High dividend stocks are a great income investment for any portfolio, because the reliable returns from dividends provide a steady stream of cash. However, a big problem in recent years has been high dividend stocks that may offer a big yield … but they’re seeing their earnings and sales dry up.
This kind of high-yield stock sometimes is a dividend stock in name only.
Take RadioShack (RSH), which paid an annual dividend of 50 cents back in 2011. In early 2012, when shares were trading below $8.00, the math on that worked out to a yield of more than 6.2%.
Of course, that presumed that the dividend would last. And as RadioShack continued to struggle in 2012, the dividend was eliminated halfway through the year.
So as appealing as it is to rely on high dividend stocks as income investments, you can’t afford to simply focus on yield; growth, in both revenue and earnings, is a necessary part of any good stock.
So what high dividend stocks out there are offering both big yield and significant growth? Here are a few to consider.
High Dividend Stocks: Lorillard (LO)
- Dividend Yield: 4%
- 2014 Returns: 20%
- Past Revenue Growth: Revenue in 2013 was $4.97 billion, up 7% from $4.64 billion in 2012
- Future Revenue Growth: Revenue for 2014 is forecast to be $5.1 billion, up another 3%
- Past Earnings Growth: EPS in 2013 was $3.12, up 12% from $2.81 in 2012
- Future Earnings Growth: EPS for 2014 is forecast to be $3.34, up another 6%
Lorillard (LO) is hardly seen as a growth stock by many investors, considering its entrenched and highly-regulated tobacco business. However, the numbers don’t lie; thanks in part to continued revenue growth globally and a strong policy of stock buybacks to boost earnings per share, the growth is still there in addition to a juicy 4% yield in this high dividend stock.
High Dividend Stocks: Ventas, Inc. (VTR)
- Dividend Yield: 4.2%
- 2014 Returns: 17%
- Past Revenue Growth: Revenue in 2013 was $2.81 billion, up 13% from $2.48 in 2012
- Future Revenue Growth: Revenue for 2014 is forecast to be $3 billion, up another 7%
- Past Earnings Growth: EPS in 2013 was $1.66, up 59% from $1.04 in 2012
- Future Earnings Growth: EPS for 2014 is forecast to be $1.70, up another 2%
Ventas Inc. (VTR) is a great long-term play for income investors looking for high dividend stocks. Structured as a real estate investment trust, Ventas has a mandate for big dividends since REITs must deliver 90% of their taxable income back to shareholders. Also, the real estate of VTR is focused on healthcare and elder care, including senior housing properties across the U.S. as well as skilled nursing facilities and hospitals. The demographic tailwind of aging Baby Boomers that need more care as they age will ensure VTR does brisk business going forward.
High Dividend Stocks: Spectra Energy Partners (SEP)
- Dividend Yield: 4.2%
- 2014 Returns: 18%
- Past Revenue Growth: Revenue in 2013 was $1.97 billion, up 12% from $1.75 million in 2012
- Future Revenue Growth: Revenue for 2014 is forecast to be $2.24 billion, up another 14%
- Past Earnings Growth: EPS in 2013 was $7.15, up 320% from $1.69 in 2012
- Future Earnings Growth: EPS for 2014 is forecast to be $2.63, down sequentially but up 55% from 2012 EPS
Spectra (SEP) is a bit confusing, considering the energy partnership sold about $10 billion in assets last year, leading to the big one-time pop in earnings. However, even if you throw out that big pop, the bottom line is that the top line and bottom line are growing briskly anyway. As a “toll-taker” MLP, spectra is concerned mainly with transporting natural gas through pipelines, meaning it’s not exposed to the capital expense of exploration nor the price volatility involved in downstream sales. It all adds up to reliable revenue, and reliable dividends for shareholders.
High Dividend Stocks: PetroChina (PTR)
- Dividend Yield: 3.7%
- 2014 Returns: 11%
- Past Revenue Growth: Revenue in 2013 was $367 billion, up 6% from $348 in 2012
- Future Revenue Growth: Revenue for 2014 is forecast to be $376 billion, up another 3%
- Past Earnings Growth: EPS in 2013 was $12.36, up 7% from $11.51 in 2012
- Future Earnings Growth: EPS for 2014 is forecast to be $12.61, up another 2%
Think Big Oil is still way behind the broader market? Well, maybe PetroChina (PTR) will make you think again. The massive state-owned energy company is one of the biggest corporations in the world, and has big access to Asian oil fields and energy-hungry Chinese customers as a result. While the Chinese economy is admittedly slowing down, the bottom line is that it is still growing — and so is energy demand. That means PetroChina has seen continued growth in both the top and bottom line despite a slowing growth rate in the region and despite soft oil prices.
High Dividend Stocks: Las Vegas Sands (LVS)
- Dividend Yield: 3.1%
- 2014 Returns: -20%
- Past Revenue Growth: Revenue in 2013 was $13.77 billion, up 23% from $11.13 in 2012
- Future Revenue Growth: Revenue for 2014 is forecast to be $14.98 billion, up another 9%
- Past Earnings Growth: EPS in 2013 was $2.79, up 50% from $1.85 in 2012
- Future Earnings Growth: EPS for 2014 is forecast to be $3.55, up another 27%
Las Vegas Sands (LVS) is a casino stock that has hit the jackpot with its continued expansion at home and abroad. In addition to running casinos across the U.S. — from its flagship location in Las Vegas to the Sands Bethlehem in eastern Pennsylvania — LVS has expanded into Singapore and Macau to tap into big gambling opportunities over in Asia. Las Vegas Sands stock is volatile, however, and has actually been slumping in 2014. However, the consistent growth in earnings and sales coupled with a juicy dividend at this pricing could mean now is the time to buy on a dip.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.
