For investors wary of the sudden valleys of the stock market, high-dividend stocks make for a sure-footed wealth building strategy. Stable cash flows and solid payout histories can ensure you stay safe and secure, come what may in the broader markets.
As the season of good cheer gets underway, we stuff your holiday stocking with three high-yield dividend stocks with robust business models and market-beating returns. These income stocks should be a part of your long-term retirement planning strategy.
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1. Crown Castle International Corp. (CCI - Get Report)
Crown Castle International is one of the largest owners of cellular towers in the U.S. The company is expected to generate higher sales volumes and margins as telephone companies use increasing amounts of data -- driving improved utilization of its towers and rentals.
Crown castle's established market dominance gives it the leeway to not only improve margins and cash flows but also enhances its ability to raise and sustain dividends.
Its annual free cash flow per share has grown at a 13% annualized rate over the last five years. Further, its long-term market performance is phenomenal with a five-year yield of 104%. The stock currently offers a 4.1% dividend yield and most recently raised its dividends by 8% last month.
In an industry that is averaging approximately 15%-to-17% annual growth, Crown Castle has grown by 25% per annum in the last five years.
Crown castle should deliver a compounded annual dividend growth of 6%-to-7% over the next several years, which, after taking into account the current dividend yield, drastically improves the long-term total return prospects for its shareholders.
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2. Digital Realty Trust (DLR - Get Report)
Digital Realty is a specialized real estate investment trust (REIT) that invests in data-center properties. The companyachieved a growth of 5% year-over-year in its Funds From Operations (FFO) in the most recent third quarter. Revenues during the same period rose by 6% to $436 million to comfortably exceed analysts' estimates of $424.8 million.
Digital Realty's acquisition of Telx during the quarter is expected to bolster its bottom line right away. Its full-year FFO guidance has risen from $5.05-$5.15 per share to $.12-$5.18 per share.
Digital Realty's acquisition of Telx during the quarter is expected to bolster its bottom line right away. Its full-year FFO guidance has risen from $5.05-$5.15 per share to $.12-$5.18 per share.
The company's future earnings potential is promising, with the possibility of adding $4 in net asset value per share by leasing up its acquired Telx properties. If we look at the composite lease-up scenario of its existing properties, the company could unlock a value of $12-to-$16 in net asset value per share (NAVPS).
Digital Realty has also delivered a whopping 475% total returns during the past decade -- a 19.1% annual average.
To sum things up, its cheap valuation, a one-year forward price-to-earnings ratio of 12.97 and an encouraging earnings outlook for the near term are enough reasons to invest in this stock, which has an attractive current dividend yield of 4.73%. This stock is ideal for a dividend portfolio that's geared toward income.
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3. Las Vegas Sands Corp (LVS - Get Report)
For a while now, Las Vegas Sands Corp has been striving to manage a slowdown in Macau, the Las Vegas of east Asia, driven by slower growth in China as well as a government crackdown on corruption.
That said, the stock's dividend yield of 5.8% at current prices is attractive given that it will go ex-dividend next month. In fact, Las Vegas Sands has an impeccable track record on dividends. It has increased dividends by more than 30% annually since 2012. Gambling remains a profitable business and the company enjoys an adjusted EBITDA margin of around 36% in revenues.
As a result of the negative sentiment, the company's stock has been buffeted by heavy selling recently and the stock has fallen nearly 30% in the trailing 12-month period to $45 on November 26.
Despite growth in revenues from its properties in the U.S. and Singapore, total revenues fell short of the consensus estimates for the sixth consecutive quarter due to the adverse conditions in Macau.
Gross gaming revenues in Macau declined in double digits in all three months of the most recent quarter, reflecting a slowdown in gambling growth with customers spending much less in a stuttering Chinese economy.
Besides the dividend kicker, the company's valuations look reasonable with the twelve-month trailing price-to-earnings ratio of 16.12 and a one-year forward price-to-earnings ratio of 17.58. Considering how the gambling industry always manages to find its way back to the top, Las Vegas Sands should effectively overcome its current adversities, enhancing growth and reaffirming its high-yields.
By Chiradeep BasuMallick
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