Investors continue to fret about the pace of economic growth as the highly transmissible COVID-19 Delta variant continues to spread rapidly in several countries. In addition, the potential for the Federal Reserve to commence tapering its asset purchase program could result in a stock-market selloff in the near term.
Because the stock market is expected to remain highly volatile, we believe it could be wise to turn now to dividend investing to ensure a steady income stream. Furthermore, the near-zero interest rate environment and declining Treasury yields make the backdrop favorable for dividend stocks.
So, it could be wise to bet on fundamentally sound dividend stocks OneMain Holdings, Inc. (OMF), Western Midstream Partners, LP (WES), and Vector Group Ltd. (VGR) to ensure a stable, passive stream of income. The stocks currently deliver a dividend yield of more than 4%.
OneMain Holdings, Inc. (OMF)
Financial services holding company OMF, in Evansville, Ind., provides personal loan products, credit and non-credit insurance, services loans it owns, and services or sub-services loans owned by third parties. Its segments include Consumer and Insurance; Acquisitions and Servicing; Real Estate, and Others.
OMF’s OneMain Financial agreed in April 2021 to acquire Trim, a customer-focused financial wellness fintech. The acquisition is expected to help expand OMF’s product and services portfolio to provide solutions that help its consumers gain more control of their finances.
OMF declared a $4.20 per share dividend payable on August 13, and it expects to maintain a $0.70 per share minimum quarterly dividend going forward. While OMF’s four-year average dividend yield is 7.42%, the current dividend translates to a 4.61% yield.
The company’s interest income for the second quarter, ended June 30, 2021, was $1.07 billion, compared to $1.06 billion in the previous quarter (ended March 31, 2021). OMF’s total other revenues increased 64.8% sequentially to $150 million. Its net income came in at $350 million, up 293.3% year-over-year. And its EPS increased 293.9% year-over-year to $2.60.
Analysts expect OMF’s revenue to increase 5.1% year-over-year to $848.60 million for the quarter ending September 30, 2021. The company’s EPS is expected to come in at $9.53 in its fiscal year 2021, representing a 57% year-over-year rise. Also, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 66.4% to close yesterday’s trading session at $60.70.
OMF’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary ratings system. The POWR Ratings assesses stocks by 118 different factors, each with its own weighting. The stock also has a B grade for Momentum, Quality, and Sentiment.
In addition to the POWR Ratings grades we’ve just highlighted, one can see OMF’s ratings for Growth, Value, and Stability here. OMF is ranked #2 of 51 stocks in the B-rated Consumer Financial Services industry.
Western Midstream Partners, LP (WES)
WES is a master limited partnership (MLP) that gathers, compresses, treats, processes, and transports natural gas. It also gathers, stabilizes, and transports condensate, natural gas liquids, and crude oil. Its assets and investments are in the Rocky Mountains, North-central Pennsylvania, and Texas. WES is based in Woodlands, Tex.
Michael Ure, the company’s CEO and CFO said on May 10, “Since becoming a standalone organization, we have been immensely focused on our financial policy. This shift to free-cash-flow generation has led to a trifecta of results, including the authorization of a unit buyback program, retirement of upcoming debt maturities, and an increase in our distribution.”
The stock has been consistently paying dividends each quarter for the past eight years. While WES’ four-year average dividend yield is 9.54%, the current dividend translates to a 6.61% yield. The most recent dividend declared by the company is $0.32, payable on August 13, amounting to a $1.28 annual dividend.
WES is expected to report its second-quarter earnings results on August 9. For the first quarter, ended March 31, 2021, the company’s product sales increased 25% year-over-year to $70.81 million. Its net income for the quarter came in at $191.24 million compared to a $289.40 million net loss in the prior-year quarter. WES’ EPS came in at $0.44 versus a $0.57 loss per share in the year-ago period.
The company’s revenue and EPS are expected to increase 6.2% and 12.4%, respectively, year-over-year to $2.91 billion and 2.54 in its fiscal year 2022. WES has surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock has soared 25.8% over the past six months to close yesterday’s trading session at $19.29.
It’s no surprise that WES has an overall B rating, which equates to Buy in our POWR Ratings system. In addition, the stock has a B grade for Quality as well.
Click here to see the additional POWR Ratings for WES (Growth, Value, Momentum, Stability, and Sentiment). WES is ranked #7 of 39 stocks in the B-rated MLPs – Oil & Gas industry.
Vector Group Ltd. (VGR)
VGR is a Miami, Fla.-based holding company operating through its subsidiaries—Liggett Group LLC, Vector Tobacco Inc., and New Valley LLC. The company’s segments include Tobacco; E-Cigarettes; and Real Estate. It produces cigarettes in 100 combinations under various brands, including the EAGLE 20’s, Grand Prix, Liggett Select, and Eve.
On May 10, 2021, VGR’s subsidiary Douglas Elliman announced the launch of its new single sign-on portal, MyDouglas, in addition to an improved StudioPro application powered by Rechat. Douglas Elliman’s President and COO, Scott Durkin, said, “We are proud to have created a seamless single solution platform that only strengthens our existing tech and provides a unique experience for agents at all levels, across the country.”
VGR has been consistently paying quarterly dividends since 2000. On June 29, the company paid a $0.20 dividend, which cumulates to an $0.80 annual dividend and yields 6.04%. Its four-year average dividend yield is 11.09%.
VGR is expected to report its second-quarter financial results on August 5. The company’s top line surged 19.6% year-over-year to $543.76 million for the first quarter ended March 31, 2021. Its operating income came in at $90.20 million compared to a $4.90 million loss in the prior-year period. Its net income for the quarter came in at $31.96 million versus a $3.23 million loss in the year-ago period. VGR’s EPS for the quarter was $0.20 compared to a $0.03 loss per share in the prior-year quarter.
For its fiscal year 2021, the company’s revenue is expected to be $2.21 billion, representing a 10.3% year-over-year rise. VGR’s EPS is expected to increase 47.1% year-over-year to $0.25 for the about-to-be-reported quarter, ended June 30, 2021. It has surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 50.2% over the past year to close yesterday’s trading session at $13.25.
VGR’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary ratings system. In addition, the stock has an A grade for Momentum, and a B grade for Growth, Value, Stability, and Quality.
Click here to see more of VGR’s component grades. VGR is ranked #1 of 11 stocks in the A-rated Tobacco industry.
OMF shares were trading at $59.95 per share on Tuesday morning, down $0.75 (-1.24%). Year-to-date, OMF has gained 36.04%, versus a 17.58% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More…
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