After years of a low interest rate environment, many investors have turned to equities not only for the growth potential but also for solid and dependable dividends that help to provide an income stream. What this equates to is total return, which is one of the most powerful investment strategies going.
We always like to remind our readers about the impact total return can have on portfolios because it is one of the best ways to help improve the chances for overall investing success. Again, total return is the combined increase in a stock’s value plus the dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%: 10% for the increase in stock price and 3% for the dividends paid.
Five companies are expected to raise their dividends this week, so we screened our 24/7 Wall St. research universe and found that the stocks of all five are rated Buy at some of the top firms on Wall Street. While it is always possible that not all five do raise their dividends, top analysts expect them to, and generally the data is based on past increases in the firm’s dividend payouts. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Bonanza Creek Energy
This stock is way off the radar but offers solid upside potential. Bonanza Creek Energy Inc. (NYSE: BCEI) engages in the extraction of oil and associated liquids-rich natural gas. It is focused on the Niobrara and Codell formations in the Denver-Julesburg Basin.
The company’s primary oil and liquids-weighted assets are located in the Wattenberg Field in Colorado. As of December 31, 2020, the company had proved reserves of 118.2 million barrels of oil equivalent. The company announced in May that it entered a definitive agreement with Extraction Oil & Gas to merge in an all-stock deal of equals, wherein shareholders of both companies will have equal percentage shareholdings in the combined entity. Notably, the deal, which is valued at $2.6 billion, is expected to complete in the third quarter of 2021.
The merged entity, renamed as Civitas Resources, will be regarded as the largest pure-play oil and gas company in the Denver-Julesburg Basin of Colorado. In fact, a majority of the companies’ operations are based in this basin, spreading across the Front Range and parts of Wyoming and Nebraska.
Shareholders currently receive a 3.64% annual dividend. The company is expected to raise the dividend to $0.40 per share from $0.35.
Truist Securities has a massive $60 price target, but the Wall Street consensus target is even higher at $62.17. The shares were trading early Monday near $39.50.
While somewhat pricier than shares of the other companies raising dividends this week, this is a solid idea for growth investors. Cable One Inc. (NYSE: CABO) provides data, video and voice services in the United States.