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Dividend Detective Finds 4 Favorites for Income

·3 min read

Earnings season ended with over 90% of reporting companies beating estimates. The strong market seemingly ignored fear of inflation or that the global Delta variant spread might stall the economic recovery, observes income expert Harry Domash, editor of Dividend Detective.

However, the market probably won’t ignore inflation and slowing economy fears forever. Be prepared for anything. Don’t add cash to the market that you’re going to need back anytime soon.

More from Harry Domash: Dividend Detective: Preferred Picks and High Yield Funds

Meanwhile, if you haven’t noticed, share prices typically track EPS more that any other single factor. With that in mind, we’re adding a major player to our Energy Industry portfolio paying a 5.5% dividend that analysts expect to grow EPS around 34% next year. Trust me, it’s hard to find that combination of high dividend yield and expected EPS growth in this market.

Chevron (CVX) is one of the world’s largest energy companies, to the portfolio. Why buy now? Chevron stumbled last year but is now back on track. June quarter revenues totaled $36.1 billion, up 125% from year-ago.

For its current September quarter, analysts are expecting EPS to grow 34% vs. year-ago to $2.12 per share. Even better, analysts are looking for 12% EPS growth next year. Chevron is paying a 5.5% dividend yield. What’s not to like?

Wee’re also adding an aerospace and defense system provider to our High Tech Dividends portfolio with 23% expected earnings growth next year. It’s paying 2.4%, which is high for a tech stock.

Raytheon Technologies (RTX) was formed in 2020 through the combination of Raytheon Company and the United Technologies Corporation’s aerospace businesses. Raytheon produces aerospace and defense systems for commercial and government customers.

Off to a good start, Raytheon reported 164% June quarter year-over-year EPS growth on 12% higher revenues. Analysts are looking for 23% EPS growth in 2022 on 10% higher revenues. Raytheon is paying 2.4% dividend yield.

We’re also adding two new picks to Preferred Stocks portfolio, one paying 6.5% and the other paying 6.2%. 

Arbor Realty Trust 6.25% E Cumulative (ABR-E)

Arbor Realty Trust (ABR), a mortgage REIT, originates and manages loans secured by multifamily, healthcare, and commercial real estate properties. Although not credit rated, the dividends are cumulative, meaning that Arbor remains on the hook for any missed payouts.

See also: Two Total Return Trades: APA and Western Digital

These preferreds recently traded at $25.24 per share. The market yield was 6.2% and the yield to its 8/11/26 call date is 6.0%. Its dividends are taxable at ordinary rates.

Textainer Group Holdings 6.25% B Cumulative (TGH-B):

Based in Bermuda, Textainer Group Holdings Ltd. (TGH) owns more than two million shipping containers that it leases to customers worldwide. As was the case for Arbor Realty, Textainer is not credit rated, but its preferreds are cumulative.

Recently traded at $24.71 per share. The market yield was 6.3% and the yield to its 12/15/26 call date is 6.5%. Dividends are taxable at ordinary rates.

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