Charting record highs, 2021 has been an outstanding year for the U.S. equity markets with a year-end rally propelling the indices to historic levels. Buoyed by an accelerated pace of immunization, solid fiscal stimulus packages, healthy labor market conditions, accommodative Federal Reserve stance and robust economic expansion, the outgoing year appears to be on cruise mode. Moreover, the domestic homebuilding market is taking off, while the increase in consumer spending suggests solid momentum for the overall economy.
However, the dream run witnessed some of the scariest drops and intense market volatility in recent memories due to the resurgence of coronavirus, supply chain disruptions, inflationary pressure and policy paralysis owing to the lack of political consensus on broad-based issues. In addition, mixed economic data at certain times have also been misleading as it lacked clarity on the broader economic picture. Global macroeconomic uncertainty and volatile oil prices have added to the cacophony.
Amid the vagaries of the broader equity market, a prudent investment decision would be to focus on stocks that promise a steady revenue stream with a healthy dividend yield. Added to the intrinsic value proposition of such stocks, a healthy dividend yield would satiate the appetite of risk-averse investors. The fact that these stocks have the potential to outperform the market, while also providing a decent dividend yield, has made them prized assets. With market volatility likely to stay in 2022, Sunoco LP SUN, EPR Properties EPR, Oasis Midstream Partners LP OMP, PPL Corporation PPL, Arbor Realty Trust, Inc. ABR, Horizon Technology Finance Corporation HRZN, and Dynex Capital, Inc. DX appear to be healthy bets.
Top 7 Picks
With the help of the Zacks Stock Screener, we have selected Zacks Rank #1 (Strong Buy) or #2 (Buy) stocks that have a dividend yield of more than 5%. In order to narrow down the list, we have taken those stocks with a market cap in excess of $100 million and a five-year historic average dividend yield of more than 5%.
Headquartered in Dallas, TX, Sunoco is among the biggest motor fuel distributors in the United States wholesale market in terms of volumes. The consumption of gasoline and diesel is expected to increase in the coming days as vaccinations against COVID-19 increase. More consumption of fuels and increasing refining productions in the domestic market will likely drive demand for wholesale fuel distribution businesses, getting accretive to Sunoco’s distributable cashflows.
Sunoco has a market cap of $3.9 billion and a dividend yield of 8.4%. This Zacks Rank #2 company has an average dividend yield of 11.5% over the past five years.
EPR Properties operates as a leading real estate investment trust, focusing on real estate venues, which create value by facilitating out-of-home leisure and recreation experiences, including movie theaters, ski resorts, golf entertainment complexes, and early childhood education centers. The company expects to witness significant leisure travel demand owing to accelerated vaccination and higher international demand, following the reopening of the country to international travelers.
EPR Properties has Zacks Rank #2 and a current dividend yield of 6.5%. You can see the complete list of today’s Zacks #1 Rank stocks here. With a market cap of $3.5 billion, EPR has an average dividend yield of 5% over the past five years.
Oasis Midstream is a midstream firm focused on the Williston and Delaware Basins. It operates primarily as a gathering and processing company but also provides a wide array of midstream services relating to natural gas, crude oil and water. Oasis Midstream’s proposed merger with Oasis Petroleum Inc. is likely to create a combined midstream entity that is well-positioned to drive value with enhanced scale and basin diversification.
Oasis Midstream has a market cap of $1.1 billion and a dividend yield of 10.3%. This Zacks Rank #2 company has an average dividend yield of 12.9% over the past five years.
Allentown, PA-based PPL Corporation is a diversified utility holding company, primarily generating electricity from power plants in the northeastern, northwestern and southeastern United States. Courtesy of the ongoing investments for strengthening its infrastructure, customers have been experiencing far less outages. PPL Corporation is likely to benefit from grid strengthening, electricity and gas distribution, electricity transmission and expansion of renewable generation capacity.
PPL Corporation has Zacks Rank #2 and a current dividend yield of 5.6%. With a market cap of $22.6 billion, it has an average dividend yield of 5.3% over the past five years.
Headquartered in New York, Arbor operates as a nationwide real estate investment trust, managing a multibillion-dollar servicing portfolio and specializing in government-sponsored enterprise products. The company expects the earnings power of the investment portfolio, and the strong contributions from the agency business to drive its business in 2022.
Arbor has a market cap of $2.6 billion and a dividend yield of 7.9%. This Zacks Rank #2 company has an average dividend yield of 9.4% over the past five years.
Headquartered in Farmington, CT, Horizon Technology operates as a leading specialty finance firm that provides capital in the form of secured loans to venture capital-backed companies across diverse industries. A solid pipeline, backlog, and liquidity profile will likely drive its net portfolio growth in 2022.
Horizon Technology has Zacks Rank #2 and a current dividend yield of 7.6%. With a market cap of $321.7 million, it has an average dividend yield of 10% over the past five years.
Headquartered in Glen Allen, VA, Dynex Capital is an internally managed real estate investment trust, which invests in mortgage assets on a leveraged basis. The company is likely to benefit from the uneven transition of the global economy and central bank strategies that are likely to create new risks and opportunities.
Dynex Capital has Zacks Rank #2 and a current dividend yield of 9.4%. With a market cap of $611.6 million, it has an average dividend yield of 10.9% over the past five years.
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PPL Corporation (PPL) : Free Stock Analysis Report
Sunoco LP (SUN) : Free Stock Analysis Report
Arbor Realty Trust (ABR) : Free Stock Analysis Report
Horizon Technology Finance Corporation (HRZN) : Free Stock Analysis Report
EPR Properties (EPR) : Free Stock Analysis Report
Dynex Capital, Inc. (DX) : Free Stock Analysis Report
Oasis Midstream Partners LP (OMP) : Free Stock Analysis Report
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