Dividend stocks are a very beneficial foundation for an investment portfolio. First, they offer a return that is not directly tied to a company’s share price, which can help investors through downturns in the market. Dividend payments may be taxed at a more favorable rate. Finally, investors can take advantage of compound interest by reinvesting dividend payments.
While dividends are significant for long-term investors, they can also be deceiving. By that, I mean that companies can create a false sense of security by supplying an unsustainable dividend to attract investors. Therefore, comparing companies within the same sector is best to determine if their dividend is unusually high. Another metric to pay attention to is a company’s return on equity which gives investors a good picture of its strength, aside from its dividend payout rate.
Return on Equity = Net Income/Shareholders’ Equity
Dividend Stocks to Buy: Coterra (CTRA)
Coterra (NYSE:CTRA) is an oil and gas exploration and production company based in Houston, Texas, in the Anadarko Basin, Marcellus Shale, and Permian Basin.
Coterra currently has a quarterly dividend of $0.57 per share, and the company has a 33% return on equity. The company has plans to raise its dividend in the future, and they also authorized a new share repurchase program totaling $2 billion that came into effect in February and doesn’t have a declared expiration date.
Early this month, OPEC+ announced oil production cuts of more than 1 million barrels of crude oil daily. This was done as a way to increase the price of oil. Oil futures surged at this news, including stocks such as Coterra.
Camping World (CWH)
Camping World (NYSE:CWH) is a retailer of recreational vehicles (RVs) and related products and services that operate under the Camping World and Good Sam Brands.
Camping World has a quarterly dividend of $0.63 per share. It has a return on equity of 50%. The company hasn’t been performing exceptionally well, with overall revenue remaining unchanged and net income dropping by half compared in 2022 compared with full-year earnings from 2021.
Many of the company’s recent financial issues can be attributed to a drop in demand for RVs and the current span of company acquisitions of RV dealerships from Michigan, California, Utah, and Alabama.
Gaming and Leisure (GLPI)
Gaming and Leisure (NASDAQ:GLPI) is a Real Estate Investment Trust () that owns and finances triple-net lease agreements for gaming operations.
Gaming and Leisure has a return on equity of 18% and a quarterly dividend of $0.72. The company has seen considerable growth from a net income standpoint, with a 67% increase compared to Q4 2021. The unique advantage of REITs is that the law requires 90% of their taxable income to be distributed in the form of dividends to shareholders. This is a significant reason why REITs have such favorable dividend yields.
Gaming Lesuire has also, in recent months, acquired multiple real estate properties from Bally’s Corp. and also entered into a lease agreement with PENN Entertainment (NASDAQ:PENN) for seven of its current properties. Thus, it is among the top dividend stocks to buy.
On the date of publication, Noah Bolton 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.