Dividends from healthy, growing companies deliver to us, like mail carriers, in any kind of weather — boom, bust, or stalled economy.
As 2012 drew to a close, I offered some high-yield dividend payers for you to consider. There are a lot of other promising income-generating stocks out there, though, and the year is still young, so if you’ve been meaning to add some dividends to your portfolio, read on for additional ideas.
Below are a few companies about which you might want to learn more. Note that several are master limited partnerships (MLPs), which offer some tax advantages as well as some complications. Note, too, that very high yields are sometimes tied to riskier stocks that have fallen in value. Be sure to research such companies carefully before jumping in.
Sasol Limited (ADR) (NYSE:SSL) : With a market cap near $28 billion and a dividend yield of about 6%, Sasol is a giant in the energy and chemical fields. Instead of being an ordinary explorer or refiner of oil, it specializes in coal-to-liquid technology (CTL) and gas-to-liquid technology (GTL), producing liquid fuels such as diesel. It’s buoyed by low natural gas prices, and with America’s significant shale fields, prices may well remain low for some years. Its dividend has grown by an annual average of about 11.8% over the past five years, and its relatively low payout ratio of 42% suggests plenty of room for further growth. Sasol Limited (ADR) (NYSE:SSL)’s great geographic diversification spreads its risks around, but it also delivers occasional challenges, such as when sanctions were imposed on Iran. Sasol is based in South Africa.
Ares Capital Corporation (NASDAQ:ARCC) , recently yielding 9.5%, is a business development company (BDC), which is a kind of private equity company that’s publicly traded, permitting small investors to be co-owners via stock. Like some other kinds of companies, BDCs have to pay out at least 90% of their earnings as dividends, so they can serve income-seeking investors rather well. Ares focuses more on senior debt and secured loans and less on subordinated debt or equity. Its portfolio features more than 150 companies that it has financed. A few years ago, Ares swallowed beleaguered fellow BDC Allied Capital, and its revenue has swelled considerably since then.
Penn West Petroleum Ltd (USA) (NYSE:PWE) is down about 50% over the past year, which has boosted its dividend yield to 10.8%. That’s certainly appealing, but be careful because the company is paying out about three times more than its earning per share. The company, which drills for both oil and gas, has been struggling in an environment of low natural gas prices and has been selling some assets to raise money. Plenty of investors remain hopeful, perhaps due to its development of oil sands. But some Wall Streeters are less hopeful, seeing it as overvalued even at recent low levels.