Growth stocks have been center stage for quite a while now. Some of that was driven by the crash that happened in 2018’s fourth quarter, when they lost a lot of ground.
Back then, the Federal Reserve was bullish on the economy. It was raising rates and selling off its bond portfolio that it had amassed during the aftermath of the 2008 meltdown. But it was also the first quarter of the U.S.-China trade war.
These countervailing forces made the Fed re-evaluate its position and start to loosen again, fearing the U.S. economy would start to swoon.
But now that it has righted that ship, and growth stocks have been running hard, it looks like the global economy is sputtering. Yet U.S.-focused companies have been sheltered from that storm. And stocks that kick off significant dividends look like a good way to play the messy space we are in now. In fact, both U.S. stocks and dividend payers are significant themes in my Growth Investor model portfolio these days.
As for the best places to direct capital now, I have found seven “A”-rated dividend stocks yielding 7% or more by my Portfolio Grader rating system. It’s a good time to add one or more to your portfolio.
Dividend Stocks to Buy: Great Ajax (AJX)
Dividend Yield: 8.3%
Great Ajax (NYSE:AJX) is real estate investment trust, which means by law it has to share its net profits with shareholders. It does this, like most REITs, in the form of a dividend. AJX stock’s current dividend is a very respectable 8.3%.
Right now is a great time for REITs. Since they’re in the real estate business, low rates are advantageous to everyone — buyers, sellers, REITs, banks, etc.
AJX focuses on buying single-family homes that have been foreclosed on and then managing the properties or selling them off. It also buys interests in multi-family home mortgages for the same purpose.
Along with the big dividend, AJX stock is up more than 13% in the past 12 months, and over 26% year-to-date. It’s also looking like its last quarter will follow on this strong path. With top scores for both growth and dividends, AJX is part of a phenomenon I sometimes call the Money Magnets. I consider it a must-have if you want income and growth in this market.
Alcentra Capital (ABDC)
Dividend Yield: 8.1%
Alcentra Capital (NASDAQ:ABDC) is an investment management firm that provides financing to middle-market companies in a variety of sectors. It invests in companies with annual revenues between $10 million and $100 million.
After the 2008 crash, traditional banks and lending institutions found it hard to lend to anyone but the best companies. The people in their underwriting departments were cut loose. And many of them went out and re-imagined how to build companies that lend to smaller businesses.
Now, the market is full of competition for traditional banks thanks to companies like ABDC, as well as neo-banks.
In the past year, ABDC stock is up a whopping 41% — and that doesn’t include its 8.1% dividend. Low interest rates mean better margins. ABDC stock should continue its streak for a while.
Landmark Infrastructure (LMRK)
Dividend Yield: 8.4%
Landmark Infrastructure (NASDAQ:LMRK) is an interesting company. While it’s in the real estate business, it’s not set up as a REIT. Like a lot of up-stream and mid-stream energy companies, it’s set up as a limited partnership.
For investors, it’s not much different. While REITs do have slightly more tax advantages, both REITs and LPs deliver above-average dividends — and some growth if you’re lucky. That’s why both investment categories are a staple of my Elite Dividend Payers “buy” list at Growth Investor.
And with LMRK, shares are up 27% in the past 12 months. And they deliver an 8.4% dividend on top of that.
Landmark Infrastructure has three divisions: wireless communication, outdoor advertising and renewable power generation. It doesn’t own the assets, it owns the properties where the assets are built.
With the advent of 5G technology in the U.S. telecom market and the growing use of renewable energy resources, there’s a lot of promise for LMRK moving forward.
Cypress Energy Partners (CELP)
Dividend Yield: 10.2%
Cypress Energy Partners (NYSE:CELP) is a traditional limited partnership that operates in the mid-stream energy sector.
But there’s a twist. It doesn’t actually own mid-stream services, it services them.
When you hear “midstream,” it basically means pipelines or distribution. Upstream includes exploration and the production companies that get the oil or natural gas. They ship it using pipelines, or mid-stream companies. Then it is sent downstream to refiners and distribution companies for sale.
