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Finance

4 Dividend Stocks to Consider Adding to Your Portfolio

Dividends make investing in stocks a more attractive proposition. In addition to the potential of capital appreciation, dividend stocks provide a steady stream of income. While COVID-19 pandemic-led business disruptions caused many companies to slash or suspend their dividend payments, there are still some stocks in the market that have maintained or increased their dividend payments by either capitalizing on pandemic-driven trends or based on their sound fundamentals.

Because  a growing number of investors and analysts believe U.S, stocks have become significantly overvalued and the market has entered bubble territory, this may be a good time to bet on some fundamentally sound dividend stocks to hedge one’s portfolio against a market pullback. In that event, these stocks could at least ensure a steady stream of income.

Moreover, the performance of dividend stocks has been decent over the past year, as evidenced by the Vanguard High Dividend Yield ETF’s (VYM) 9.4% returns over this period.

Verizon Communications, Inc. (VZ), Sunoco L.P. (SUN), Delek Logistics Partners L.P. (DKL), and Pzena Investment Management, Inc. (PZN) have been improving their dividend payouts over the past few years and currently offer attractive yields. So, it could be wise to bet on them now.

Verizon Communications, Inc. (VZ)

VZ  delivers communication services to consumers, businesses, and government entities. The company operates in the wireless and wireline segments. VZ’s stock has gained 12.3% since the mid-March market crash to close yesterday’s trading session at $56.5.

At the U.S. government’s auction of  5G wireless airwaves this week, VZ committed $45 billion with the goal of  its  network to 5G. VZ has expanded its partnership with Cisco by adding three new SD WAN service offerings to its portfolio.

VZ has declared a dividend per share of $0.6275 for the last quarter. This is an increase of 1.2% from its earlier dividend amount. VZ’s dividend payout has grown at a CAGR of 2.19% over the past five years. The company has an annual dividend yield of 4.44%. Its stock’s four-year average yield is 4.58%.

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VZ is expected to see  revenue growth of 2.6% for the quarter ended March 31, 2021 and 3.8% in 2021. Its EPS is estimated to grow 3.7% in 2021 and at a rate of 2.8% per annum over the next five years.

VZ’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

It has a grade of B for both Quality and Stability. In the Telecom- Domestic industry, it is ranked #1 of 26 stocks.

In total, we rate VZ on eight different levels. Beyond what we’ve stated above, we have also given VZ grades for Growth, Momentum, Sentiment, and Value. Get all the VZ ratings here.

Sunoco L.P. (SUN)

SUN is involved in the distribution of fuel products. The company  has operations primarily  in the United States. SUN has returned 6.7% over the past year and closed the last trading session at $31.31.

SUN  recently made a cash tender offer for up to $500 million of outstanding 4.875% senior notes that are 2023. SUN intends to fund the tender offer with the net proceeds of its separately announced proposed offering of $500 million of debt securities, together with cash on hand.

SUN has declared a dividend per share of $0.8255 for the last quarter. Its  dividend payout has grown at a  CAGR of 2.74% over the past five years. The company has an annual dividend yield of 10.55%. The four-year average yield of the company’s stock is 12.87%.

SUN’s revenue is estimated to increase 7% for the quarter ended March 31, 2021 and 34.2% in 2021. Its  EPS is expected to rise 129.2% in 2021 and 2.6% per annum over the next five years.

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It’s no surprise that SUN has an overall rating of B, which equates to Buy in our POWR Ratings system. SUN has a B grade for both Value and Growth. In the MLPs – Oil & Gas industry, it is ranked #4 of 42 stocks.

Click here to see the additional POWR Ratings for GILD (Quality, Stability, Momentum, and Sentiment).

Delek Logistics Partners L.P. (DKL)

DKL provides logistics solutions for crude oil and refined oil products. The company has operations primarily in the United States. DKL’s stock price has increased 40.9% over the past year and its last closing price was $37.77.

Last spring, DKL participated in  a logistic asset dropdown agreement for the acquisition of the Big Spring gathering system from Delek US (DK) for $100 million in cash and five million common units. The company has also reduced its contract services, which has resulted in a $7.5 million decline in operating expenses.

DKL has declared a dividend per share of $0.91 for the last quarter, which is an  increase of 0.6% from its  earlier dividend amount. DKL’s dividend payout has grown  at a CAGR of 9.98% over the past five years. The company has an annual dividend yield of 9.64%. The four-year average yield of the company’s stock  is 11.96%.

DKL is expected to see revenue growth of 11.2% for the quarter ended June 30, 2021 and 11.7% in 2022. Its  EPS is estimated to grow 18.4% for the quarter ended March 31, 2021.

DKL’ strong fundamentals are reflected in its POWR Ratings. DKL has an A  grade for Growth and a B grade for Quality. In the 24-stock MLPs – Oil & Gas industry, it is ranked #5.

Beyond what we’ve stated above we also have given DKL grades for Value, Sentiment, Stability and Momentum. Get all the DKL ratings here.

Pzena Investment Management, Inc. (PZN)

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PZN offers investment management services to high-net-worth individuals, investment companies, corporations, and government institutions. PZN’s stock has gained 39.3% over the past year to close yesterday’s trading session at $9.36.

The company’s assets under management for the month ended January 31, 2021 was 9.7% more than the same period last year.

PZN has declared a dividend per share of $0.25 for the last quarter, which is  an increase of 733.3% from its  earlier dividend amount. PZN’s dividend payout has grown  at a CAGR of 23.16% over the past five years. The company’s stock has an annual dividend yield of 10.68%. The stock’s four-year average yield is 6.58%. Its  EPS is expected to rise 19% per annum over the next five years.

It’s no surprise that PZN has an overall rating of B, which equates to Buy in our POWR Ratings system. PZN has an A grade for Quality and B grade for Growth. In the Asset Management industry, it is ranked #4 of 63 stocks.

Click here to see the additional POWR Ratings for PZN (Value, Stability, Momentum, and Sentiment).

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

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shares were trading at $383.33 per share on Friday afternoon, up $1.00 (+0.26%). Year-to-date, has gained 2.53%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Aaryaman Aashind

Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More…

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