3 Stocks With Fantastic Dividends

Last week, the S&P 500 marked a 2% retreat, driven primarily by losses from tech and semiconductor stocks. Conversely, defensive sectors, such as healthcare, real estate, and utilities, saw significant gains.

While there is a rotation underway, leaning too heavily into defensive holdings would be a mistake at this juncture. There are still gains to be made, but with stretched valuations, the easy trades are over. Screening for quality is essential in conditions like these.

There is a way to benefit from the ongoing rotation while still leaving your portfolio exposed to the upside. Dividends have historically accounted for roughly 23% of total stock market returns — and the companies in a position to mete out stable, growing distributions are typically healthy, resilient, and have a proven track record.

With that being said, not every dividend-paying stock is fundamentally sound. Comparing stocks with only capital appreciation in mind is difficult enough — and dividends add another layer of complexity to the research process. Thankfully, there’s a way to streamline all of that — all you have to do is turn to …

Income Stock Strategy

Our in-house rating system looks at 4,600 stocks each day and evaluates them on the basis of 115 fundamental factors and metrics. Those insights are formed into a simple, user-friendly metric — a stock’s Zen Rating.

A Zen Rating of A, equivalent to a Strong Buy recommendation, is only given to those stocks that rank in the top 5% for overall fundamentals. That immediately whittles the list of potential candidates down to roughly 230 names. However, there’s a way to make your research even more focused — by taking a look at one of our exclusive  Zen Strategies.

There are 11 Zen Strategies portfolios in total.  Each consists of just 7 carefully selected stocks. Today, we’ll be taking a look at a portfolio that has an all-time annual return of 25.52%. It has provided a 9.29% return in the past 30 days, while the S&P 500 has lost 2.77% in value in the same timeframe. This week, the spotlight is on 3 tickers from our  Income Stock Strategy. 

Smith & Wesson (SWBI)

Our first pick needs very little introduction. Smith & Wesson is a world-renowned designer and manufacturer of firearms. Right now, SWBI shares rank in the top 1% of all the equities we track, giving them a Zen Rating of A.

When it comes to the dividend, SWBI currently has a yield of 3.41%, compared to the industry average of just 0.98%. In addition, over the past 6 years, the payments have been stable and they’ve grown.

The stock boasts a very balanced fundamental profile. When it comes to Value, it ranks in the top 24%, while also ranking in the top 11% for Growth. With regard to Sentiment, it’s in the top 3%, indicating significant smart money accumulation. Last, but certainly not least, is the balance sheet — Smith & Wesson ranks in the top 1% of everything we track for Financials.

As for the softer ratings, in SWBI’s case, those are Safety and Momentum. With that being said, there’s reason for optimism on both fronts — the share price is up 10% since the last earnings call on June 17, and the stock currently has a Beta of 0.8.

That positive price action since the earnings call is a big part of why waiting for a better entry point is not the right move here. SWBI is up almost 75% compared to this time last year, and it was rangebound between March and the earnings call on June 17. The next leg up has already begun.

Ultrapar Holdings (UGP)

The next stock we’ll be looking at is Ultrapar Holdings. This Brazilian energy and infrastructure business’s main focus is on fuel distribution and liquid bulk storage. UGP currently ranks in the top 1% of the stocks we track for overall fundamentals.

With the stock trading at a price-to-earnings growth (PEG) ratio of 0.62x, it’s clear that it is undervalued relative to growth prospects. To put that into numbers — it ranks in the top 9% of stocks for Growth and the top 1% for Value. However, that’s not the entire story — it’s also in the top 12% for Sentiment, indicating elevated smart money interest. Cherry on top, UGP also ranks in the top 4% for Artificial Intelligence, which means our in-house neural network, trained on more than 20 years of data, considers it a likely outperformer going forward.

There are no glaring red flags here — UGP’s weakest link is the Financials rating, which reads as slightly above-average, while Momentum, Financials, and Safety all read as above-average, but not exceptional.

As for the dividend, UGP currently has a very attractive forward yield of 5.67%. The stock has also pulled back by 10% over the past 30 days on account of profit-taking, so investors can get in at a significant discount. 

DHT Holdings (DHT)

Our third and final pick for this week is DHT Holdings, a crude-oil tanker company focused on very large crude carriers, or VLCCs. Right now, DHT ranks in the top 1% of all the stocks we track for overall fundamentals.

What makes DHT stand out is the exceptionally balanced fundamental profile. The stock reads as average in only two areas — Safety and Artificial Intelligence. When it comes to everything else, it reads as above-average or exceptional.

Let’s put some concrete figures to that claim. Looking at Value, it’s in the top 17%. When we’re talking about Growth, it ranks in the top 15%. Financials and Sentiment clock in at the top 5% and top 6%, respectively. And finally, DHT is in the top 20% of the stocks we track for Momentum. All in all, a solid valuation, strong growth metrics, a healthy balance sheet, significant smart money inflows, and above-average momentum relative to peers and the wider market.

The dividend is nothing to scoff at either. Right now, DHT’s dividend yield is 5.95%, significantly above the industry average of 4.53%. Those dividends have increased over the past 10 years, and at a healthy payout ratio of 47.6%, they also seem very sustainable.

Another thing to note here is strong execution. DHT has managed to beat EPS estimates for 7 quarters in a row. The stock is down 7.59% since the last earnings call, so just like our previous pick, it’s currently at an appealing discount.

Interested In More Great Stock Picks? 

The 3 stocks highlighted above are just a fraction of what you get from our proven Income Stock Strategy.

That’s because each day our system recalibrates — and Zen Strategies members get access to the top 7 technology stocks based on 115 different parameters that point to outperformance. 

See all Top 7 Income stocks here >

However, maybe none of the stocks you’ve seen here have caught your eye. Perhaps you would like to see all 11 of our market beating strategies including Growth, Momentum, Value, and our coveted AI Factor model. 

Each featuring the top 7 stocks.

Each featuring tremendous performance

We spell it all out in this timely presentation below that lives up to its name:

10 Minutes a Month to Beat the Market > 

What to Do Next?

• 77 Best Stocks NOW! >
• Options Trading with the Zen Ratings >
• 2 New Stocks to Buy from Steve Reitmeister >

Want to get in touch? Email us at news@wallstreetzen.com.