Three Dividend Stock, Under $30, +4% Yield
We’re all busy, so, let’s get right to the three dividend stock ideas, with over 4% yields, shall we? Oh, and by the way, clicking on the stock name will bring you to the seeking alpha summary page for that stock.
#1- Unum Group (UNM) ~ 4.30% Yield
Unum Group is an insurance company with a broad portfolio of financial protection services. The company operates through its Unum US, Unum UK, Unum Poland, and Colonial Life businesses; providing disability, life, accident, critical illness, dental, and vision insurance.
In 2020 they generated over $13 Billion in revenue, while their cash flow has taken a bit of a hit and was down to $216 Million.
They have a strong operating history as they were able to increase their dividend throughout the great recession, and are currently below 30% payout ratio.
Unum has decreased their shares by 31.54% since 2011, while increasing their free cash flow per share 109.97% from 2011 to 2019. The Covid pandemic saw FCF/Share fall 69% to $2.35.
Their most recent dividend increase was 5.3%, and the 5 year compound annual growth rate is 8.73%.
Unum Group is down almost 39% the past 5 years, bottoming out in March of 2020, and could very well have began it’s climb back to above $50.
Given their very low payout ratio and the ability generate more than enough cash flow per share, I think Unum Group is a solid consideration.
#2 – H&R Block (HRB) ~ $4.64% Yield
H&R Block is a global consumer tax services provider who prepared over 21 million U.S. tax returns last year. They have over 10,000 company owned and franchised locations around the world and also provide tax software.
H&R block has a market cap of $4.9 Billion and generated $2.6 Billion in trailing twelve month revenue.
Considering that almost all taxpayers are required to file taxes, H&R Block should always have a solid stream of revenue.
We use TurboTax which is a direct competitor to HRB, and while DIY software keeps growing, revenues have largely remained steady. This is most likely because the US tax code is 2,652 pages long and well over a million words. People simply need the expert help that H&R Block can provide.
Do be aware that when tough economic times hit, while people still must file their taxes, HRB seems to freeze their dividend.
This is far superior to a cut, but recessions seem to have a freezing effect on their dividend growth. This is not a big deal in my opinion, just something to be aware of.
H&R Block is currently down almost 4% the past 5 years.
In 2021 they earned $3.04/share in free cash, so the current FWD annual dividend of $1.08 is well covered.
Shares outstanding have been reduced by 33.86% since 2011, and in 2021 they had a very healthy net profit margin of 17.1%.
6 years dividend growth, a low 38.3% payout ratio, a dividend that hasn’t been cut since 1996 and a tax system that requires people to potentially seek your help?
H&R Block is a solid high yield company any serious income investor should consider.
#3 – Enterprise Products Partners LP (EPD) ~ 7.95% Yield
Enterprise Products Partners L.P. is one of the largest publicly traded partnerships and a North American provider of midstream energy services to producers and consumers of natural gas, natural gas liquids, crude oil, refined products and petrochemicals.
Some of their services include: natural gas gathering, treating, processing, transportation and storage. EPD was founded in 1968.
Enterprise Products Partners’ assets include approximately 50,000 miles of pipelines, 260 million barrels of storage capacity for Natural Gas Liquids, crude oil, and other refined products.
In other words, they have a HUGE network that makes competition difficult, to say the least.
They’ve increased cash flow 457.58% since 2011 (when it was -$0.33), but they have also increased shares outstanding 24% in that same timeframe.
While revenues have decreased 38.62% since 2011, their net profit margins usually find themselves in the mid to high teens.
EPD is down about 14% the past 5 years.
Their dividend (distribution) has increased for almost 23 years and their EPS payout ratio is at 86.12%.
Do be aware that EPD is a Limited Partnership (LP) – Limited partnerships do not pay income tax, but “pass through” any profits or losses to partners.
That’s you, partner!
And in doing so, you’ll receive a K-1 statement which can be a headache for some investors. I’d suggest starting with this Investopedia article.
Another bit of food for thought – we shifted all of our MLP’s into our ROTH so as to avoid the tax burden. But, income from them that goes over $1,000 may be taxable, regardless that it’s inside a tax advantaged account.
Check out this great explanation, again, from our friends at Investopedia.
If you’re looking for a fantastically high yielder for your ROTH, Enterprise Products may be a perfect fit.
We are currently not invested in any of the aforementioned stocks.
Cheers and never stop investing in yourself!