5 Dividend-Paying Stocks That Delivered 100%-Plus Total Returns in One Year
By: Ned Piplovic,
Investors looking for equities that offer balanced returns from dividend income and asset appreciation should consider one of the five dividend-paying stocks that have delivered a total return of more than 100% just over the trailing one-year period.
While nearly 50 equities doubled shareholders’ investment over the past year, the securities included in the list below meet additional criteria. This ensures that the companies included here are more likely to offer sustainable dividend income and capital gains.
Each of the five companies below has a market capitalization in excess of $2 billion. The market capitalizations range from $2.49 billion on the low end to $65.14 billion as the upper limit. The simple, unweighted average market capitalization of all five equities is $15.9 billion.
All five companies offer dividend yields in excess of 2%. Ranging from 2.05% to 4.37%, the simple average of all five yields is 3.24%. While three of the five companies have not raised their dividend distribution in the past 12 months, one company has a current streak of eight consecutive annual dividend hikes, and one company has boosted its annual dividend for the past 51 consecutive years. Despite no recent dividend hikes from two-thirds of companies in this group, the one long streak pushes the average streak of consecutive dividend boosts to nearly a dozen years.
To ensure sustainability of dividend income payouts, the highest dividend payout ratio among the five securities listed below is 57%. Generally, investors consider 50% to be the upper limit of the sustainable range. A ratio that is too low indicates that the company does not distribute a significant portion of its earnings to be attractive to income-seeking investors. While there are certainly exceptions to the rule based on specific situations and specific individual portfolio goals, investors generally look for a minimum payout ratio of 30%.
Alternatively, a payout dividend ratio in excess of 50% indicates that the company uses more than half of its earnings to cover dividend distributions. While most companies can occasionally pay more than 50% of its earnings as dividends, it is nearly impossible to sustain a payout ratio in excess of 50% over extended periods. However, the 50% is just a general guideline for overall markets. The upper limit for a sustainable payout ratio also varies by sector, industry and other factors. The five equities below have payout ratios right around that upper limit and range from 42-57%, with a simple payout ratio average of 49%.
While asset appreciation delivered bulk of the gains over the past year, dividend income contributed between 2.2% and 6.1% of total gains. For the five companies on the list below, these combined gains from dividend income and asset appreciation averaged more than 105% and ranged between 100.13-113.08%.
Another important characteristic of these five equities is that the robust one-year asset appreciation resulted from a share prices recovering after recent pullbacks. Three of the five companies here have higher total returns over the past year than over the last three years. Moreover, the one-year total returns of all five equities outperformed their total returns over the last five years.
In ascending order by their respective one-year return, here are the five dividend-paying stocks that delivered 100%-plus total return in one year
5 Dividend-Paying Stocks That Delivered 100%-Plus Total Return in One Year: #5
OneMain Holdings, Inc. (NYSE:OMF)
OneMain Holdings — a financial service holding company — began delivering dividend distributions to its shareholders only in 2019. The company’s $0.25 quarterly dividend converts to a $1.00 annualized payout and yields 2.32%. In addition to its regular quarterly dividend distributions, OneMain Holdings also paid a special dividend of $2.00 per share in September 2019.
The company’s share price experienced above-average volatility and declined from its all-time high above $53 in March 2015 to its all-time low under $20 by November 2016. After another significant decline in late 2018, the share price nearly doubled over the trailing one year. The combined regular and special dividends paid during the year were just enough to push the total return marginally over the 100% mark of the last 12-month period. Without any dividends before 2019, the 60%-plus share price pullback from early 2015 through late 2016 delivered a total return of less than 26% over the last five years. The timing of the all-time low in late 2016 resulted in a total return of 106% over the last three years.
