by Robert Hauver
Trying to make sense of this market? Join the club – it’s been a topsy-turvy ride so far in 2016, with the market getting off to its worst start in history, thanks to the December Fed rate hike, and plunging oil prices.
Then, in early February, oil prices bottomed, and the market started coming back. This chart uses the USO oil ETF as a proxy for oil. It’s a pretty good directional correlation between oil and the S&P 500:
(Chart Source: YahooFinance)
by Robert Hauver
After rising nearly 24% in 2013, the Energy sector continues to be a winner in 2014, having risen 6.69% as of May 21, 2014. But how have dividend stocks within this sector fared? As it turns out, there are 3 winners from the Energy section of our High Dividend Stocks by Sector Tables, that have handily outperformed the market as a whole, and whose performance has also beaten the Energy sector’s by a long shot in 2014.
These 3 energy stocks are all LP’s, which offers you additional benefits – LP’s must pay out 90% of their earnings, in return for not paying taxes, which often results in a high dividend yield; and tax efficiency, since the high yield distributions that you receive will be partially sheltered, via offsets, such as depreciation, on the K-1 form you’ll receive at tax time.
The full company profiles are at the bottom of this article.
Here’s how these stocks have fared in 2014 and over the past trading month. Compare this with the S&P, which was up 2.15% year-to-date, as of 5/21/14, and up 13.11% over the past year:
Dividends: All 3 of these stocks yield over 5%, (GLP yields over 6%), and go ex-dividend in late July/Early August. They’ve all steadily raised their dividends over the past 5 years. Coverage-wise, GLP leads the pack, with a 2.6x distribution coverage ratio. (LP’s refer to their dividends as distributions, and their shares as units.) Click here to read more…
Disclaimer: This article was written for informational purposes only. Author not responsible for any errors, omissions, or actions taken by third parties as a result of reading this article.
Copyright DeMar Marketing 2014. All rights reserved.
DCP Midstream Partners LP, (DPM), an oil & gas pipeline company, has one of the higher dividend yields in our High Dividend Stocks by Sector tables. It also appears to be undervalued, and has several above-average metrics, when compared to its peers, in our Industry Comparison Table:
Oil & Gas Pipeline Industry
EPS GROWTH NEXT 5 YRS.
DPM, which closed at $30.04 Wednesday, recently declared a $.60/share dividend, payable to shareholders of record Feb. 5th, 2010.
DPM also has covered call and put options available with double-digit annualized yields:
COVERED CALL: July 2010 $30.00 call is currently bid at $1.75, a 13% annualized yield. Covered call sellers would also collect $.60/share in dividends, for an additional 4.47% annualized yield.
CASH-SECURED PUT: July 2010 $30.00 put is currently bid at $2.35, a 17.5% annualized yield, (based on a 100% cash reserve).
Disclosure: Author doesn’t own DPM shares.
Disclaimer: This article is written for informational purposes only.