CELP repairs and services mid-stream assets for mid-stream companies. It’s a service provider. And right now, its business is doing well because the U.S. energy market is strong, especially in the mid-stream sector. The U.S. energy market is strong right now, and should be for a long time, especially as exports expand. And it’s insulated from other issues global energy companies face.
Cypress Energy Partners stock delivers a whopping 10.2% dividend and is up 16.6% in the past year.
Arbor Realty Trust (ABR)
Dividend Yield: 8.4%
Arbor Realty Trust (NYSE:ABR) is structured as a REIT, so it throws off a delectable 8.4% dividend and has new tax advantages that were added through President Donald Trump’s 2017 tax cuts.
But instead of owning properties and managing them, ABR does loan origination for various properties. It focuses on specific sectors that it knows well — multi-family, senior housing, healthcare and some commercial real estate.
The fact is, the former three sectors are some of the hottest sectors in housing and will continue to grow due to significant generational trends like graying baby boomers and younger generations that aren’t as interested in home ownership.
ABR stock is up nearly 15% in the past year, yet it still trades a forward price-to-earnings ratio of 10.1. And given the fact that interest rates are heading down rather than up, this means ABR’s margins will be getting bigger rather than smaller.
Remember, the sectors it’s financing aren’t discretionary, like shopping malls. These are filling needs that exist and will continue to exist. All in all, ABR is among my current “Top 3 Stocks” for Growth Investor, where I’m also about to deliver two new plays.
Starwood Property Trust (STWD)
Dividend Yield: 7.8%
Starwood Property Trust (NYSE:STWD) is a big REIT, with about six times the market cap of ABR. And its origins were directly related to the 2008 market collapse and the subsequent lack of traditional lending opportunities. Its parent, private equity firm Starwood Capital Group saw an opportunity.
And that opportunity was STWD.
Since its beginnings in 2009, STWD has lent more than $51 billion. It originates, acquires, finances and manages mortgages and other commercial real estate debt investments.
This is proving to be a very lucrative sector since STWD doesn’t have to deal with all the regulation a traditional lender has to, to originate loans. That means less red tape and less overhead. And with rates so low, it also means improving margins.
Delivering a solid 7.8% dividend, STWD stock is also up 15% in the past year. There’s plenty more ahead.
Ares Capital (ARCC)
Dividend Yield: 8.4%
Ares Capital Corp (NASDAQ:ARCC) is another alternative lender that began its business in 1997.
It specializes in funding for businesses with EBITDA between $10 million to $250 million. ARCC takes a majority share of the business and gets a seat on the board.
Right now, ARCC has about $142 billion worth of assets under management. Around 97% of its investments are located in the U.S., with healthcare services, business services and consumer products sectors making up a majority of its financing. And, as I mentioned, at Growth Investor I am strongly recommending to skew U.S. at this time.
It has been in this sector a long time and has built a solid reputation. That means as this alternative lending trend continues, it will become an even bigger player in the space.
It generates an impressive 8.4% dividend and the stock is up just over 9% in the past year. This is a long-term pick that may not set the world on fire, but will deliver year in and year out.
Why Dividend Growth Stocks Are Especially Important Today
These days, the global bond market is just going haywire: We’ve got falling and even negative yields overseas. But as investors retreat to U.S. Treasurys it’s causing bizarre effects here, too. Just look at what happened this summer, when the two-year Treasury actually began to yield MORE than the 10-year Treasury.
And even the 30-year Treasury can’t be relied upon for good yield anymore. In August, its yield dropped below 2% for the first time ever.
So — whether you’re managing big institutional cash, or your own portfolio — you’ll also want to look at the Money Magnets.
Not only did these stocks earn an “A” in my Portfolio Grader, thanks to strong buying pressure and great fundamentals …
The stocks also earn an “A” in my Dividend Grader. These stocks are able to pay great yields — and have the strong business model to back it up.
All in all, I’ve got 27 strong dividend growth stocks for you now, and one more coming, in Growth Investor … almost all of which yield more than the S&P 500. These stocks are poised to do well as we continue to see international capital flow to the U.S. markets. Click here to see how I found these stocks, and how you can get great performance out of YOUR portfolio — come what may.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.