During the recent market meltdown, many stocks got hammered for
reasons unrelated to their fundamental outlooks. Here are three such
stocks that caught my attention. All are high-dividend payers,
meaning that you’ll get paid to wait even if it takes a while for
their share prices to recover.
Low Risk Dividend Payer
Communications Sales & Leasing (CSAL) is an April 2015
spinoff from rural telephone company Windstream Holdings. Prior to
the spinoff, Windstream transferred its landline assets including
transmission lines and associated equipment to Communications S&L,
which, in turn, leases those assets back to Windstream.
The point of the transaction was to transform Windstream into a
growth company focusing on data center operations. Communications
S&L is organized as a real estate investment trust, which means that
it doesn’t pay federal income taxes, allowing it to pay high
dividends. In fact, it’s currently paying dividends equating to a
whopping 15.6% yield.
Communications S&L’s game plan was to diversify its customer based
by acquiring additional telecom assets that it could lease back to
the selling parties. However, CS&L took longer than expected to
implement that strategy, making its first acquisition just last
month. That delay, which frustrated shareholders, combined with the
overall market downdraft, drove CS&L’s share price down by half
since its IPO. However, CS&L has a solid balance sheet and analysts
expect it to close additional acquisitions over the next few months.
Natural gas sells for less than $2 per million BTUs in the U.S.
compared to around $5 in Europe. The only way to ship natural gas
from here to there is by converting it to a liquid by freezing it,
shipping it, and then defrosting at the other end. Natural gas in
the frozen state is known as LNG (liquefied natural gas). GasLog
Partners (GLOP) owns ships outfitted to transport LNG that it
leases to shippers under long-term contracts. Shipping LNG is a fast
growing business and GLOP participates in that growth by acquiring
GasLog, based in Monaco, is organized as a master limited
partnership (MLP), which can complicate life at tax time. But,
GasLog has elected to be taxed as a regular corporation, which
eliminates that problem. However, most MLPs operate in industries
such as oil pipelines or oil and gas production that have been
crushed by falling energy prices.
Although business is booming and it is financially solid, GasLog,
being an MLP, has been tarred by association. Its unit (share) price
has fallen almost 50% over the past 12-months. GasLog is currently
paying a 14.7% dividend yield and expects to grow its quarterly
payout around 12% annually over the next two years.
Fast Dividend Grower
Macquarie Infrastructure (MIC)
owns and operates infrastructure properties including private
airplane repair and fueling facilities, terminals for storing
refined petroleum products, and a variety of utility assets.
Long-term, Macquarie grows sales and cash flow at double-digit
annual rates. But, year-over-year results are often lumpy. Its
disappointing 2015 numbers drove its share price down almost 25%.
However 2016 is shaping up to be a good year. For instance, already
paying an impressive 8.1% dividend yield, analysts expect 14%
dividend growth this year.
Those are my ideas. As always, do your own due diligence. The more
you know about your stocks, the better your results.