Top Dividend Stocks for May 2023 (2023)

This month's list of top dividend stocks consists of international shipping companies Frontline PLC (FOR), Genco Shipping & Trading Ltd. (GNK); energy company Berry Corp. (BRIJ); and real estate investment funds Two Harbors Investment Corp. (OF THE) and Ready Capital (RC).

Companies that pay dividends are generally well established, with stable earnings and a history of returning part to shareholders in the form of cash or additional shares. A practical criterion to measure the sustainability of a companydividingpayments is thedividend payout ratio(DPR), which measures the total dividend divided bygrand income. It tells investors how much of the company's net income is paid out to shareholders in the form of dividends compared to how much the company has left to invest in further growth.

If the ratio is greater than 100% or negative (meaning that net income is negative), the company may be borrowing to pay dividends. In these cases, dividends are at relatively greater risk of being cut. While dividend stocks are known for their regular payouts, the payout can be lowered to save money in tough times.

Dividend stocks, measured by the at the beginning of May, they have increased by 0.8% in the last year compared to the decrease of 0.17% of theRussell 1000 Index.

Below, we take a look at the top five dividend stocks in theRussell 3000 Indexpuertafuture dividend yield, excluding companies with a negative pay rate or greater than 100%.

These market performance figures and statistics below are as of May 3.

Frontline PLC (FRO)

• Future dividend yield: 29%
• Payout Ratio: 0%
• Precio: $14.89
• Market Cap: $3.3 billion
• Total profitability 1 year: 88%

Frontline PLC is a 70-ship crude oil shipping company headquartered in Cyprus. At the end of February, the company reported its highest quarterly net income since the second quarter of 2008, at $240 million, for the fourth quarter of 2022. In addition, Frontline more than doubled its quarterly cash dividend in the fourth quarter to 77 cents. per share. . .

Two Port Investment Corporation (TWEE)

• Future Dividend Yield: 19%
• Payout Ratio: 58%
• Precio: $12.32
• Market Cap: $1.1 billion
• Total return 1 year: -28%

Two Harbors Investment Corp. is a real estate investment trust (REIT) that invests in financial assets such asMortgage Backed Securities (MBS). On February 3, the company announced a public offering of 10 million shares for expected total proceeds of $178 million.

• Future Dividend Yield: 18%
• Payout Ratio: 73%
• Precio: $14.20
• Market Cap: $601 million
• Total return 1 year: -28%

Genco Shipping & Trading Ltd. operates a shipping company with 44 vessels transporting dry bulk goods internationally. The company declared a quarterly dividend of 15 cents per share for the first quarter. Genco reported lower returns on its marine vessels, resulting in a 31% drop in total revenue in the first quarter.

Berry Corporation (BRY)

• Future Dividend Yield: 17%
• Payout Ratio: 44%
• Precio: $6.67
• Market Cap: $505 million
• Total return 1 year: -29%

Berry Corp. is aupstreamEnergy company surveys US oil properties During the first quarter, the company announced a double dividend of 12 cents per share. Berry's revenue nearly tripled compared to the first quarter of 2022 due to profits from the sale of oil and gas derivatives.

Ready Capital Corp. (RC)

• Future Dividend Yield: 16%
• Payout Ratio: 97%
• Precio: $10.28
• Market Cap: $1.1 billion
• Total return 1 year: -20%

Listo Capital Corp. is a real estate investment fund that finances commercial loans. The company declared a quarterly dividend of 40 cents per share for the first quarter.On February 27, Ready Capital and Broadmark Realty Capital Inc. (BRMC) entered into an agreement in which Broadmark Realty will merge with Ready Capital, creating a capital base of $2.8 billion.

3 Reasons Used to Analyze Dividend Stocks

dividend yield: This ratio measures the annual value of dividends received relative to the market value per share of a security. Investors calculate thedividend yielddividing the annual dividend per share by the current share price.

For example, if Company XYZ pays an annual dividend of $10 with a current share price of $100, it has a dividend yield of 10% ($10 / $100 = 10%). Those looking for high-yield stocks can begin their search by looking at issues with a share return above a certain percentage. Keep in mind that there are many other factors besides dividend yield that investors should consider first.to investin a bag.

Dividend Payout Ratio: The DPR measures how much of a company's revenue is paidshareholders. Investors calculate the ratio by dividing the total dividend by the net income.

For example, if Company XYZ reported net income of $50,000 and paid $15,000 in annual dividends, it would have a DRP of 30% ($15,000 / $50,000 = 30%). This means that the company distributes 30% of its profits to shareholders. In general, a company that pays less than 50% of its net profit in dividends is considered stable and has sustainable growth potential.Profitsgrowth.

Dividend coverage ratio: This ratio measures the number of times a company can pay dividends to its shareholders. Investors calculate the dividend coverage ratio by dividing a company's annual figuresearnings per share (EPS)for the annual dividend per share.

For example, if Company XYZ reports $10 million in net income with a $2 million annual dividend to shareholders, it has a dividend coverage ratio of five times ($10 million/$2 million). Investors generally view a higher dividend coverage ratio as more favorable.

Dividend Stock Benefits

Two main benefits of investing in dividend stocks generate onepassive incomeand dividend reinvestment.

passive income: Companies that pay dividends typically issue them quarterly, creating a reliable stream of passive income for investors to spend at will. Dividends also have the added benefit of offsetting the decline in stock price value.

Dividendherinvestering: Investors can reinvest the dividends received in the company to acquire more shares. This is called adividend reinvestment plan(DROP). By participating in a DRIP, the investor can benefit from thiscompound returns— a long-term wealth-building strategy.

Do your dividend stock research

High yields are just one of many things to consider when investing in dividend stocks. An above-average return can indicate trouble if a troubled company pays large dividends to attract investors.

In addition to the dividend yield, also take a good look at the following data.

• payout ratio: A payout rate of 35% to 55% is considered healthy because a company that pays up to half of its earnings as dividends will likely perform well and be a market leader. Importantly, it reinvests much of its profit back into itself for growth.
• raise the dividend:A strong history of rising dividends is good news, as it indicates that a company has had the financial resources and the desire to continue paying its shareholders through good and bad economic times and to increase the amount it pays out.
• Reliable sales and profit growth: Over time, the more stable, the better. The occasional erratic result may not attract attention, but anything else could be a sign of a company in trouble.
• Solid market share and competitive advantages: These can help companies maintain their ability to maintain high performance. Such benefits could beintellectual property, advanced technology, high barriers to entry and a recognized and respected brand.

it all comes down to

The dividend yield compares the income a company pays out to shareholders with the price of that share. It is calculated by dividing the amount of the annual dividend (the amount of income paid during a year) by the share price. While a high dividend yield may be attractive, it doesn't necessarily mean a stock is a smart investment.

The dividend yield is a tool for spotting dividend stocks that may be worth owning. A dividend yield that is too high can indicate that a company is struggling. Similarly, companies with extremely high payout ratios can also be a signal to investors.

Before you invest your money, spend some time looking for companies that are financially strong enough to maintain and potentially increase your dividends, and that offer an attractive ongoing supply.dividend yield.