Earnings across the board will be put under pressure during the next president’s term, as the market may continue to run higher in the short term. However, it is likely to fall at some point in the next four years no matter who wins on Nov. 8. The following is a selection of dividend payers that are financially stable, have grown sales and profits over the last 10 years and provide high probability of continue dividend payouts.
Waddell & Reed (WDR, Financial)
Dividend yield: 11%
The stock is off 56% in the last year as the asset management company lost 24% of assets under management year over year, but at this price the company is paying out a dividend yield that makes it a solid investment. Since 2007, Waddell & Reed's sales are up 110%, and its profits are up 295%. More importantly, the company has consistently paid out a quarterly dividend since going public in the late 1990s. Jeremy Grantham (Trades, Portfolio) recently initiated a position. Mario Gabelli (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) both own over one million shares.
Spectra Energy Partners (SEP, Financial)
Dividend yield: 6%
Spectra is in a great position to profit from any recovery in the commodities market for oil and gas. It is a Houston-based master limited partnership formed by Spectra Energy Corp (SE). It is one of the largest pipeline MLPs in the United States, with more than 15,000 miles of transmission and gathering pipelines, approximately 170 billion cubic feet of natural gas storage, and approximately 4.8 million barrels of crude oil storage. Over the last decade, revenue and net income are up over 1,500%. In fact, it has made over $3 billion in net income during the decline of oil and gas prices, and paying a 6% dividend has caught the attention of Jim Simons (Trades, Portfolio) and T Boone Pickens (Trades, Portfolio), who both own a position in the company.
Xinyuan Real Estate (XIN, Financial)
Dividend yield: 7.6%
The Chinese real estate developer’s stock is up 42% year to date, and having pulled back from $7 per share, it is one of the few companies with a solid net current asset value, extremely low earnings multiple and high dividend yield. The company has been able to retire debt and take on new senior notes at lower interest rates. A basic calculation of value is the $3.5 billion in current assets minus the $2.8 billion in total liabilities. That $700 million figure is 100% higher than the current market capitalization. So, why not get paid to wait and watch. If anything, the dividend payment would increase with the share price, allowing investors to buy more. And, as long as the NCA value remains higher than the market cap, it is a great ownership opportunity. Jim Simons (Trades, Portfolio) is the only guru position with over 1.5 million shares, 2.28% of the shares outstanding.
Sunoco LP (SUN, Financial)
Dividend yield: 11.5%
Sunoco operates a chain of 850-plus convenience stores and retail fuel sites, as well as provides wholesale distribution of motor fuels to convenience stores, independent dealers, commercial customers and distributors. Have you stopped filing up your car with gas yet? Exactly, me either. The stock is off 28% in 2016, yet the company remains very well positioned to profit from any rise in oil and gas in the next few years. Sunoco LP is managed by Energy Transfer Equity L.P. (ETE), and Energy Transfer Partners (ETP) owns a 50.8% interest in the LP. Jim Simons (Trades, Portfolio) just initiated a position in Sunoco, and T Boone Pickens (Trades, Portfolio) added to his position, now totaling north of 4% of his assets. This could be one of the best trades going into 2017.
Disclosure: I own XIN. I do not own any other stocks discussed in this article.
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