To me, it’s a foreign concept that some investors steer clear of dividend stocks. Sure, they don’t exactly have a reputation for being chart-toppers. However, considering yields plus potential returns, you might be looking at your next portfolio mainstay. It sounds like an oxymoron, but trust me, it is possible. As a bona-fide dividend stock lover, I’m always on the hunt for high-yield growth stocks.
To come up with the list, I screened the market for likely candidates with the following criteria:
- Dividend yields of more than 7%: Trailing twelve months if dividend amounts are irregular, forward yield if regular.
- A strong buy rating from analysts: Wall Street’s warm regard can do wonders for a stock’s price.
- Covered by more than 8 analysts: I wanted to filter out “Strong Buy” stocks with only a handful of analysts covering them, so I set the minimum to 8.
- More than 20% upside potential based on high target prices: 20% in five years is double your money (with dividends, it could even be faster). So, I thought that was a reasonable value to start my search with.
We’re looking for the creme de la creme of high-yield growth stocks, so my search criteria were a bit more stringent than usual. Thankfully, it yielded excellent results, which I arranged from highest to lowest based on dividend yields.
So, let’s kick things off with the highest one on the list:
Civitas Resources (CIVI)
Civitas Resources (NYSE:CIVI) is an oil and natural gas exploration and production company focused on developing assets in the Denver-Julesburg and the Permian Basin in Colorado and Texas, respectively. The company promotes sustainable operational management that balances production with minimal carbon emissions.
Civitas has a quarterly payout schedule and has been paying extra dividends since 2022. Its trailing twelve-month dividend is $6.28 per share—a staggering 9.10% yield based on current prices. However, those interested in adding CIVI stock to their high-yield growth stock portfolio must know that the extra or variable dividends fluctuate depending on the company’s financial performance.
Despite a dip in Civitas’s Q1’24 results (net income at $175.8 million, down from $202.5 million in Q1’23), there’s reason for optimism. The company has successfully closed several oil and gas asset acquisitions that are now in operation. These additions could potentially lead to a significant increase in revenue.
Nine analysts seem to think the same, rating CIVI stock a strong buy average score with a high target price of $106 or a 54% upside based on current prices. CEO Chris Doyle shares the optimism. He says, “Civitas is off to a great start this year with strong performance across our portfolio.”
Energy Transfer LP (ET)
Energy Transfer LP (NYSE:ET) is a midstream service provider that transports and stores natural gas, crude oil, refined products, and natural gas liquids. The company is known for having one of North America’s largest and most diversified energy assets.
The company provides midstream services, including gathering, processing, and transportation of energy resources, and is involved in various segments of the energy infrastructure industry.
Energy Transfer’s annualized dividend in 2024 is $1.27, representing an impressive 7.83% yield. Additionally, the company has been increasing its dividends in the past few years—another thing to look forward to for high-yield growth stocks aficionados.
The company’s Q1’24 financials are the icing on the cake. ET reported increased revenue from $19 billion last year to $21.6 billion. However, net income ended flat at 32 cents per share.
Still, 14 analysts agree that ET stock is a strong buy and its high target price of $24 reflects a 48% upside potential.
Enterprise Products Partners LP (EPD)
The last on our list of high-yield growth stocks is Enterprise Products Partners LP (NYSE:EPD). Like the earlier entry, it operates as a midstream energy service provider to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products, and petrochemicals.
The company’s services include transportation, storage, processing, and marketing of these products. It also has a vast network of pipelines, storage facilities, and processing plants.
Enterprise Products’ Q1’24 results reported a 5% increase in EPS YOY. Its net income also increased from $1.73 billion to $1.82 billion.
Meanwhile, the company announced a $2.06 annualized dividend payout, translating to a more-than-decent $7.11% yield.
Its financial performance and high yield have analysts abuzz, with a consensus among 16 firms that issued EPD stock a strong buy rating with a high target of $36, representing a 24% potential upside.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
