Top Income picks In Nine Categories

1/9/2017


With thousands of stocks and funds to choose from, it can be challenging to find the very best income picks. For investors who like one-stop shopping, the list in the table below should make life easier.

We hand-picked 45 standouts across nine categories, including master limited partnerships (MLPs), utilities, and mutual funds. Chuck Carlson,
our nationally recognized expert on dividend reinvestment plans (DRIPs), included five of his favorite picks. DRIPs allow investors to buy shares directly from the company, typically with small minimum investments and modest or no fees.

For stocks, we focused on A-rated names with attractive yields, solid Quadrix scores, and reasonable dividend payout ratios (dividends as a percentage of earnings), implying the potential for future dividend growth. For funds, we looked for below-average expense ratios, good track records, and solid fund scores. We highlight four appealing income stocks below. All four could benefit from a Trump administration, as touched on in each review.

Yielding 2.0%, Apple ($116; AAPL) is an attractive income play among large-cap stocks. The tech titan has raised its quarterly dividend at least 8% in each of the past four years, including a 10% hike in April, which is when it typically announces increases. President-elect Donald Trump has mentioned a potential one-time tax holiday on money held in foreign accounts, allowing U.S. firms to repatriate funds with only a 10% tax hit. Apple holds some $215 billion overseas — money that could be used to repurchase shares or boost the dividend. Apple is a Buy and a Long-Term Buy.


EQT Midstream Partners ($76; EQM), a master limited partnership (MLP), operates natural-gas pipelines in the Appalachian basin. In November, the company distributed $0.815 per share, up 4% from the August payment. Fueled by healthy contributions from acquisitions and solid internal growth, management expects to increase the annual payout 20% in 2017 and 15% to 20% annually beginning in 2018. The MLP, which could benefit from Trump plans to ease restrictions on the production of U.S. oil and natural gas, is a Buy and a Long-Term Buy. The current yield is 4.3%.


Owens Corning ($52; OC) raised its dividend, reinstated in 2014 after a 14-year hiatus, twice in 2016. In December, the company hiked its quarterly payout 11% to $0.20 per share, payable Jan. 18. In February, the dividend rose 6%. Importantly, strong cash flow and a modest payout ratio of 22% suggest the potential for more dividend growth. A leading maker of insulation and roofing materials used in construction, Owens Corning could benefit from Trump's tough stance on foreign imports. A top pick among midcaps, Owen Corning is a Focus List Buy and Long-Term Buy.


Headquartered in Los Angeles, Preferred Bank ($52; PFBC) operates 12 branches, including one in New York. On Sept. 30, the regional bank had assets of $3.1 billion, up 36% from a year earlier. Strong deposit and loan growth should help sustain growth. Rising interest rates, spurred partly by Trump's desire to boost spending, should lift net interest margin (the spread between the interest paid on deposits and the interest earned on loans). On Dec. 23, Preferred raised its per-share dividend 20%. The stock, with a market capitalization of only $724 million, is rated Best Buy in our sister publication Upside.

