Fat Dividend Stocks I Am Buying, Up To 10% Yield

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Dividends serve as a beacon of stability amidst uncertain markets.Dividend payouts quietly reached new record highs in 2023.Explore our top picks offering yields of up to 10% to capitalize on the ...

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href=https://seekingalpha.com/article/4681711-fat-dividend-stocks-i-am-buying-up-to-10-percent-yield><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Dividends serve as a beacon of stability amidst uncertain markets.Dividend payouts quietly reached new record highs in 2023.Explore our top picks offering yields of up to 10% to capitalize on the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4681711-fat-dividend-stocks-i-am-buying-up-to-10-percent-yield\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU1280957306.USD","symbol_name":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) 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yields of up to 10% to capitalize on the potential for another record-setting year in 2024.   skynesher/E+ via Getty Images Co-authored with Hidden Opportunities A lot of people ask me about my views of an upcoming recession and what I am doing in preparation. A few weeks ago, the markets were convinced that we would see higher rates for longer. But Fed Chairman Powell mentioned that he foresees three rate cuts this year, despite an uptick in inflation data. Amidst debates over market direction, global dividends quietly soared to a record $1.66 trillion in 2023, showcasing resilience and rewarding patient investors with outsized returns. This is a 5.6% YoY increase and an 18.6% spike since the pre-pandemic 2019. “Pessimism over the global economy proved ill-founded in 2023. Although the outlook [for the economy] is uncertain, dividends look well supported, and the global economy’s resilience will likely lead to another year of dividend growth in 2024, too, with global payouts rising to $1.72 trillion. - Ben Lofthouse, head of global equity income at Janus Henderson   Fortune The U.S. spearheaded the surge, contributing $602 billion, and 22 other nations also achieved record dividend payouts. Remarkably, 86% of global firms either increased or maintained dividends in 2023. \"I don’t try to predict the markets; I prepare for it.\" Our Investing Group's philosophy aligns with this sentiment. We prioritize a more controllable market output: our portfolio income. From where we stand, it is raining dividends, and amidst a downpour of dividends, 2024 promises to be another record year for income investors. We will now discuss our top picks for growing dividends. Pick #1: NNN - Yield 5.3% NNN REIT, Inc. (NNN) is a Real Estate Investment Trust managing properties primarily leased to retail tenants under long-term Triple-Net Leases. Triple-net leases require the tenant to pay all utilities and real estate taxes and assessments, maintain the interior and exterior of the property, and carry property and liability insurance coverage. As of December 2023, NNN operated a portfolio of 3,532 properties located in 49 states, with a weighted average remaining lease term of 10.1 years. Looking at NNN’s top tenant industries, we see that most require a prime location to pursue their businesses, and the need for physical space is unlikely to be replaced by technology.  Source   NNN REIT Fact Sheet Notably, 19% of NNN’s property portfolio annual base rent is generated from five tenants whose business and interaction with customers depends on brick-and-mortar retail units – 7-Eleven (4.4%), Mister Car Wash (4.2%), Camping World (3.8%), Dave & Buster's (3.5%) and LA Fitness (3.1%). NNN ended FY 2023 with a near-perfect occupancy of 99.5%. Notably, between 2003-2023, the REIT’s occupancy never dropped below 96.4%, while the REIT industry average never rose above 93.7%. Only 6.8% of NNN’s leases expire through 2025. During FY 2023, NNN reported FFO of $3.24/share, and AFFO of $3.26/share. NNN made property investments worth $819.7 million, involving the acquisition of 165 properties at a high 7.3% cap rate with a weighted average remaining lease term of 18.8 years. Additionally, NNN sold 45 properties for $115.7 million at a low cap rate of 5.9%, pocketing $47.5 million from the gains. The purchase of new assets at high cap rates while disposing of non-core assets at low cap rates is a very effective method of capital recycling. It is akin to selling a low-yield holding and deploying those proceeds into a higher-yield investment. NNN immediately improves its revenues while building a portfolio of properties that are better aligned with its strategy. NNN maintains an excellent streak of providing growing income for shareholders, with 34 consecutive annual payment increases. Its current $0.565/share quarterly dividend enjoyed a 1.4x coverage from the FY 2023 AFFO. It also ended the year with $968 million of availability on the bank credit lines and has well-laddered maturities. 