While writing about Boeing (NYSE: BA) recently, I was reminded of the company's many attributes. The aerospace giant operates in a growing field with daunting barriers to entry, generates buckets of free cash flow, and generously shares the profits with stockholders.
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Those are just a few of the reasons why I recommended the stock years ago in another newsletter. Incidentally, I bought the stock below $125, and today it trades above $330. Along the way, dividends have nearly tripled. Still, the annual distribution of $8.12 per share leaves the yield a bit shy of my minimum 4% threshold for inclusion in my High-Yield Investing premium newsletter.
If you haven't noticed, the market moves pretty fast these days. Windows of opportunity can open and close quickly. So it's best to have potential investment ideas on your radar before the next big downturn (and rest assured, we haven't seen the last of them).
So in today's screen, I searched for dividend payers with yields between 3.90% and 3.99%. (Although by the time you read this, the yields could be slightly different.) To weed out weaker candidates, I looked specifically for companies with at least four straight years of rising distributions and sustainable payout ratios below 75%. Here's what I found:
As always, the stocks in the table above haven't been fully researched and shouldn't necessarily be considered portfolio recommendations. This screen is simply meant to uncover candidates that meet certain criteria and may be worthy of a closer look.
While we consider 4% a minimum, that rate is actually in the market's upper echelon -- double the 2% average payout among S&P 500 members. And each of these companies has been hiking payments with regularity. So any downtick in share prices or uptick in distributions could qualify them for consideration in my portfolio.
A Closer Look
Crown Castle (NYSE: CCI) is a previous High-Yield Investing portfolio holding. I exited with a total return of 48.7% this past April when the yield sunk below 4%. But with quarterly distributions having just been bumped from $1.05 to $1.125 per share, the stock is almost back in play. However, I still think valuations on the wireless infrastructure REIT are a bit extreme and would prefer to see a pullback below $100 before re-establishing a position.
I've also got my eye on Mid-America Apartment Communities (NYSE: MAA), which owns more than 100,000 apartment units in 17 states. The company made its market debut in 1994, and just hit a major milestone -- paying out its 100th quarterly dividend. Payouts have been rising at a modest, but steady 5% annual pace over that time frame.
While the construction of new apartment complexes poses a threat in some markets, MAA maintains strong occupancy rates of 96% and has pushed through average rent hikes of 2.1% over the past year. On a year-to-date basis, all those monthly rent checks have driven funds from operation (FFO) up slightly to $4.49 per share, supporting a healthy dividend.
The balance sheet is solid, with 85% of borrowings either hedged or locked in at fixed rates. That will allow for further redevelopment and acquisition to help keep pushing cash flows forward.
Want More Picks Like This?
I've got ample REIT exposure currently but will be watching MAA as a potential future addition to the High-Yield Investing portfolio. But of course, my premium readers will know about it first.
The same goes for the rest of the stocks in this screen. My advice: do some research on these names on your own -- you may find a future high-yield machine in this group.
In the meantime, if you'd like to learn more about High-Yield Investing, go here.