Dividend stocks have always carried an undeniable appeal. The steady drop of income into your account, bolstered by capital appreciation and robust valuations, makes them a go-to for long-term investors. As we swing into Summer 2024, the focus shifts to dividend stocks that promise not just stability, but also growth and profitability. We’re here to handpick the cream of the crop—dividend stocks that are set to shine brighter than ever this summer.
Dividend stocks aren’t just a boring option for retirees—they’re a cornerstone for anyone looking to achieve a balanced and lucratively diverse portfolio. The promise of regular dividends, when reinvested, can compound your returns exponentially. And with market conditions aligning favorably this summer, these high-yield opportunities are too good to ignore.
Let’s delve deep into three dividend stocks that tick all the right boxes—yield, growth, and valuation.
Editor's Note: Analysis and insight for this article were originally sourced sourced from our friends at InvestorPlace
Overview
NewLake Capital Partners (OTC: NLCP) is making waves as an industrial REIT with a distinct focus on the burgeoning cannabis sector. Specializing in providing triple-net leases to licensed cannabis businesses, NLCP’s portfolio includes around 45 properties comprising both cultivation facilities and dispensaries.
Investment Appeal
NLCP’s performance over the past year has been nothing short of stellar, with its share price surging by 56%. This growth is anchored in solid fundamentals—robust earnings growth, strategic acquisitions, and consistent dividend hikes. Their Q1 2024 earnings report is a testament to their momentum, showcasing a 10% revenue increase and a 17% rise in net income compared to the previous year.
In a strategic move, NewLake acquired a cultivation facility in Connecticut for approximately $4 million in May. Concurrently, they increased their dividend by 5%, bringing the annual yield to an impressive 8.94%. The most recent quarterly distribution was $0.43 per share, disbursed on July 15.
NLCP stands out in the dividend stock realm not just for its yield but for its valuation. With a forward P/E ratio of 14.74 against the sector average of 35.36, its stocks remain attractively priced. Moreover, the industry is on the cusp of a major shift, thanks to the DEA’s recent rescheduling of marijuana from a Schedule I to a Schedule III substance. This development could potentially channel more revenues into legally operating cannabis businesses, further amplifying NLCP’s appeal.
Analyst Ratings Overview
While NLCP is a relatively new stock with limited analyst ratings, the available data is encouraging.
| Metric | Value |
|---|---|
| Consensus Rating | Buy |
| Average Price Target | $14.50 |
| Potential Gain | 34.5% |
| Number of Ratings | 3 |
Analysts are generally bullish on NLCP, holding a “Buy” consensus rating. The average price target of $14.50 suggests a potential gain of 34.5% from the current price, indicating a positive sentiment about the stock’s future prospects.
Overview
Blue Owl Capital (NYSE: OBDC) is a powerhouse in asset management, offering business development services through various investment vehicles like mezzanine loans, unsecured loans, preferred stock, and equity-related securities. Additionally, it dips its toes into private equity development, providing a broad spectrum of investment solutions.
Investment Appeal
OBDC’s appeal lies in its steady yet impressive performance. Over the past year, the share price has increased by 13%, driven by substantial dividend yields, share buybacks, and solid earnings growth. Their Q1 2024 earnings painted a promising picture with a 6% increase in total investment income, albeit with a slight 10% drop in earnings per share.
In a significant value-adding move, Blue Owl Capital approved a $150 million share buyback program in May, set to run until November 2025 unless altered by the board. This reinforces investor confidence and ensures a steady income stream.
Holding OBDC stocks means securing a dividend yield of 10.78%. The latest quarterly disbursement was $0.37 per share. Adding to this is its advantageous valuation, with a forward P/E ratio of 8.45 compared to the sector average of 11.96, making it a financially sound choice for investors looking for income and growth.
Analyst Ratings Overview
| Metric | Value |
|---|---|
| Consensus Rating | Buy |
| Average Price Target | $22.50 |
| Potential Gain | 34.1% |
| Number of Ratings | 4 |
The analysts covering OBDC stock are overwhelmingly positive, placing it in the “Buy” category. This sentiment, buoyed by an average price target of $22.50, indicates a potential upside of 34.1%. Analysts recognize the company’s robust financial performance and strategic maneuvers, making it a strong dividend investment.
Overview
AT&T (NYSE: T) needs no introduction. Serving as a leader in telecommunications, it provides internet connectivity services like AT&T Fiber and various broadband solutions. Its robust communications segment caters to both businesses and individual consumers, offering smartphones and corresponding plans.
Investment Appeal
AT&T continues to prove its mettle as a staple in the telecommunications industry. The Q2 2024 earnings report underscored this stability, with free cash flow up 10% year-over-year to $4.6 billion, and 419,000 postpaid phone net additions—outstripping the predicted 279,000 by analysts.
Moreover, AT&T touts a noteworthy annual dividend yield of 5.85%. The most recent quarterly dividend was $0.28 per share, delivered on July 9. From a valuation standpoint, AT&T is a bargain, trading at a forward P/E ratio of 8.67 against the sector median of 13.11.
The share price has seen a commendable 31% growth over the past year, and with substantial free cash flow coupled with impressive subscriber increments, AT&T’s stock is primed for continued upward momentum.
Analyst Ratings Overview
Analysts exhibit a more cautious stance on AT&T, reflected in its “Hold” consensus rating.
| Metric | Value |
|---|---|
| Consensus Rating | Hold (2.6/5) |
| Average Price Target | $33.15 |
| Potential Gain | 14.1% |
| Number of Ratings | 22 |
While the consensus rating is neutral, the average price target of $33.15 implies a potential gain of 14.1%. This mix of cautious optimism highlights both the strengths and challenges AT&T faces in a competitive landscape.
Investors looking to anchor their portfolios with steady income and potential for growth should find these top dividend stocks particularly alluring. High yields, strong financials, and attractive valuations make NewLake Capital Partners, Blue Owl Capital, and AT&T strong contenders in the dividend landscape.
