by Robert Hauver
Looking for high dividend stocks with market support in 2015? As always, we are too, and we were surprised where we found them – in the Energy sector. It was just weeks ago that this sector took a massive beating, with some energy dividend stocks losing up to 50% of their market value, as the price of crude oil collapsed.
However, it’s a new year and a new day for many Energy stocks – the ever-fickle market has decided that oil isn’t going to $10 a barrel, and that, maybe, some of these companies will survive after all, since they have viable business models.
Our High Dividend Stocks By Sector Tables, has been tracking these 3 high yielding stocks since early 2014. All 3 of them are LP’s, which had relatively recent IPO’s:
(You can find brief profiles for all 3 stocks at the bottom of this article.)
Performance:In autumn 2014, these 3 stocks all took a nosedive…
…but look how well they’ve been doing lately – they’ve all had double-digit gains so far in 2015:
Dividends/Distributions: The table below compares these stocks’ latest quarterly distributions to their targeted minimum distribution. As you can see, all 3 of them are paying more than their minimum targeted distribution.
DLNG has the highest dividend yield, but DKL has the most consistent dividend hike record. However, the bottom line is that, unlike many Energy stocks, none of these stocks has cut their dividends, all of which are well-covered by distributable cash flow:
Options: Only DKL has fairly high options yields – FISH doesn’t have options, DLNG’s options yields aren’t currently that attractive. Our free Covered Calls Table lists this May $40 call option, which, at a $2.50 bid, pays you nearly 5 tines the amount of DKL’s next quarterly dividend.
Since the $40 call option is $.23 above DKL’s price/share, it gives you a small amount of price gain potential, in addition to the call option income. However, it’s less than the $.51 quarterly dividend, if your DKL shares get assigned/sold away prior to the ex-dividend date. Here are the 3 main scenarios for this trade:
Selling Put Options: Our free Cash Secured Puts Table lists this May $35 put option, which has a much lower yield than the $40 call, since it’s further “out of the money”, (further away from DKL’s price/share). The main attraction to this put trade, in addition to getting paid the $.85 put premium, is that it gives you a much lower breakeven cost, of $34.15.
Valuations: On a trailing and forward P/E basis, DLNG looks the cheapest. This makes sense, considering that it has only gained a bit over 2% over the past year, whereas FISH has gained over 43%, and DKL has gained over 25%.
So, even though DLNG is up over 24% in 2015, its price, “P”, hasn’t outpaced its Earnings, “E”. Another useful way of looking at this, is to use Earnings Yield, which merely divides Earnings/Share by Price/Share, to obtain a comparative %:
FISH- Marlin Midstream Partners, LP, together with its subsidiaries, acquires, owns, develops, and operates midstream energy assets in the United States. The company operates through two segments, Midstream Natural Gas and Crude Oil Logistics. It provides natural gas gathering, compression, dehydration, treating, processing, and hydrocarbon dew-point control and transportation services to producers, marketers, and third-party pipeline companies; and crude oil transloading services. The company also sells and delivers natural gas liquids to third parties. It serves small and large exploration and production companies, large pipeline companies, and natural gas marketers. Marlin Midstream GP, LLC operates as a general partner of the company. The company is headquartered in Houston, Texas.
DLNG- Dynagas LNG Partners LP, through its subsidiaries, operates in the seaborne transportation industry worldwide. The company owns and operates liquefied natural gas (LNG) vessels. Its fleet consists of 3 LNG carriers, each of which has carrying capacity of approximately 150,000 cubic meters operating under multi-year charters with BG Group and Gazprom. Dynagas GP LLC serves as the general partner of Dynagas LNG Partners LP. The company was founded in 2013 and is headquartered in Athens, Greece. DLNG’s niche is that its vessels operate in the harsh northern seaborn route between Norway and Asia, which chops transit time by up to 40%.
DKL- DKL operates in two business segments: a Pipelines and Transportation segment and a Wholesale Marketing and Terminalling segment.
Pipelines and Transportation Segment consists of approximately 400 miles of crude oil pipelines, 16 miles of refined product pipelines, an approximately 600-mile crude oil gathering system and associated crude oil storage tanks with an aggregate of approximately 1.4 million barrels of active shell capacity.
Wholesale Marketing and Terminalling Segment provides marketing services for 100% of the refined products output of DKL’s Tyler refinery, other than jet fuel and petroleum coke, and owns and operates five light product terminals.
Disclaimer: This article is written for informational purposes only, and isn’t intended as investment advice.
Disclosure: Author has no positions yet in the stocks mentioned in this article.
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