5 Dividend-Paying Stocks That Delivered 100%-Plus Total Return in One Year: #4
Seaspan Corporation (NYSE:SSW)
Based in Hong Kong, the Seaspan Corporation operates as an independent charter owner and manager of containerships. The company’s current $0.125 quarterly dividend payout is equivalent to a $0.50 annualized payout and a 3.5% dividend yield at the current share price level. While only slightly lower than the 3.9% average yield of the overall Shipping industry segment, Seaspan’s current yield is almost 65% higher than the 2.12% yield average of the entire Services sector.
During the first half of the trailing five-year period, the company’s share price declined more than 70%. However, since reversing direction in May 2017, the share price rose almost 170% and recovered nearly 70% of its previous losses. Dividend income covered the gap and managed to maintain the five-year total return in positive territory with 1.5%.
The recovering share price contributed most of the gains and combined with the dividend income for a total return of 83% over the last three years. The share price accelerated growth to deliver a total return of 101.5% over the trailing 12 months.
5 Dividend-Paying Stocks That Delivered 100%-Plus Total Return in One Year: #3
Aircastle Ltd. (NYSE:AYR)
Aircastle — a holding company that acquires, leases and sells commercial jet aircraft — has been paying dividends since 2006. While forced to cut its dividend payouts in the aftermath of the 2008 financial crisis, the company began its current streak of nine consecutive annual dividend hikes in 2011. Over the past nine years, Aircastle has enhanced its annual payout amount more than three-fold, which corresponds to an average annual dividend growth rate of 13.8% per year.
The most recent dividend hike for the December 2019 distribution raised the quarterly payout 6.7% from $0.30 in the previous period to the current $0.32 quarterly payout amount. This new distribution amount is equivalent to an annualized payout of $1.28 per share. This annual payout corresponds to 4% forward dividend yield, which is 90% higher than the 2.12% average yield of the company’s peers in the entire Services sector.
The company’s share price traded relatively flat for five years before surging in the second half of 2019. Because of the flat share price, dividend income contributed the majority of the 65% total returns over the last three years and 75% over the past five years. However, the share price surge limited the dividend contribution towards the 105% total return over the last years to slightly more than 6%.
5 Dividend-Paying Stocks That Delivered 100%-Plus Total Return in One Year: #2
The Carlyle Group LP (NASDAQ:CG)
After initiating dividend distribution in 2012, the Carlyle Group has increased its annual dividend distribution more than six-fold over the first three years. Unfortunately, after paying its peak dividend of $3.39 per share in 2015, the company cut its annual payout more than 60% over the subsequent two years and then paid a flat annual dividend of $1.24 in 2017 and in 2018.
However, the company has increased its annual payout this year. The $1.36 annual dividend per share in 2019, corresponds to a 4.35% forward dividend yield, which is 8.6% higher than the 4.02% simple average yield of the Asset Management industry segment, as well as 5.6% above the 4.12% yield average of the overall Financials sector.
A share price drop of nearly 60% from mid-2015 through early 2016, limited the five-year total return to less than 50%. The rising share price drove the total return to nearly 107% over the trailing 12-month period and above 127% over the last three years.
5 Dividend-Paying Stocks That Delivered 100%-Plus Total Return in One Year: #1
Target Corporation (NYSE:TGT)
As one of just 16 S&P 500 Dividend Kings, the target corporation has rewarded its shareholders with more than five decades of consecutive annual dividend hikes. Just over the past two decades, the company has boosted its annual dividend payout more than 13-fold. This advancement pace is equivalent to an average annual dividend growth rate of nearly 14% per year.
The current quarterly dividend of $0.66 is 3.1% higher than the $0.64 payout from the same period last year. This new quarterly amount corresponds to a $2.64 annualized payout and currently yields 2.05%, which is in line with the average yield of the overall Services sector but outperformed the 1.32% simple yield average of the Discount & Variety Stores industry segment by more than 55%.
The share price more than doubled on its own and combined with the dividend income distributions for a total return of 113% over the trailing 12-month period. Driven by a share price pull back from 2015 to 2017, the total returns over the last three and five years were slightly lower in the mid-80% range.
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