We contrarians don’t normally buy dividend stocks high. But when we do, we sell them higher.
These 25 dividend stocks we’re about to discuss are hitting new 52-week highs. This is notable because the market-at-large is falling apart. Which means they are on the “right side” of one or more current trends.
Considering the world is a much different place than it was just two months ago, this is notable. There has been a global trend change.
Our Federal Reserve is sopping up money instead of printing it. Sky-high inflation has backed the Federal Reserve into a corner, with no recourse but to start drastically raising rates and engaging other quantitative tightening measures.
Higher interest rates in turn threaten to eat into the bottom lines of a Wall Street that has grown plump and complacent from years of lean borrowing rates.
Europe, meanwhile, is finally realizing it can’t buy gobs of gas to fund a war machine. Russia’s invasion of Ukraine has made inflation worse. It has disrupted the supply of many key commodities and shelled an already-broken global supply chain.
Interestingly, we wouldn’t guess that 2022 was such a dumpster fire if we only looked at dividend-paying stocks. They have zagged while the broader market has sagged:
5% Sounds Pretty Good Right About Now, Doesn’t It?
What’s fueling this surge among higher-income stocks?
- Safety sectors: Investors are finding safety in two of the market’s most yield-friendly sectors: utilities and consumer staples.
- Energy: “Crash ‘n Rally” dividend stocks—we told you so.
- Dividend safety overall: US Treasury bonds are getting trashed, which makes dividend stocks look safer by comparison.
In fact, the latest rush to safety has driven dozens of dividend stocks to fresh 52-week highs of late, including 25 companies currently doling out between 3.0% and 12.3%!
That likely won’t be the peak, either, if current trends hold out. A few noteworthy stocks sticking out right now:
Altria (NYSE:MO, 6.7% Yield): Tobacco companies are harder to kill than John McClane. No matter how bad the regulatory environment gets, Marlboro parent Altria and its ilk just keep on ticking.
Indeed, Altria’s annual revenues have grown uninterrupted for a full decade. The company has tried to evolve by making big investments in vaping (Juul) and cannabis—Cronos Group (NASDAQ:CRON).
That’s not to say it has been completely successful—Altria had to write down its $12.8 billion Juul investment by $4.5 billion in 2019 amid government scrutiny. And while revenues have steadily grown, profits have been all over the map of late and are a fraction of their 2016 highs.
But when investors find themselves in a foxhole, they find it hard to resist the “sticky” business and high yields of Big Tobacco.
OGE Energy (NYSE:OGE, 4.0% Yield): Utilities have earned a bid of late, and that includes OGE—one of the sector’s best-looking names right now. Most readers probably don’t know OGE unless they live in Oklahoma or Arkansas, where OG&E (Oklahoma Gas & Electric) serves nearly 900,000 customers.
But the company has gained nearly 30% over the past year, including a nearly 8% gain in 2022, thanks in part to stellar management. The company recently merged its midstream business with Energy Transfer LP (NYSE:ET) as part of an effort to turn the company into a pure-play electric utility.
The remaining business should benefit from strong cost controls. Growing dividends add to this utility name’s appeal.
Eagle Bulk Shipping (NASDAQ:EGLE, 12.3% Yield): In general, shippers are benefiting from extravagant rates courtesy of gunked-up supply chains, but Eagle Bulk Shipping stands apart.
This Ultramax/Supramax specialist actively trades its fleet to maximize whatever rate environment it operates in. The result is generous cash flow, which the company is happy to use to reward investors.
In addition to a $50 million share buyback authorization, the company initiated a quarterly dividend in November 2021 that will equal at least 30% of net income and no less than 10 cents per share. The latest payout, delivered in late March 2022, was far more than that, at $2.05 per share—good for a 12%-plus yield!
Disclosure: Brett Owens and Michael Foster are contrarian income investors who look for undervalued stocks/funds across the U.S. markets. Click here to learn how to profit from their strategies in the latest report, "7 Great Dividend Growth Stocks for a Secure Retirement."