3 Dividend Stocks With Mega-Trend Tailwinds

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High Yield Dividend StocksWhile the government shutdown has put a pinch on the markets, the U.S economy has been steadily recovering for the most part this year, sending domestic equities — dividend stocks, growth stocks … you name it — up in the process.

However, while growth here in the states typically translates to growth overseas as well, that relationship hasn’t been as strong this year.

As Bloomberg’s Simon Kennedy recently reported, economists are predicting that an acceleration in the U.S. will “provide less oomph abroad than it once did.” A few quick reasons:

  • America is focusing on greater demand and production at home.
  • The U.S. holds a shrinking share of worldwide GDP.
  • We are also tapping more of our own energy.

Those factors are notable for a big reason — they’re “mega-trends.” In other words, they are trends that not only are expected to have a powerful effect on various markets, but they also should last for years, possibly even decades. That means the companies behind them could be perfectly positioned to make a nice buck or two over the long haul.

The following three companies could each see their fortunes vastly improved thanks to one of these mega-trends. But more importantly, while you wait for these long-term stories to play out, these dividend stocks will provide sweet payouts in return for your patience:

Onshoring: General Electric

General Electric GEDividend Yield: 3.2%

In his article, Kennedy cited a recent September survey showing that 54% of U.S. manufacturers are planning on or considering bringing factory lines back from China — a 17-percentage-point increase from February. While those numbers are the latest proof of the onshoring trend, they are hardly the beginning.

General Electric (GE), for example, has created more than 16,000 American jobs and has built or planned 15 new U.S. factories since 2009. It opened two new assembly lines — the first in 55 years — in legendary Appliance Park earlier this year, and another one is on the way.

And the onshoring megatrend — while often wrapped in a feel-good, star-spangled package — can help the bottom line. The tough reality is that once-cheap foreign wages are rising, along with oil (and thus cargo) costs. Meanwhile, U.S. labor productivity is improving, while cheap and abundant natural gas has lowered the cost of domestic factories.

Diversified giant GE is doing plenty of other things to help the bottom line long-term as well, like bolstering the industrial side of its business. So far, that has helped the stock climb steadily out of the depths of the recession, up almost 200% from the 2009 lows, including more modest 13% gains booked so far this year.

Also, while GE doesn’t exactly have a great reputation among dividend stock investors anymore thanks to its payout cut in 2009, the company has improved its payout mightily since, bringing GE’s current yield to 3.2%. With 10% annual earnings growth is on tap long-term, there’s reason to expect the upward trend for both GE’s stock and dividend to continue.

New Markets: Dow Chemical

dowDividend Yield: 3.3%

At the turn of the century, the U.S. contributed a whopping 31% of worldwide GDP. More than a decade later, that share has shrunk by nearly 10 percentage points as the output of other countries — such as China — has emerged.

Betting solely on China for this mega-trend, though, doesn’t seem like the best idea considering the country’s recent slowdown — and doesn’t seem like a fair representation of the new world economy.

Instead, a diversified dividend stock like The Dow Chemical Co. (DOW) seems like a better fit.

Last year, DOW got 36% of its sales from North America; 34% from Europe, the Middle East and Africa; 18% from the Asia Pacific; and 12% from Latin America. That means has exposure to fast-growing markets on top of established ones. Plus, Dow Chemical has its hand in businesses ranging from electronics to water to energy — clear areas of demand for developing markets.

So far this year, DOW shares are beating the market with 25% gains — and even after that run, this dividend stock still yields a solid 3.2% and hasn’t missed a payment since its first dividend in 1911.

That’s a pretty solid track record to lean against while the rest of the world continues buying Dow products.

Domestic Energy: Martin Midstream Partners

martinDividend Yield: 6.7%

Last but not least, we have to give a nod to the fracking-driven domestic energy boom. As Kennedy pointed out, America produced an average of 7.2 million barrels of crude per day since January — the highest rate since 1991 — and the U.S. trade deficit has been steadily sliding as a result.

This mega-trend is hardly news, and it can be played from all angles. One especially promising option: Martin Midstream Partners (MMLP).

This master limited partnership cleans up, stores and transports gas — essentially collecting a “toll” on the gas that passes through its pipelines, then passing most of that toll along to shareholders per its MLP status. The current result of that setup: a mouth-watering 6.7% yield.

It’s important to note that this small-cap dividend stock only trades less than 50,000 shares daily, so interested investors should use stop-losses and limit orders.

Still, as InvestorPlace contributor Michael Shulman explained back in March, Martin Midstream Partners “has extensive operations in the Gulf — the destination of a great deal of fracking, with everything coming from Texas, Oklahoma, and North Dakota,” and thus is “sitting right where a great deal more gas is heading over the next one to twenty five years.”

Beyond that, you can rest easy long-term knowing that MMLP’s businses is not tied to the price of the gas that it transports, but to the unit volume.

As long as the gas keeps flowing, so will Martin’s payouts.

As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2013/10/3-dividend-stocks-ge-dow-mmlp/.

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