Tracking down a stock that pays a high yield is easy enough to find, but selecting ones that are worth holding onto for decades to come is quite another thing. Not all high-yield stocks are stable enough, or have enough cash coming in to keep payouts flowing.
That’s why we reached out to a few Motley Fool contributors to find three high-yield stocks that dividend investors can buy — and comfortably hold — for years to come. They came back with these stocks. Here’s why.
Top 5 Blue Chip Stocks For 2019: Public Storage(PSA)
Public Storage is the clear leader in the self-storage industry, as the company is larger than the next three self-storage competitors combined. As of the end of 2017, the company owned more than 2,700 properties, including 2,386 U.S. self-storage facilities.
There’s lots to love about the self-storage business. While it tends to be more sensitive to the strength of the economy than many other types of commercial real estate, it also makes money much easier. Public Storage has said that it can break even with just 30% of its properties occupied, and the company currently has occupancy of 93.8% — so it’s fair to say that there’s a lot of cushion.
Public Storage grows in three main ways: growth in same-store revenue, acquiring existing properties, and developing new self-storage facilities from the ground up. The latter is relatively new for Public Storage, but it represents the best potential for long-term value creation, and the company is investing considerable resources in its development efforts. In 2017 alone, Public Storage invested $312 million in new properties, and the company says they’re "filling up ahead of projection."
However, investors should know that development is also one of the industry’s biggest concerns. It’s worth pointing out that there are significant oversupply worries in the self-storage industry right now, which is why self-storage stocks have underperformed the rest of the REIT sector recently. Specifically, construction of new self-storage properties in the U.S. has exploded over the past few years — in fact, more was spent on new constructions in 2017 than during the entire 2010-2014 time period. As Public Storage said in its latest annual report, "when it is cheaper to build than to buy and the return on investment is high, developers will build."
This is likely to be a temporary headwind, and in my view, it creates a nice buying opportunity. However, it could weigh on the industry as long as it persists.
Top 5 Blue Chip Stocks For 2019: Iamgold Corporation(IAG)
Just like with the broader market uncertainty, investors are better served going with strong companies stuck in weak circumstances. In this manner, you can increase your odds that the name you acquire is a genuine discount, and not one that keeps dropping!
Iamgold Corp (NYSE:IAG) is one of my top choices for gold stocks to buy because of its fundamentals. Sure, IAG is well off from last year’s highs, but I’m more interested in the comeback probability. I don’t like risking money on a cheap stock simply because it’s cheap.
With IAG, I have the confidence that I’m not throwing money in the wind. The last four years have been tough on every gold miner. That said, I’m impressed with how Iamgold has handled the industry pressure. Management maintained cost discipline, keeping SGA expenses stable. Moreover, they’ve significantly reduced other operating expenses, which helped produce profits in 2016 and 2017.
On the balance sheet side, IAG has whittled down long-term debt. Free cash flow has generally turned positive, which should aid in the day-to-day operations.
The only issue is that the markets don’t value management’s efforts, with IAG stock down 12% YTD. That said, I think Wall Street is missing the bigger picture. Gold is a long-deflated sector that’s overdue for a recovery rally. In addition, IAG has significantly streamlined its business.
Any underlining tailwind could send it over the top!
Top 5 Blue Chip Stocks For 2019: AppFolio, Inc.(APPF)
AppFolio offers cloud-based software solutions for the property management and legal industries. The company’s AppFolio Property Manager is a leading solution for property management, while its MyCase application is ideal for practitioners and small law firms. AppFolio has found consistent profitability, and investors have rewarded the stock with 66% gains over the past year.
APPF is currently sporting a Zacks Rank #2 (Buy), as well as an “A” grade for Growth in our Style Scores system. The stock will hope to maintain its momentum with continued bottom-line expansion, with current consensus estimates projecting EP growth of 66% on net sales growth of 27% this year.
Top 5 Blue Chip Stocks For 2019: Alamos Gold Inc.(AGI)
A significant but sometimes overlooked benefit to an industry downturn is that it forces participants to streamline their operations. To achieve this, competing organizations will consider consolidations. By pooling resources together, the combined entity will have a better chance to survive and thrive.
For Alamos Gold Inc (NYSE:AGI), it simply made sense to acquire Richmont Mines. Upon completion, AGI would gain high-grade projects in their portfolio while improving its balance sheet. Moreover, Alamos can maintain its cost-efficiencies, and helping it return to profitability. So far, I’m impressed with the results.
Last year, AGI rang up nearly $543 million in top-line sales, an 88% improvement from four years prior. Additionally, management has chipped away at their SGA expenses, bringing it down to $21.7 million in 2017. In the prior year, SGA had crept up to $26.5 million. Overall, Alamos’ efforts delivered a $26.6 million net income after multiple years deep in the red.
So far, the markets are ignoring the fundamentals. On a YTD basis, NEM stock is down 16.6%. However, since hitting bottom on March 12th, NEM shares have jumped more than 11%. With potential tailwinds along the way, this smart organization could surprise Wall Street.