All the stocks included in this article hold a Zacks Rank #2 (Buy) or better at the moment, as well as a dividend yield over 10%.
It is important to note that many of these stocks have seen their dividend yields climb because their stock prices fell in recent months. Still, the companies on this list could be headed in the right direction down the road based on their current Zacks Rank.
Dividends can be a very lucrative reward for a company’s stockholders. But often a company’s drive to please its shareholders can slow future growth or present cash flow problems in the short term. With that being said, here are 5 stocks that provide a strong dividend yield while also boasting a positive outlook for the future.
Salem Media Group SALM
Zacks Rank: #1 (Strong Buy) Dividend Yield: 12.38%
Salem Media Group is the only Zacks Rank #1 (Strong Buy) on this list and currently holds Style Scores of "A" for both Value and Momentum. Salem has a Price/Cash Flow ratio of 2.55 at the moment, well below its industry average of 4.53. This metric is important for two reasons. First, it shows the stock offers relatively good value at this price and is not overvalued relative to the market. Additionally, it shows the company has good cash flow which is very important for the company in order to maintain its high dividend. Salem could make a possible good addition to a portfolio, but a position should be taken soon as their next ex-dividend date is June 13. Salem’s stock has decreased in value by 50% over the past year, which is a bit concerning, but the dividend helps to provide a steady return from the stock.
NGL Energy Partners NGL
Zacks Rank:#2 (Buy) Dividend Yield: 10.71%
NGL currently boasts a VGM (Value, Growth, Momentum) score of "A" along with its Zacks Rank #2 (Buy). Analysts are currently giving the company a very good outlook for future growth, with Zacks Consensus Estimates calling for earnings growth of 165% this year, followed by an additional 43% earnings growth in 2020. All this expected earnings growth is fueled by expected top line growth in both fiscal 2019 and 2020. The expected growth alone could make NGL a possible good addition to the portfolio and the solid dividend only makes its case stronger.
Capitala Finance CPTA
Zacks Rank: #2 (Buy) Dividend Yield: 11.05%
Capitala is a standout company on the list because in fiscal 2016, 2017, and 2018, the company paid out 12 dividends and is on track to do the same in 2019. This monthly dividend, as opposed to a quarterly dividend, allows investors to reinvest their dividends more often, which can lead to significantly bigger profits in the long run. Additionally, the company currently holds a Style Score of "A" for Value. Capitala has a P/E of 9.02, which is slightly below the industry average of 10.70. Capitala’s solid value, along with the opportunity to consistently reinvest a solid dividend, make CPTA a possible good addition to a portfolio in need of income. The firm’s next ex-dividend date is June 19, so interested investors should buy before then. Capitala’s $0.08 dividend payout has remained steady since it was last cut in October 2017.
Consolidated Communications Holdings CNSL
Zacks Rank: #2 (Buy) Dividend Yield: 36.98%
With the largest dividend yield on the list by a significant margin, CNSL may seem like a dangerous stock, with its large dividend being its only real appealing quality. Fortunately for investors, that is not the case. CNSL is expected to experience significant earnings growth over the next couple of years. Zacks Consensus Estimates call for EPS to grow from a loss of $0.36 in 2018 to a loss of only $0.21 in fiscal 2019, representing a 41% change. This large growth is expected to be followed by an additional 40% growth, giving fiscal 2020 EPS an expected loss of only $0.12. Although the company is projected to report positive earnings, the estimates are headed in the right direction and the solid dividend returns could make CNSL a possible good addition to a portfolio. CNSL has maintained the same dividend, $0.39, since 2009 and has paid one every quarter, which is a very good sign for those looking for a steady income from a dividend.
Alliance Resource Partners ARLP
Zacks Rank: #2 (Buy) Dividend Yield: 12.44%
Alliance Resource Partners is another company on this list that boasts an "A" grade for Value in our Style Score system and a Zacks Rank #2 (Buy). Alliance’s P/E is currently 4.15, which marks a discount compared to its industry 5.20 average. Meanwhile, Zacks Consensus Estimates call for 69% earnings growth in fiscal 2019. Analysts are also optimistic about the future with earnings estimate revisions trending in the right direction recently. The expected future growth, relatively good value, and solid dividend yield could make Alliance a good possible addition to a portfolio. Over the past two years, Alliance has increased its dividend from $0.44 in May of 2017 to $0.54 in May of 2019, with small increases about every other quarter. Investors can gain optimism from this 22% increase as well as gain some reassurance that Alliance is able to pay out the dividend.
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NGL Energy Partners LP (NGL) : Free Stock Analysis Report
Salem Media Group, Inc. (SALM) : Free Stock Analysis Report
Alliance Resource Partners, L.P. (ARLP) : Free Stock Analysis Report
Capitala Finance Corp. (CPTA) : Free Stock Analysis Report
Consolidated Communications Holdings, Inc. (CNSL) : Free Stock Analysis Report
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