst estimate of .28 per share. To continue this strong performance, a continued rebound in the housing markets and earnings that beat analyst estimates are keys to its success.
Ship Finance International has not risen much since the writing of my article, but it does have a 9.7% yield, which is an impressive return in itself. Fourth-quarter 2012 earnings came in at a whopping .60 per share, ahead of the consensus estimate calling for .33 per share in earnings. As published by Forbes in this article, on March 11, 2013, the company was added as a top 10 energy dividend stock by Dividend Channel. Strong earnings and maintaining and/or increasing its dividend are keys, in my opinion, to it maintaining and/or increasing its stock price.
SouFun Holdings Limited ADR also has not changed much in price since the start of the year. It has a whopping dividend yield of 7.9% though, so shareholders have been happy to collect that. Its fourth-quarter 2012 earnings also handily beat analyst expectations, as they came in at .75 per share and ahead of the .62 per share estimate. Its next earnings release is coming up on May 7, 2013, so beating or at least meeting analyst expectations and maintaining its dividend are also keys to its continued strong performance. As this article reports, China had its largest first-quarter gain in home sales in three years. Continued strength in the Chinese real estate market is a great facilitator that would help the company grow earnings.
Targa Resources Corp is the second-strongest performing stock in this article since the start of 2013. It also has the lowest dividend yield out of the companies discussed here. It more than doubled analyst estimates for its fourth-quarter 2012 earnings, having them come in at .48 per share compared with the .21 per share estimate. The company increased its dividend on April 16, 2013, by 8% compared with the prior quarter and that represented a 36% increase of the dividend compared with the first quarter of 2012. Strong company performance with its earnings and an increased dividend are the largest contributing factors to its strong performance in my opinion. It reports first-quarter 2013 earnings coming up on May 2, 2013, and with the stock trading near its 52-week high, it seems to me that investors are expecting great things. Beating analyst expectations again could propel the stock to new heights, while a miss could bring the stock down significantly.
Omega Healthcare Investors Inc. is the strongest performing stock out of the five listed here, by far. It recently increased its dividend by a penny per share and it still has a 5.7% dividend yield even though its stock price is up 35.23% year to date. As this article explains, Omega Healthcare Investors Inc. has been the beneficiary of a migration toward REITs with lower-quality assets, and Omega's history of strong and steady dividend payments has attracted investors. The key to its performance is for the company to maintain and grow its dividend by growing its earnings. Any strengthening of the housing and real estate market could certainly enhance its position further.
Thank you for reading this article. Please conduct your own research and due diligence before deciding to invest in any of these stocks.