In a market where investors are increasingly seeking stable income streams, dividend-paying stocks remain a cornerstone of many portfolios. These companies not only provide regular cash payments but also offer the potential for capital appreciation, contributing to an investment's total return. We've identified five companies across different sectors, each trading under $35 per share, that offer notable dividend yields and have distinct operational strengths.
Key Takeaways
- Five companies across energy, shipping, banking, and real estate are highlighted for their dividend yields and market position.
- Coterra Energy offers exposure to key U.S. oil and gas basins with a solid dividend.
- Enterprise Products Partners is a major midstream energy player with a high yield and strong distribution coverage.
- Frontline is a global oil tanker company that recently modernized its fleet.
- KeyCorp represents the regional banking sector, offering financial services with an attractive dividend.
- VICI Properties is a real estate investment trust (REIT) focused on experiential properties like casinos and entertainment venues.
Understanding the Appeal of Dividend Investing
Before diving into specific companies, it's important to understand the concept of total return. An investment's performance isn't just about the stock price going up. Total return combines capital gains (the increase in stock price) with the dividends paid out to shareholders.
For example, if you buy a stock for $20 and it pays a 3% dividend, your initial return is that 3%. If the stock's price rises to $22 over the year, that's a 10% capital gain. Your total return for that period would be 13%, showcasing how dividends can significantly enhance overall investment performance.
What is Passive Income?
Dividend stocks are a popular tool for generating passive income. This is revenue earned with minimal active effort from the investor. It's a financial strategy aimed at building wealth and achieving financial independence over time by letting your investments work for you.
Coterra Energy (CTRA)
Coterra Energy is an independent energy company focused on the exploration and production of oil, natural gas, and natural gas liquids within the United States. The company was formed in 2021 through a significant $17 billion merger between Cabot Oil & Gas and Cimarex Energy, creating a diversified energy producer.
The company's strategic assets are located in some of the most productive regions in the country. It holds significant acreage in three key areas:
- Approximately 186,000 net acres in the Marcellus Shale in Pennsylvania.
- Around 296,000 net acres in the oil-rich Permian Basin of Texas and New Mexico.
- About 182,000 net acres in Oklahoma's Anadarko Basin.
Coterra sells its natural gas to a wide range of customers, including industrial companies, local utilities, and power generation facilities. The company currently pays a dividend yielding around 3.31%.
Enterprise Products Partners (EPD)
Based in Houston, Texas, Enterprise Products Partners is a leader in the midstream energy sector. As one of the largest publicly traded energy partnerships, it provides essential services that connect energy producers with consumers. The company offers a substantial dividend yield of approximately 6.68%.
Core Business Operations
Enterprise Products Partners operates across four main segments: Natural Gas Pipelines, NGL Pipelines, Crude Oil Pipelines, and Petrochemical Services. Its services include the gathering, processing, transportation, and storage of natural gas, crude oil, and natural gas liquids (NGLs).
One key metric for investors in Master Limited Partnerships (MLPs) like EPD is the distribution coverage ratio. Enterprise Products Partners maintains a ratio well above 1x, indicating it generates more than enough cash flow to cover its payments to shareholders, a sign of financial stability.
Frontline (FRO)
Frontline is a major player in the global shipping industry, ranking as the world's fourth-largest oil tanker company. It specializes in the seaborne transportation of crude oil and related products, owning and operating a large fleet of tankers. Investors are drawn to its 4.07% dividend yield.
The company recently made strategic moves to modernize its fleet. It announced the sale of its five oldest Very Large Crude Carriers (VLCCs), built between 2009 and 2010, for a total of $290 million.
Following this transaction and the acquisition of 24 VLCCs from Euronav, Frontline's updated fleet consists of 84 vessels. This includes 41 VLCCs, 21 Suezmax tankers, and 18 LR2/Aframax tankers, positioning it with a more modern and efficient fleet to serve global energy markets.
KeyCorp (KEY)
KeyCorp is a regional bank holding company that provides a broad range of financial services through its subsidiary, KeyBank. For investors looking for exposure to the financial sector, KeyCorp offers a dividend yield of about 4.08%.
Operating through two primary segments, Consumer Bank and Commercial Bank, KeyCorp serves individuals and small to medium-sized businesses. Its offerings include standard banking products like deposits and loans, as well as more specialized services such as wealth management, investment banking, and commercial leasing.
The bank provides capital market products to middle-market clients across various sectors, including healthcare, real estate, and technology. This diversified business model allows it to serve a wide customer base across the United States.
VICI Properties (VICI)
VICI Properties is a unique real estate investment trust (REIT) that focuses on experiential properties. This S&P 500 company owns a large portfolio of gaming, hospitality, and entertainment destinations. For income-focused investors, it provides a dividend yield of around 6.48%.
The company's portfolio is geographically diverse and includes some of the most iconic properties on the Las Vegas Strip, such as Caesars Palace, MGM Grand, and the Venetian Resort. Its assets are occupied by leading operators under long-term, triple-net lease agreements, which provide a predictable revenue stream.
A Portfolio of Experiences
VICI's portfolio includes 93 properties across the U.S. and Canada, comprising approximately 127 million square feet. This includes about 60,300 hotel rooms and over 500 restaurants, bars, and sportsbooks. The company is also expanding into other experiential sectors with partners like Great Wolf Resorts, Bowlero, and Cabot.
In addition to its developed properties, VICI also owns four championship golf courses and 33 acres of undeveloped land near the Las Vegas Strip, offering potential for future growth.
