Investing

5 High-Yield Dividend Stocks to Buy in May

Lee Jackson

Published: May 14, 2024 8:21 am

Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.

At 247 Wall St., we are dedicated to guiding our readers toward the power of total return. When implemented effectively, this strategy can significantly enhance overall investing success. Total return is the combined increase in a stock’s value and dividends.

For example, 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.

We screened our 24/7 Wall St. high-yield dividend stock research database, looking for well-known companies that look like the best ideas for May. Many are aware of the old Wall Street adage of “Sell in May and go away.” It may make sense to sell overvalued stocks that got an Artificial intelligence bump higher and move to companies that pay big and dependable dividends.

Why are we covering this?

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For years, 24/7 Wall Street has covered dividend stocks, as their total return and passive income prospects continue to be catalysts for investors seeking growth and income success. In addition, they are often the best avenue for investors with lower risk tolerance.

Civitas Resources

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Trading at a cheap 7.84 times earnings with an 8.20% dividend could be a total return gem for 2024. Civitas Resources Inc. (NYSE: CIVI) is an exploration and production company focused on the acquisition, development, and production of oil and natural gas in the Rocky Mountain region, primarily in the Wattenberg Field of the Denver-Julesburg Basin of Colorado.

Last October, Civitas signed an agreement with Vencer Energy to acquire oil-producing assets in the Midland Basin of west Texas for a total consideration of approximately $2.1 billion, subject to customary terms, conditions, and closing price adjustments. The Acquisition is expected to close this month.

Civitas has a proven business model combining capital discipline, a strong balance sheet, cash flow generation and sustainable cash returns to shareholders. Civitas was Colorado’s first carbon-neutral oil and gas producer.

Eagle Bancorp

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This under-the-radar bank, trading just above its 52-week low, offers a substantial 9.46% dividend. Eagle Bancorp Inc. (NASDAQ: EGBN) operates as the bank holding company for EagleBank, a stable institution that primarily provides commercial and consumer banking services in the United States.

The company boasts a comprehensive suite of commercial and consumer lending products, catering to a wide range of financial needs.

Eagle Bancorp offers:

• Commercial loans for working capital
• Equipment purchases
• Real estate lines of credit
• Government contract financing
• Asset-based lending and accounts receivable financing
• Construction and commercial real estate loans
• Business equipment financing
• Consumer home equity lines of credit
• Personal lines of credit, and term loans
• Consumer installment loans, such as auto and personal loans
• Personal credit cards
• Residential mortgage loans.

In addition, it provides online and mobile banking services, checking and saving accounts; and other deposit services, including cash management services, business sweep accounts, lock boxes, remote deposit captures, account reconciliation services, merchant card services, safety deposit boxes, and automated clearing house origination, as well as after-hours depositories and ATM services.

Further, the company offers insurance products and services through a referral program and treasury management services. The company serves sole proprietors, small and medium-sized businesses, partnerships, corporations, non-profit organizations and associations, and investors.

Frontline

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While off the radar of most investors, this shipping company could explode higher and pays a massive 9.28% dividend. Frontline PLC (NYSE: FRO) engages in the seaborne transportation of crude oil and oil products worldwide. It owns and operates oil and product tankers.

In a press release earlier this year, the company announced that it would sell its five oldest VLCCs (very large crude carriers) built in 2009 and 2010 for an aggregate net sale price of $290 million.

The vessels are expected to be delivered to the new owner during the first quarter of 2024. After repaying existing debt on the vessels, the transaction is expected to generate approximately $207 million in net cash proceeds.

The company expects to record a gain in 2024 in the range of roughly $68 million to $76 million, depending on the delivery date of each vessel to the new owner. The sale is subject to certain closing conditions, according to industry standards.

Following the transaction and the completion of the delivery of all 24 VLCCs acquired from Euronav, Frontline’s fleet will consist of:

• 84 vessels comprised of 41 VLCCs
• 25 Suezmax tankers 
• 18 LR2/Aframax tankers

MPLX

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This company is one of the top holdings in the Alerian MLP energy exchange-traded fund, paying shareholders a strong 8.18% dividend. MPLX L.P. (NYSE: MPLX) is primarily engaged in transporting crude oil and refined products and terminating in the US Midwest and Gulf Coast regions and natural gas gathering and processing in the northeast. Independent US refiner Marathon Petroleum Corp. (NYSE: MPC) formed MPLX.

The company’s assets include:

• Network of crude oil and refined product pipelines
• Inland marine business
• Light-product terminals
• Storage caverns
• Refinery tanks
• Docks,
• Loading racks and associated piping
• Crude and light-product marine terminals

MPLX also owns crude oil and natural gas gathering systems, pipelines, and natural gas and NGL processing and fractionation facilities in key U.S. supply basins.

PennantPark Floating Rate

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Almost ignored by Wall Street, this is another business development company with a massive 10.79% dividend. PennantPark Floating Rate Capital Ltd. (NYSE: PFLT) seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies.

It primarily invests in the United States and, to a limited extent, non-U.S. companies. The fund typically invests between $2 million and $20 million.

The fund also invests in

• Equity securities
• Preferred stock
• Common stock
• Warrants or options received in connection with debt investments or through direct investments

It primarily invests between $10 million and $50 million in senior secured loans and mezzanine debt. It seeks to invest in companies not rated by national rating agencies.

The fund invests 30% in non-qualifying assets like:

• Investments in public companies whose securities are not thinly traded or do not have a market capitalization of less than $250 million,
• Securities of middle-market companies located outside of the United States
• High-yield bonds
• Distressed debt
• Private Equity
• Securities of public companies that are not thinly traded
• Investment companies as defined in the 1940 Act

Under normal conditions, the fund expects at least 80 percent of its net assets plus any borrowings for investment purposes to be invested in floating-rate loans and investments with similar economic characteristics, including cash equivalents invested in money market funds. It expects to represent 65% of its portfolio through senior secured loans.

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