Investors are still having a hard time finding great income stocks. And with the Fed holding yields low for the foreseeable future, this is not going to change anytime soon. It also doesn’t help that the search for yield over the past few years has pushed the price of many traditional income stocks to levels that are not justified by the underlying fundamentals of the companies. Buying a higher-yielding stock will not be a very satisfactory experience if the stock drops by four or five times the amount paid out in dividends.
Investors, even those in search of income stocks, need to use Portfolio Grader to select the very best stocks with excellent fundamentals that are attracting the attention of the big money that drives markets.
Air Industries (AIRI) is an example of a company with great fundamentals that also pays a solid dividend right now. Air Industries makes flight-critical products including flight safety parts, landing gear and components, arresting gear, flight controls, sheet metal fabrications and ground support equipment. At the current price AIRI stock is yielding 6.32% after Air Industries raised the dividend back in March.
Air Industries is growing by acquisition, having just announced the completion of one deal and had two agreements in principle to acquire companies that complimented their existing lines of business. Portfolio Grader upgraded AIRI stock to an “A” last month — a strong buy at the current price.
Northstar Realty Finance (NRF) is a REIT that acquires, originates, and structures debt investments secured primarily by income-producing real estate properties. Northstar also invests in commercial real estate debt securities, including commercial mortgage backed securities, REIT unsecured debt, and credit tenant loans and has a portfolio of properties that are net leased to commercial tenants.
Northstar recently announced that it was expanding its portfolio of healthcare-related properties by buying 60 U.S. senior housing and nursing-home buildings. Once the deal is closed Northstar’s portfolio of healthcare-related properties will be 160 buildings worth $1.6 billion.
Northstar is seeing its investments pay off in strong growth as earnings are up over 70% so far this year. Portfolio Grader upgraded NRF stock to an “A” back in March and the stock is a strong buy at the current price. The shares currently yield 5.8%.
Star Gas Parnters (SGU) is in the home heating oil and propane business in the Northeast and mid-Atlantic regions of the U.S. The company has used smart acquisitions of smaller competitors to become the nation’s largest retail distributor of home heating oil — Star Gas sells heating oil to about 450,000 residential and commercial customers in its region.
And business has been pretty good, as earnings have grown by 35% on average for the past five years. Profits leaped forward by more than 80% in the most recent quarter with an assist from the very cold winters in its markets this year.
The stock was upgraded to an “A” by Portfolio Grader back in February and is a strong buy at the current price. The stock yields 5.1%; this company has raised the payout by about 10% on average a year for the past five years.
The market is becoming much more selective as the advance continues. Investors income stocks in particular need to be very selective in their purchases and stick to those stocks with the very best fundamentals.
Louis Navellier is the editor of Blue Chip Growth.