INTRIGUING INCOME SELECTIONS
Div.
Payout
Ratio
(%)
5-Year
Div.
Growth
(%)
Stock-
Market
Capitalization
($Millions)
52-Week
Price Range
($)
------- Quadrix Scores -------
Company (Price; Ticker)
Div.
($)
Yield
(%)
Value
Quality
Overall
Industry
Large-cap stocks
Amgen ($153; AMGN)
4.60
3.0
40
33
115,111
177
-
134
86
93
89
Biotechnology
Apple ($116; AAPL)
2.28
2.0
28
NA
626,436
119
-
89
85
93
79
Tech hardware
Carnival ($53; CCL)
1.40
2.7
42
7
38,010
55
-
41
92
74
88
Hotels &
cruise lines
J.P. Morgan Chase
($87; JPM)
1.92
2.2
33
14
316,610
88
-
53
71
55
89
Diversified
banks
Lam Research
($107; LRCX)
1.80
1.7
28
NA
19,309
110
-
63
73
88
96
Semicond. equip.
Midcap stocks
CDW ($52; CDW)
0.64
1.2
19
NA
8,499
55
-
30
70
94
91
Tech
distributors
Evercore Partners
($71; EVR)
1.36
1.9
33
14
3,046
72
-
40
74
92
98
Investment
banking
Gentex ($21; GNTX)
0.36
1.7
30
8
5,887
21
-
13
75
93
97
Auto parts
j2 Global ($84; JCOM)
1.42
1.7
30
12
3,917
84
-
55
64
87
95
Internet
services
Owens Corning
($52; OC)
0.80
1.5
22
NA
5,996
59
-
39
94
88
92
Building
products
Small-cap stocks
Ameris Bancorp
($45; ABCB)
0.40
0.9
19
NA
1,538
48
-
25
58
88
94
Regional
banks
Apogee Enterprises
($56; APOG)
0.50
0.9
18
9
1,591
56
-
34
77
97
99
Building
products
KB Home ($17; KBH)
0.10
0.6
9
(17)
1,545
17
-
9
88
84
86
Homebuilding
Knoll ($28; KNL)
0.60
2.1
36
8
1,360
28
-
16
77
86
90
Office
supplies
Preferred Bank
($52; PFBC)
0.72
1.4
30
NA
724
53
-
26
45
89
95
Regional
banks
Utilities
Allete ($64; ALE)
2.08
3.2
68
3
3,151
67
-
48
61
43
38
Electric
Avista ($40; AVA)
1.37
3.4
67
4
2,554
45
-
34
68
46
41
Diversified
Entergy ($73; ETR)
3.48
4.8
42
1
13,129
82
-
65
92
45
61
Electric
Public Service Ent.
($44; PEG)
1.64
3.8
57
4
22,042
47
-
38
76
43
67
Diversified
Vectren ($52; VVC)
1.68
3.2
67
4
4,282
53
-
39
63
56
62
Diversified
Master limited partnerships (MLPs)
Ciner Resources
($30; CINR)
2.27
7.6
100
NA
588
39
-
19
92
82
88
Commodity
chem.
Cone Midstream
($24; CNNX)
1.05
4.4
66
NA
1,404
25
-
8
84
83
100
Oil & gas
storage
EQT Midstream
($76; EQM)
3.26
4.3
63
NA
6,165
81
-
58
84
97
94
Oil & gas
storage
Holly Energy ($33; HEP)
2.38
7.3
133
7
1,916
37
-
21
72
73
84
Oil & gas
storage
Star Gas Partners
($11; SGU)
0.41
3.8
53
6
602
11
-
7
84
75
82
Gas
utilities
Real estate investment trusts (REITs)
Host Hotels & Resorts
($19; HST)
0.80
4.1
75
38
14,177
20
-
12
66
80
75
Hotel &
resort
Liberty Property
($41; LPT)
1.90
4.7
116
0
5,800
42
-
27
38
49
47
Diversified
Omega Healthcare
($32; OHI)
2.44
7.6
154
9
6,520
38
-
27
74
77
72
Health
care
Summit Hotel
($16; INN)
0.65
4.0
35
8
1,409
16
-
9
80
85
98
Hotel &
resort
Welltower ($67; HCN)
3.44
5.2
152
4
23,903
80
-
53
34
68
44
Health
care
Dividend reinvestment plans (DRIPs)
CBS ($66; CBS)
0.72
1.1
18
12
28,718
67
-
47
79
88
93
Broadcasting
Comcast ($70; CMCSa)
1.10
1.6
32
20
167,861
71
-
52
71
83
66
Cable &
satellite
Disney ($107; DIS)
1.56
1.5
27
NA
171,319
107
-
86
73
95
79
Entertainment
Ingersoll-Rand
($76; IR)
1.60
2.1
38
27
19,878
79
-
47
77
87
94
Industrial
machinery
Southwest Airlines
($51; LUV)
0.40
0.8
10
86
31,238
51
-
34
87
98
91
Airlines
 
Estimated
Trailing
12-Month
Dividend
($)
             
Est.
Yield
(%)
Dividend
Frequency
Expense
Ratio
(%)
Average
Manager
Tenure
------ Total Returns ------
-- Annualized --
Fund (Price; Ticker)
12
Months
(%)
3
Years
(%)
5
Years
(%)
Fund
Score
Category
Fixed-income funds

Current Hotline

Stock Spotlight

Individual Stock Reports

ISRs make stock research easy!

Perhaps the most valuable two page reports available anywhere.

All the data you would normally have to plow through years of 10-K filings, earnings reports, and reams of market data to assemble — yours all in one concise report.

ISRs contain our proprietary Quadrix scores — find out how we rate all the stocks in the S&P 500.

Visit us at individualstockreports.com