For income investors, dividend shares are often the main choice of investment. That said, if you choose in more mature companies such as dividend aristocrats or dividends kings, many of the potential names are delivered with slow growth rates, or worse, the drop in the value of shareholders. Is it possible, however, to have the best of both worlds? The dividend actions that have the potential to skyrocket? I say yes – but with a twist.
To start, if I started a new position, I should see companies with three specific characteristics.
They need to develop their upper and lower lines. As an income investor, growth in income -free income on income is a problem. In addition, I would like to see how the company manages its dividend. Do they pay too much? Too little? It must be fair. Let us call this the “Goldilocks zone”. And then we need confirmation. What do business analysts think – and what is the size of the consensus?
All this leads to a confirmation of whether a stock of dividends has legs or not.
With the Barchart screening tool, I used the following filters to get my list:
Change of 5 years: 200% and more. I only want to see companies with substantial long -term growth. This metric is also reflected in solid commercial fundamentals and an execution that has tripled the value of shareholders.
Annual dividend yield: I left this white so that I could reorganize the list of the highest dividends stock at the lowest. I only want the best.
Current evaluation of analysts: 4 to 5. Buy moderate (but very close to the strong purchase) and solid purchasing recommendations only.
Dividend distribution ratio: 30% – 50%. An acceptable range where companies generously reward shareholders while retaining species to develop the company.
Number of analysts: 10 or more. More analysts mean more reliable notes. Several data points reduce the bias than those with limited coverage.
Net income growth: 50% or more. A significant increase in profitability indicates effective management and execution of costs, which are essential for the success of the long -term portfolio.
After configuring the filters, I directed the screen and I obtained exactly seven companies on the list:
Then, I organized the list of the highest dividend yield at the lowest by clicking on the Div yield (A) Section of columns, and ended up with Permian Resources Corp. (PR), Archrock Inc. (Aroc) and Targa Resources (TRG) like my three main dividend stocks with growth potential.
The first on my list is Permian Resources Corporation, an independent oil and gas company based in Texas which operates in the Permian basin region, covering west of Texas and New Mexico. The company was trained in September 2022 thanks to the merger of Centennial Resource Development and Colgate Energy, and is now negotiated on the New York Stock Exchange with the symbol of Ticker “PR”.
In its most recent annual finances, the turnover of the 2010 company of the company increased by 60% to $ 5 billion, while its net income for the same period increased by $ 106% to $ 984 million, or a basic BPA of $ 1.54. In terms of dividends, the annual payment of permien resources is $ 0.60 per share ($ 0.15 per quarter), which reflects a dividend yield of 4.3%. Meanwhile, the company’s payment ratio is 45.58% of its profits, which indicates that it does not pay excessive cash only to appease shareholders.
According to a consensus among 22 analysts, permian resources are evaluated a “strong purchase” with a score of 4.73 out of 5. The highest price target is $ 22 per share, which suggests up to around 58% increase in its current levels. Over the past five years, the action has earned a value that has changed its life – an impressive yield for a stock of dividends.
The next on my list is Archrock Inc., which is a natural gas compression service provider. More specifically, they help large oil companies effectively move gas through pipelines and processing facilities. The company operates through two main commercial sections: the provision of contract compression services, where it has equipment on customer sites and the manufacture of the same compression equipment.
Archrock’s annual finances are also impressive. Income from financial year 24 increased by ~ 17% to $ 1.16 billion, while its net profit increased by $ 64% to $ 172.2 million, or $ 1.05 per share. Meanwhile, the company’s annual annual dividend of the company is $ 0.84 per share, which is distributed at $ 0.210 per quarter, reflecting a competitive yield of 3.34%. The company pays 49.76% of its profits as a dividend, which is also entirely acceptable.
In the past 5 years, the company’s dividend has increased by 21.82%, while the return on its shares reached 316.97% over the same period, which means that if you have shares in the past five years, you would have had both dividend growth and capital appreciation. A consensus among 10 analysts considers the company as a “moderate purchase” with a score of 4.40 out of 5. The highest price target of analysts is $ 33 per share, which suggests almost 31% upward potential for current action.
The last stock of dividends on my list is Targa Resources, another large energy company that helps producers of natural gas and oil with its vast network of pipelines and facilities. More specifically, they bring together the natural gases of the heads of well and transport these materials to refineries after transforming them into Vendable products, such as propane and ethylene.
The company’s turnover 2000 of the company increased by 2% to 16.38 billion dollars, while net profit increased by 53% to $ 1.28 billion or $ 2.94 per share – much higher than $ 1.28 from the previous year. Annual term payment is $ 4.00, which is paid at $ 1 per quarter, which causes a yield of 2.46%. Quite respectable on the current market. Meanwhile, the payment rate is 46.13%, which is still in an acceptable range.
A consensus among 21 analysts covered Targa Resources and assesses the company a “strong purchase” with a score of 4.67 out of 5 – the highest on this list. The highest price target is $ 240 per share, which represents approximately 45% of potential increase in its current levels. Over the past 5 years, the action has won more than 975%, which is also quite impressive for a dividend company.
The companies mentioned above are among the most viable options for inventors looking for long-term potential in the yield of dividends and the appreciation of capital. That said, the market can become unpredictable, even for the most established companies.
Before starting a long -term position, investors should always analyze the future of the company by examining its history, recent finances and sectoral rear winds that could occur in the future.
All things being also equal, the companies mentioned above are a good choice of investment given the current environment.
On the date of publication, Rick Orford had (directly or indirectly) positions in any of the titles mentioned in this article. All information and data of this article are only for information purposes. This article was initially published on Barchart.com
