There’s certainly no shortage of dividend stocks for investors to pick from.
But all too often (and at least partially thanks to an uncreative financial media), the same “top dividend stocks to buy” lists have become a little too familiar, as they recycle the same names over and over again.
With that as the backdrop, in the interest of shaking things up just a little — not to mention adding a little more diversity to income portfolios — here’s a list of nine great dividend stocks that are well off the beaten path, so to speak.
In no particular order …
Lesser-Known Dividend Stocks: Student Transportation Inc (STB)
STB Dividend Yield: 10.8%
Contrary to popular belief, not every school system runs its own buses. Frequently, that service is contracted out to outfits to private-sector corporations that can achieve scale and share enough resources to make the service a profitable one.
Student Transportation (STB) is one of those companies. Operating 13,000 buses for more than 360 school districts, Student Transportation has quietly become a company producing more than half a billion dollars in annual revenue. More important than that, STB has quietly earned a place as one of the markets best obscure dividend stocks, sporting a yield of 11.3%.
Those who know Student Transportation well will likely know the dividend payout has been gradually waning. But, revenue and earnings have been growing steadily for years, and there’s more than enough room and money to beef up the payout going forward.
Lesser-Known Dividend Stocks: Consolidated Communications Holdings (CNSL)
CNSL Dividend Yield: 7.5%
It’s a misnomer to think that today’s telecom industry is entirely dominated by the mega-names like AT&T (T) and Verizon Communications (VZ). There are still a handful of regional names like Consolidated Communications Holdings (CNSL) still in business, and surprisingly enough, they’re doing rather well, taking advantage of their small size to remain more nimble than their large-cap counterparts.
Several of them are solid dividend stocks too, including the aforementioned Consolidated Communications Holdings. It currently sports a yield of 7.5%.
Critics will be quick to point out that CNSL hasn’t raised its dividend since 2006. But, by that same token, it hasn’t lowered its dividend since 2006 either, largely sailing through a 2009-11 lull without any real trouble.
CNSL is not sexy, but it’s cash-flow positive and it’s competing with the big boys by adding things like business-level cloud services. That’s half the battle.
Lesser-Known Dividend Stocks: Greif, Inc. (GEF)
GEF Dividend Yield: 5.3%
The past couple of years have been tough for Greif (GEF), as the stock has given up more than 40% of its value since its June 2014 peak. And it appears to still be in a bigger-picture downtrend.
That pullback, though, has helped in one way — it has pushed the dividend yield up to a healthy 5.3% … a dividend GEF has paid like clockwork for years, even if the payout itself has stagnated since 2010.
But why buy a falling stock of a company that apparently has stopped growing? Because the Greif of the past and the Greif of the future are two different companies, and a major overhaul of the way the packaging and container company operates is about to turn the proverbial corner. When it does, the growth it manages to produce could surprise plenty of investors.
It’s probably the riskiest of all the dividend stocks under the microscope here, but it has a potential reward that matches the risk.
Lesser-Known Dividend Stocks: StoneMor Partners L.P. (STON)
STON Dividend Yield: 9.2%
StoneMor Partners L.P. (STON) is, as its full name suggests, a limited partnership, and as such requires special care at tax-filing time. Although it’s not overwhelming to do on your own, many LP and MLP investors choose to delegate those duties to a qualified accountant.
Regardless, with a dividend yield of 9.2%, StoneMor Partners L.P. is a standout, even among the market’s best dividend stocks. Moreover, the nature of the business largely assures STON will remain a strong dividend payer for a long time to come.
How so? StoneMor Partners manages 306 cemeteries and 103 funeral homes. Until someone figures the secret to living forever, StoneMor should be able to drive income — and pass a big piece of that income along to investors — for a long, long time.
Lesser-Known Dividend Stocks: Chambers Street Properties (CSG)
CSG Dividend Yield: 7%
No list of dividend stocks to buy (well-known or not) is apt to omit a REIT or two, and this list is no exception — Chambers Street Properties (CSG) is an off-the-radar real estate investment trust worth consideration.
Chambers Street Properties focuses on a narrow sliver of the real estate market … industrial properties and warehouse/distribution properties in particular. It owns 125 properties across four countries, and services 178 different tenants. That’s enough diversity to protect the company’s revenue stream, and its current dividend yield of 7.1%.
