20 New Dividend Stocks

John D. Rockefeller – one of the wealthiest men who ever lived – once said that the only thing that gave him pleasure was to see his dividends coming in.

That’s a strong statement. But if Rockefeller meant it, he must have truly been the happiest man in the world. Rockefeller was the founder and majority of Standard Oil, which was the predecessor of both ExxonMobil and Chevron. And he insisted that 2/3 of the annual profits of the largest energy monopoly in history be paid out in dividends. That’s a lot of income rolling in every quarter.

For most investors, a dividend is simply a check that arrives in the mail every quarter (or more likely gets posted to their brokerage account). And to be sure, this is a nice perk. Getting a regular stream of income allows you to realize regular profits along the way without having to sell your stock. You can think of it as enjoying the milk from a cow without having to slaughter it for meat. Sure, steak might be tasty. But once it’s gone, it’s gone, whereas the milk can last a lifetime.

But dividends are about more than just income. They’re about being a better kind of company. Earnings can be manipulated. Even sales can be manipulated. But dividends have to be paid in actual cash. There’s no amount of dodgy accounting that can fake cold, hard cash.

Furthermore, knowing that cash has to be on hand to pay dividends forces management to be more disciplined. They are less likely to burn shareholder money on expensive vanity projects when they know they might need that cash to fund the dividend next quarter. They’re also less likely to dilute their shareholders with stock-based employee compensation or secondary stock offerings, as they’d have to pay dividends on any new shares created.

Some might argue that initiating a dividend is an admission by management that the company’s best growth days are behind it. But as Sonia Joao, President of Houston-based RIA Robertson Wealth Management explains, “Paying a dividend doesn’t suggest slower growth ahead. If anything, it’s the exact opposite. Precisely because the company expects durable growth, they’re more willing to part with their cash.”

This isn’t just academic. Dividend-paying stocks have been proven to outperform their non-paying peers over time. Research Ned Davis Research showed that the equally weighted S&P 500 index enjoyed a compound annual growth rate of 7.70% over the 1972 to 2017 period. But breaking the index down gave very different results. The dividend payers collectively enjoyed returns of 9.25% per year, while the non-payers lagged with returns of just 2.61%.

Even better, stocks that initiated or grew their dividends fared best of all, enjoying compound annual returns of 10.07% per year.

So, not only do dividend stocks put a little change in your pocket every quarter. They also massively improve the performance of your portfolio.

Today, we’re going to take a look at 20 stocks that have initiated a dividend in recent years. As these are all new dividend payers, not all are exceptionally high yielders. But all have made a commitment to start rewarding their patient shareholders with a regular cash payout.

Here are 20 dividend stocks that have initiated a new payout within the past five years.

 

Their yields range widely, from below 1% to above 8%. But all have made a commitment to start rewarding their patient shareholders with a regular cash payout.

eBay (EBAY)
Market value:
$33.6 billion
Dividend yield: 1.5%
First regular dividend: 2019

 

Let’s start with one of the darlings of the 1990s internet boom: online auction and payments pioneer eBay (EBAY, $36.72). Fully 24 years after its start as a public company, eBay is growing up and becoming a dividend payer.

Ebay declared its very first dividend earlier this year at 14 cents per share. The stock went ex-dividend on Feb. 28 and made the payment to investors on March 20.

At current prices, that dividend works out to a modest yield of 1.5%, which is slightly below the 1.9% sported by the S&P 500. But aggressive dividend growth is certainly feasible. At current levels, eBay is paying out only 22% of its profits in dividends.

In some ways, eBay has been something of an also-ran in the internet commerce world it helped to create. Most of the attention these days goes to Amazon.com (AMZN), Alibaba (BABA) and others. But eBay has been quietly growing its business, and revenues per share have risen by 54% since 2015 and the company’s spinoff of payments company PayPal (PYPL).

Ebay may not be as exciting as a social media darling like Facebook (FB), Twitter (TWTR) or Snap (SNAP). But the company has proven itself to be durable, and at long last, shareholder-friendly.

Shell Midstream Partners LP (SHLX)
Market value:
$4.3 billion
Distribution yield: 8.3%*
First regular distribution: 2015

Shell Midstream Partners LP (SHLX, $19.25) is a high-yielding master limited partnership (MLP) that’s distributing a whopping 8.3% of its share price. But this is exactly what you should expect from a company that was formed for the express purpose of throwing off tax-advantaged income to its investors.

Energy supermajor Royal Dutch Shell (RDS-A) created Shell Midstream Partners in 2014 by spinning off some of its midstream pipeline assets into a new standalone company. And Shell Midstream wasted no time in opening the income floodgates. The company made its first quarterly distribution of 10.4 cents per share in January 2015 and has been on a distribution-raising tear ever since. SHLX doubled its dividend within a year, and today’s quarterly payout level of 40 cents represents cumulative growth of 285% in just four years.

Shell Midstream is not without its risks. It’s dependent on Royal Dutch Shell to continue pushing down new pipeline assets, and the entire pipeline industry is under constant attack from conservationists and political activists.

But as the tobacco industry has proven over the decades, a difficult political environment doesn’t necessarily spell doom for a company, and particularly a high-yielding one. And there aren’t too many places you can find yields in excess of 8% without taking substantially more risk.

*Master limited partnerships pay distributions, which are similar to dividends, but are treated as tax-deferred returns of capital and require different paperwork come tax time.

General Motors (GM)
Market value:
$51.8 billion
Dividend yield: 4.1%
First regular dividend: 2014

It may seem funny to include a century-old company that used to pay dividends in a list of new dividend payers. But remember, General Motors (GM, $36.75) was a casualty of the 2008 meltdown. The original GM was forced to undergo a bankruptcy reorganization in 2009 that wiped out General Motors’ original shareholders, but the company issued new shares in a 2010 IPO.

Those shares haven’t performed particularly well; nearly a decade later, the price has barely budged from its original IPO levels. But there’s one thing the company has done well, and that’s pay its dividend.

The new GM paid its first quarterly dividend of 30 cents per share five years ago, in May 2014, and quickly raised it by 20% in the following year. GM then raised the dividend another 5.5% in 2016, to 38 cents, where it has sat ever since.

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