This month’s top dividend stocks include marine shipping companies Frontline PLC (FRO), Nordic American Tankers Ltd. (NAT), Genco Shipping & Trading Ltd. (GNK), plus Berry Corp. (BRY), an oil exploration company, and Two Harbors Investment Corp. (TWO) a REIT specializing in mortgage-backed securities.
Dividend-paying companies tend to be well-established, with stable earnings and a track record of distributing a portion of them to shareholders in the form of cash or additional stock. One useful measure to gauge the sustainability of a company’s dividend payments is the dividend payout ratio (DPR), which measures total dividends divided by net income
This month’s top dividend stocks include marine shipping companies Frontline PLC, Nordic American Tankers Ltd. Genco Shipping & Trading Ltd. (GNK), plus Berry Corp. an oil exploration company, and Two Harbors Investment Corp. a REIT specializing in mortgage-backed securities.
Dividend-paying companies tend to be well-established, with stable earnings and a track record of distributing a portion of them to shareholders in the form of cash or additional stock.
One useful measure to gauge the sustainability of a company’s dividend payments is the dividend payout ratio (DPR), which measures total dividends divided by net income. It tells investors how much of the company’s net income is being paid to shareholders in the form of dividends compared with how much the company is retaining to invest in further growth.
If the ratio exceeds 100% or is negative (meaning the company has posted a net loss), the company may be borrowing to pay dividends. In these cases, the dividends are at a relatively greater risk of being cut.
Dividend stocks, as measured by the S&P 500 Dividend Aristocrats Index, are up 5% in the past year versus the 10% gain of the Russell 1000 Index.
Below, we look at the top five dividend stocks in the Russell 3000 Index by forward dividend yield, excluding companies with payout ratios that are either negative or in excess of 100%.
These market performance numbers and statistics below are as of June 22.
Frontline PLC (FRO)
- Forward Dividend Yield: 19%
- Payout Ratio: 42%
- Price: $14.87
- Market Cap: $3.3 billion
- 1-Year Total Return: 90%
Frontline PLC is a Cyprus-based marine shipping company that transports crude oil worldwide on its fleet of 70 vessels. In May, the company released its first-quarter earnings. Total revenue more than doubled from the previous year’s quarter due to increased demand following the reopening of the Chinese economy. The company also announced a quarterly dividend of 70 cents per share.1
Berry Corp. (BRY)
- Forward Dividend Yield: 17%
- Payout Ratio: 48%
- Price: $6.79
- Market Cap: $5.2 billion
- 1-Year Total Return: 4%
Berry Corp. is an upstream energy company exploring oil properties within the U.S. In the first quarter, the company doubled its dividend to 12 cents per share. Berry’s first-quarter revenue nearly tripled from a year ago, when the company lost $132 million on oil and gas sales derivatives.2
Nordic American Tankers Ltd. (NAT)
- Forward Dividend Yield: 16%
- Payout Ratio: 58%
- Price: $3.74
- Market Cap: $0.8 billion
- 1-Year Total Return: 104%
Nordic American Tankers is a tanker company based in Bermuda that ships crude oil and provides charter services for its fleet of 19 vessels. In May, the company reported earnings with revenue that increased more than fivefold from the prior year. And similar to Frontline, Nordic American Tankers has posted growing profits related to the Chinese economy’s reopening. The company announced a dividend of 15 cents per share.3
Genco Shipping & Trading Ltd. (GNK)
- Forward Dividend Yield: 13%
- Payout Ratio: 91%
- Price: $14.34
- Market Cap: $0.6 billion
- 1-Year Total Return: -15%
Genco Shipping & Trading Ltd. is an ocean transport company with 44 vessels that ship dry-bulk cargo internationally. The company paid out a first-quarter dividend of 15 cents per share, its 15th consecutive payout. Genco reported a reduced rate of return from its shipping vessels, resulting in a 31% decrease in total revenue in the first quarter. The company’s earnings didn’t technically meet management’s conditions for a dividend payout, but the Board of Directors recommended the company set aside less of its earnings for future investment so as to pay the dividend.