Potential newcomers should know that Chambers Street Properties is in the process of merging with Gramercy Property Trust (GPT), which casts some doubt as to the future of the combined companies’ dividend payment; GPT only yields about 4% right now. However, the companies have jointly said they foresee an AFFO payout ratio of between 70% and 80%. That should leave the dividend closer to the Chambers Street Properties payout level than the Gramercy Property Trust dividend rate (adjusted for the merger’s agreed-upon exchange prices, of course).
Lesser-Known Dividend Stocks: Covanta Holding Corp (CVA)
CVA Dividend Yield: 6.5%
There’s nothing sexy about Covanta Holding (CVA)… not one thing. The company performs waste-management services, and has largely perfected the fine art of converting garbage’s methane emissions into electricity.
Yet, both are business lines that will never go away. That is, we’ll always have trash to throw away, and we’ll always need electricity. It’s that dual recurring revenue model that will protect and grow the dividend going forward. In fact, the company already has a proven track record of steady payout increases since 2011.
Meanwhile, the current yield of 6.5% might not be earth-shattering, but it’s better than some of the best blue-chip income stocks.
To be fair, the first half of 2015 was uncharacteristically unprofitable for Covanta, as energy pricing pressure kicked in at the same time that several expensive initiatives were underway. The latter is winding down, and the former shouldn’t be able to get any worse. There’s some risk to it to be sure, but not as much as the 30% pullback since the middle of the year would imply.
Lesser-Known Dividend Stocks: Navient Corp (NAVI)
NAVI Dividend Yield: 5.4%
In late September, Goldman Sachs released a list of 21 of the market’s cheapest stocks to buy. It wasn’t an explicit list of dividend stocks, though several of them were attractive dividend payers.
One of the most compelling yet admittedly obscure stocks on that list worth consideration was by income-seekers was student loan debt collector Navient (NAVI).
Investors who know what’s currently happening within the debt-collection industry know that pending regulatory reform could prove costly to Navient. In reality, however, that overhaul could provide some much-needed standardization that would actually help NAVI.
In any case, Goldman Sachs is well aware of brewing changes that could affect Navient, and still says NAVI shares are worth around $19 per share, versus their current price near $12. In the meantime, the dividend yield of 5.4% is compelling, though it would be quickly whittled down to would-be owners who tarry and miss out on the bullishness Goldman says is brewing.
Lesser-Known Dividend Stocks: New Media Investment Group (NEWM)
NEWM Dividend Yield: 7.8%
New Media Investment Group (NEWM) owns and operates a number of local newspapers, along with several localized online commercial phone directories.
A dying industry (on both counts)? Yes and no.
While a mass, nationalized audience demands speed and scope that can only be satiated by major online publications in real-time, small-market consumers still read — and subscribe to — printed newspapers as a supplement to online news sources when available.
What New Media Investment Group brings to the table is a combination of scale and modernization that makes the old-school business work in an era when it isn’t supposed to. The company is combining its offline and online efforts to work together, and deploys a common platform that all 490 print publications can easily utilize and then grow.
It’s a formula that works. Through ongoing acquisitions, revenue is growing dramatically, and profits are now being realized more often than not.
In that light, the 9.2% yield NEWM is paying suddenly looks even more compelling.
Lesser-Known Dividend Stocks: Iron Mountain Inc (IRM)
IRM Dividend Yield: 6.8%
Iron Mountain (IRM) is set up like a REIT, and technically it is one … but the categorization is a bit misleading. The company actually performs off-site records storage and document-destruction services. It’s a much more stable business model; it’s a rarity for document-retention requirements to change, and corporations are producing (and discarding) more sensitive paper documents than ever before.
The strength and perpetuity of the business hasn’t prevented IRM shares from losing 30% of their value since February of this year … a pullback recently fueled by a revenue miss in the third quarter followed by news that the company’s planned acquisition of Australia’s Recall Holdings may hit an antitrust wall.
That pullback from IRM, though, has made it one of the market’s more attractive — even if offbeat — dividend stocks. Iron Mountain currently sports a yield of 6.8%, and not only has it never had any problem paying it, it has logged regular payout increases for several consecutive years now.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.