95% of its unsecured debt carries fixed interest rates with a weighted average rate of 4% and a duration of 12 years, respectively. NNN’s balance sheet carries BBB+ investment-grade ratings from S&P.   NNN Investor Update - Feb 2024 NNN maintains a quality portfolio of retail properties and credit-worthy tenants and is well-positioned to navigate the higher-for-longer rate climate and grow its AFFO through recession pressures. The REIT’s industry-leading 69% AFFO payout ratio positions it well to deliver continued annual raises for the foreseeable future. Pick #2: KRP – Yield 10.3% Kimbell Royalty Partners, LP (KRP) is a leading oil & gas mineral and royalty company owning mineral and royalty interests in ~17 million gross acres in 28 states and in every major onshore basin in the continental United States. Across KRP’s acreage, there are ~1,100 operators actively producing hydrocarbons, with the top ten operators being EP Energy E&P Company, SWN Production Co., XTO Energy, Chesapeake Operating, EOG Resources, Vital Energy, Mewbourne Oil Company, Pioneer Natural Resources Company, Chevron USA (CVX), and Diamondback (FANG). These firms together accounted for ~38% of KRP’s revenues in FY 2023. During Q4 2023, KRP generated a record $83.9 million in oil, natural gas, and NGL revenue and a record $69 million adj. EBITDA, and a record run-rate average daily production. During the fiscal year, KRP’s energy mix was 69% from oil sales, 22% from natural gas sales, and 9% from NGL sales. During FY 2023, KRP generated $294 million in net revenues, and Cash Available for Distribution (‘CAFD’) of $140.7 million (48% of the revenue). Out of this, KRP paid out 85% to shareholders as distributions, and retained 15% towards the settlement of its line of credit. For FY 2024, KRP aims to maintain a 75% payout from the CAFD, which it estimates through the following matrix, guided by variable oil and natural gas prices. *With crude oil at $80/Bbl, and natural gas between $1.5-2/Mcf, the 2024 distribution can be $1.55-1.61/share, and this calculates to a 10.1% - 10.5% annualized yield (10.3% at the midpoint). Source   KRP Investor Presentation - Spring 2024 For Q1 2024, KRP declared and paid $0.43/share. It is to be noted that KRP is structured as a C-Corp for tax purposes, and distributions will be reported to investors via 1099-DIV. Also, ~93% of the Q1 distribution is expected to be treated as non-taxable reductions to the tax basis of each distribution recipient’s ownership interest in KRP and will not be considered a dividend for U.S. federal income tax purposes. KRP uses debt in its royalty investment strategy, but its partnership agreement prohibits the incurrence of debt in excess of 2.5x EBITDAX in any four quarters. KRP ended FY 2023 with 1x debt-to-EBITDAX, marking its lowest leverage in four years. The partnership is also prohibited from reserving a portion of the cash generated from operations to finance acquisitions. Hence, KRP pursues M&A to add royalty acreage through equity dilution, having pursued two massive transactions in 2023, as discussed in the energy royalty deep dive within our Investment Group in September. Since 2017, KRP has returned ~56% of its $18/share IPO price, and the partnership is well-positioned to continue these shareholder returns for the foreseeable future. KRP’s business presents an attractive mix of crude oil, natural gas, and NGL royalties. Current gas prices, at their lowest levels since the 1990s, present a good opportunity to load up on royalty interests and experience price recovery while collecting handsome distributions. Conclusion In 2023, several dividend-focused sectors delivered double-digit annual percentage increases in their payouts. These include defensive sectors like utilities and industrials and undervalued areas like healthcare and financials.   Fortune Our Investing Group maintains diversification across critical economic sectors and emphasizes current income generation from our holdings. Our strategy, aptly named \"The Income Method,\" focuses on getting paid for our time in the market rather than attempting to time it. To implement this, we maintain a carefully crafted portfolio comprising +45 securities targeting an overall yield of +9%.  Despite market pundits' speculation about market conditions, the outlook for dividend payments in 2024 remains bright. As an income investor, I am eager to collect these dividends. It's crucial to immunize your investment strategy from the everyday volatility of the markets to achieve financial independence and retirement on your terms. Keep collecting those growing dividends and reinvest wisely to leverage the power of compounding. This is the essence and beauty of income investing.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.0","shortVersion":"4.24.0","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2424816733"}