This past year could have been better for equity investors. 2022 was one of the worst performances by the S&P 500. It lost 18.1% this past year, the seventh-worst year on record. Mid-cap dividend stocks to buy fared much better.
The WisdomTree U.S. MidCap Dividend Fund (NYSEARCA:DON) tracks the performance of the WisdomTree U.S. MidCap Dividend Index, a collection of dividend-paying mid-cap stocks.
The index takes the largest 300 companies out of the WisdomTree U.S. Dividend Index. It then selects the top 75% of dividend-paying stocks by market cap. Relative to the S&P 500, DON did quite well in 2022, generating a total return of -4.74%.
If you’re looking for mid-cap dividend stocks to buy, DON is an excellent place to find good ideas for January and the rest of 2022. The ETF currently has 351 stocks invested in its $3.2 billion in total assets.
Here are three that make excellent investments. They all have market caps between $2 billion and $15 billion.
| PARA | Paramount Global | $18.66 |
| WSO | Watsco | $255.85 |
| MTN | Vail Resorts | $242.83 |
Paramount Global (PARA)
Paramount Global (NASDAQ:PARA) is the company’s name created by the 2019 merger between CBS and Viacom. However, the name Paramount Global didn’t become official until February 2022.
“Paramount’s iconic peak represents a rich history for our company as pioneers in the Golden Age of Hollywood. Today, as we embrace the Paramount name, we are pioneers of an exciting new future,” CEO Bob Bakish stated in the company’s press release announcing the change.
In addition to Paramount Pictures, the company’s entertainment brands include Paramount+ (its streaming service), CBS, Showtime Networks, Nickelodeon, MTV, Comedy Central, BET, and Pluto TV.
Like most media companies that rely on advertising, Paramount Global will likely see a contraction in its TV advertising in 2023.
In addition, analysts are skeptical about the company’s direct-to-consumer (or DTC) streaming service’s ability to make money. In 2023, Paramount+ and the rest of its DTC could lose as much as $1.9 billion. The company says its losses will peak this year. However, there is no timeline for breakeven.
So, why buy PARA stock?
It’s currently yielding 5.23%. Get paid to wait for the streaming service to come around.
And suppose you’re worried about its balance sheet. In that case, it’s got $3.4 billion in cash as of Sept. 30, 2022, and $3.5 billion undrawn from its revolving credit facility, providing it with plenty of liquidity should the need arise.
Watsco (WSO)
This past year, I became a fan of Watsco (NYSE:WSO), the largest distributor of air conditioning, heating, and refrigeration equipment and supplies in the U.S.
On Jan. 3, the company announced an 11% increase in its quarterly dividend to $2.45 a share. With the Jan. 31 payment, its annual payout of $9.80 yields 3.78%. Watsco has paid dividends for 49 consecutive years.
I included Watsco on a list of dividend stocks to buy and hold forever in December. I was especially taken by the fact it generates 32% of its revenue from e-commerce. In addition, it’s built a business that makes money in good weather and bad.
Its stock is also very cheap at the moment. It trades at 1.26x sales with a 5.44% earnings yield, less than its five-year averages.
Over the past 30 years, the company’s annual total shareholder return was 21%. For example, a $10,000 investment in 1991 was worth $3.04 million at the end of 2021.
As I said in December, WSO is an excellent combination of income and capital appreciation. As a result, I could see a long-term investor holding for the next 30 years.
Vail Resorts (MTN)
Vail Resorts (NYSE:MTN) reported its Q1 2023 results in early December. While it’s not the busy season for the operator of some of North America’s busiest ski resorts, the company does start to see the sale of ski passes accelerate, which gives it some indication of what the busier second and third quarters will deliver.
According to its first-quarter report, it’s North American pass sales for the 2022/2023 ski season through Dec. 5 increased by 6% on both units sold and dollars generated from those sales. Compared to 2019/2020, units sold increased by 86%, while revenues were up 53%.
For fiscal 2023, it expects to generate $920 million of resort-reported EBITDA (earnings before interest, taxes, depreciation, and amortization) at the midpoint of its guidance, 10% higher than in 2022.
“We expect to have approximately 2.3 million guests in advance commitment products this year, generating over $800 million of revenue and representing over 70% of all skier visits committed to our 40 North American and Australian resorts in advance of the season in a non-refundable pass, an increase of over 1.1 million guests in the program from the 2019/2020 season, including all pass products for our North American and Australian resorts,” stated CEO Kirsten Lynch in its Q1 2023 press release.
In fiscal 2022, it earned $8.29 a share. Analysts project it will earn $8.95 in 2023 and $10.01 in 2024.
Between March 2009 and August 2018 (114 months), its stock appreciated by 1,468%. Between April 2020 and November 2021 (20 months), it appreciated by 183%. That’s average monthly increases of 12.9% and 9.2%, respectively.
Buy now before the next leg up.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
