It can pay to look beyond blue chips.
When most people go looking for a dividend stock, they tend to gravitate to the same old blue-chip stocks. There's good reason since many of these giants have large institutional investors behind them and a rich history of distributions to shareholders that can date back more than a century. However, overlooked dividend stocks are an important part of any portfolio, too. That's because investors need to be diligent about their research instead of relying on the herd mentality that can bring big-time losses. Stocks like flailing industrial giant General Electric Co. (ticker: GE) and fallen utility PG&E Corp. (PCG) prove that even big stocks can carry big risks. Here are nine stocks you may have missed that are worth a look.
Sculptor Capital Management (SCU)
A publicly owned hedge fund sponsor formerly known as Och-Ziff, Sculptor is a $1 billion stock but is the brains behind a roughly $33 billion investment portfolio. That sounds like a lot of dough, but considering the largest hedge funds top $100 billion in assets, it's actually fairly modest. SCU pays irregular dividends based on the performance of its underlying assets, but the last 12 months of distributions add up nicely. The icing on the cake, too, is share price performance that has blown the doors off with more than 90% gains in 2019 so far.
Compass Diversified Holdings (CODI)
Compass Diversified Holdings is similar to a hedge fund operator in that it's a private equity firm specializing in acquisitions, recapitalization and other investments. In a nutshell that means the company looks at the balance sheet of a company and then decides how to move things around -- or cut things loose -- to maximize value. CODI has a niche in industrial and consumer-related companies that currently include electronic components company Advanced Circuits, food-service provider Sterno and security firm Liberty Safe. As these businesses throw off cash, CODI is there to take a cut and share that money with its shareholders as regular dividends.
Essential Properties Realty Trust (EPRT)
Essential Properties Realty Trust is a unique firm that manages almost 700 single-tenant properties in the United States. That means restaurants, car washes, medical centers, convenience stores, day cares and a host of other enterprises that don't share a building with anyone else. There's risk here, of course, since you're relying on one entity to pay the bills at a given location. However a rigorous screening process and long-term deals help ensure that this real estate investment trust, or REIT, generates steady income from its real estate portfolio -- income it can pass on to shareholders via reliable dividends.
Industry: Real estate
Innovative Industrial Properties (IIPR)
Another twist on the typical real estate play is Innovative Industrial Properties, a recently minted corporation that owns and manages specialized properties leased to legitimate, state-licensed medical-use cannabis providers. You read that right -- this $1 billion firm rents sites to legalized medical marijuana providers. Now, you may think that's a shady business to be in. However, many jurisdictions have some form of medical provision for cannabis or CBD oil. And with a host of legal red tape, an experienced landlord like IIPR is positioned to help growers and distributors navigate this emerging economic landscape.
Industry: Real estate
Schweitzer-Mauduit International (SWM)
Schweitzer-Mauduit is a paper and wood pulp company that on the surface is about as boring a business as you can find. However, its engineered papers are used as the shell of cigarettes and cigars, its pulp is used in flooring laminates and it even has a specialty business making alkaline battery separator papers. That's on top of the typical paper and packaging. Though there's not much growth potential, SWM is an entrenched supplier for other end-users and those relationships are very sound considering that consolidation has shrunk the number of paper and wood pulp specialists. This creates a firm foundation for the company and for income investors.
H&E Equipment Services (HEES)
H&E is a Louisiana-based equipment rental specialist for construction and industrial firms, providing aerial work platforms, cranes, earthmovers and other heavy machinery. This is a unique specialty, but with a $1 billion market capitalization and rental fleet that tops 40,000 pieces of equipment, there is certainly enough scale here for investors to have confidence. On top of rentals, the firm also is in the business of sales and service. That helps provide a sweetener on top of the consistent revenue generated by equipment moving in and out to renters, and helps prop up a generous and reliable dividend for shareholders.
Industry: Business services
MDC Holdings (MDC)
MDC Holdings is a homebuilding and financial service business that purchases lots and develops neighborhoods of single-family homes primarily to first-time homeowners. The company operates from California to Maryland, offering mortgage and insurance products to customers as well as the finished homes. Founded in 1972, MDC has a rich history and has lived through plenty of ups and downs in the housing market. While the business is undeniably tied to broader economic trends, the fact remains that housing is incredibly strong right now with persistent year-over-year gains in home values across nearly all markets as well as tight inventories that make it a seller's market.
Kosmos Energy Ltd. (KOS)
Kosmos is a deepwater oil and gas exploration and production company, focused in areas off the coast of Africa and the Gulf of Mexico. Founded in 2003 and is headquartered in Dallas, KOS has a lot of experience when it comes to the risky and sometimes lucrative business of offshore production and has the know-how to thrive regardless of the ups and downs of crude oil prices in the near-term. While a focus on sustainability has moved many consumers and businesses away from fossil fuels, the reality is that the clean energy future is still many years away. In the meantime, investors can cash in by tapping into a portion of KOS profits via its dividend paydays.
Qiwi is a fintech firm that is part software provider and part financial services company. It operates electronic online payment systems primarily in Eastern Europe and Russia, including both conventional money transfers as well as integrated consumer financial services and small business banking solutions. Mobile payments are all the rage via its Qiwi Wallet software, however, this company also offers a network of about 110,000 kiosks and 34,000 terminals running its proprietary point-of-sales and payment software. While not big in the West as of yet, QIWI is a $1 billion mobile payments powerhouse that is already comfortably profitable. That means investors should watch this stock both for its steady income generation and its future growth potential.
Industry: Technology services
Dividend stocks that may be missed:
-- Sculptor Capital Management (SCU)
-- Compass Diversified Holdings (CODI)
-- Essential Properties Realty Trust (EPRT)
-- Innovative Industrial Properties (IIPR)
-- Schweitzer-Mauduit International (SWM)
-- H&E Equipment Services (HEES)
-- MDC Holdings (MDC)
-- Kosmos Energy Ltd. (KOS)
-- Qiwi (QIWI)
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