VLVLY - 4 Top Stocks Yielding Over 5% I'd Buy Right Now

Dividend investing is a highly efficacious style amid current market conditions, given the steady stream of income dividend-paying stocks can offer. With the Federal Reserve committed to holding the interest rates at their current levels for roughly two more years amid ascending  inflation rates, investors are parking a portion of their investable money in dividend-paying stocks to hedge against market volatility and secure higher-than-benchmark yields.

The fast-paced macroeconomic recovery should drive the growth of several industries that were hit by the pandemic. And an expected increase in companies’ cash flows should enable them to ensure at least steady dividend payments for investors, and perhaps even increased payments.

Therefore, we believe high dividend yielding stocks China Shenhua Energy Company Limited (CSUAY), Volvo AB (VLVLY), Imperial Brands PLC (IMBBY) and Ternium S.A. (TX) are ideal bets now.

China Shenhua Energy Company Limited (CSUAY)

Headquartered in China, CSUAY, a subsidiary of China Energy Investment Corporation Limited, produces and sells coal and power, railway, port, and shipping transportation, and engages in coal-to-olefins businesses internationally. The company's main coal products are thermal  and coking coal. Its other products are applied in electricity, metallurgy, chemical, building materials and other sectors.

On June 19, Shuozhou-Huanghua Railway, a line jointly funded by CSUAY, Hebei province, and the Ministry of Railways, became China’s first heavy-haul railway to adopt a moving-block system. This was a major breakthrough in China’s heavy-haul railway technology. The moving-block system is an optimal signaling system whose safety and transportation efficiency enables trains to be controlled and kept at braking distance from each other. This development should accelerate the drive toward an improved transportation structure by increasing cargo transportation by rail. During its fiscal quarter, ended March 31, 2021, CSUAY’s revenue increased 32.4% year-over-year to RMB67.61 billion ($10.47 billion). The company’s gross profit came in at RMB19.17 billion ($2.97 billion), up 8.1% from the prior-year period. Its pre-tax income is reported at RMB18.07 billion ($2.80 billion), which represents a 19.8% year-over-year improvement. CSUAY’s total comprehensive income increased 21% year-over-year to RMB14.60 billion ($2.87 billion). And its EPS increased 18.9% year-over-year to RMB0.60.

CSUAY surpassed the Street’s revenue estimates in each of the trailing four quarters. A $10.16 billion consensus revenue estimate for the current quarter represents a 29.3% rise from the prior-year period.

The company’s $1.13 forward dividend translates to a 12.57% dividend yield.  CSAUY stock price has climbed 21.3% over the past three months to close yesterday’s trading session at $9.01.

CSUAY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The stock has an A grade for Stability, Quality and Momentum and a B for Value. To see additional POWR Ratings for CSUAY’s Growth and Sentiment, click here.

CSUAY is ranked #1 of 70 stocks in the Coal industry.

Volvo AB (VLVLY)

VLVLY is a Sweden-based company that  designs, manufactures, and markets commercial vehicles worldwide. The company manufactures trucks, buses, engines, and construction equipment, as well as providing  financial services.

On March 31, 2021, VLVLY proposed an ordinary dividend of SEK6 per share for 2020 and an extra dividend of SEK 9.00 per share.

The company pays $1.75 in dividends annually, which translates to a 6.89% dividend yield. Its  dividend has grown at a 36.7% CAGR  over the past five years.

On June 2, 2021, VLVLY’s Volvo Penta, an established internal combustion engine manufacturer, announced the acquisition of ZEM, a Norwegian marine battery and electric drivelines solutions supplier. Penta will support ZEM’s growth through its established network, while ZEM’s experience will help Penta accelerate development projects and expand and accelerate Penta’s range and capabilities in marine electromobility. ZEM’s acquisition will contribute to  Volvo Penta progress in its journey towards sustainable solutions to become a net-zero emissions company, which is in line with the Volvo Group’s recent commitment to the Science Based Target initiative (SBTi).

VLVLY’s net sales came in at SEK94.02 billion ($11.11 billion) for its  fiscal first quarter, ended March 31, 2021, which represents a 2.8% year-over-year rise. The company’s gross income increased 9.3% year-over-year to SEK23.70 billion ($2.80 billion). Its adjusted operating income is reported at SEK11.82 billion ($1.40 billion), up 65.6% from the prior-year period. While its total comprehensive income increased 113.6% year-over-year to SEK16.81 billion ($1.99 billion), its EPS increased 89.1% year-over-year to SEK4.35.

Analysts expect VLVLY’s revenue to improve 28.2% year-over-year to $10.41 billion for the current quarter, ending June 30, 2021. VLVLY has gained 67.1% over the past year and 38.9% over the past nine months. It closed yesterday’s trading session at $25.48.

VLVLY’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system.

The stock has a B grade for Growth, Value, Stability and Quality. In addition to the POWR Ratings grades we’ve just highlighted, one can see VLVLY’s ratings for Momentum and Sentiment here.

VLVLY is ranked #3 of 57 stocks in the Auto & Vehicle Manufacturers industry.

Click here to check out our Automotive Industry Report for 2021

Imperial Brands PLC (IMBBY)

Based in the U.K., IMBBY manufactures and sells a range of cigarettes, fine cut and smokeless tobaccos, papers, and next generation products (NGP). The company operates through four segments—Europe, the Americas, Africa, Asia & Australasia (AAA), and distribution. It also provides logistics services that include the distribution of its products and services.

On March 30, 2021, IMBBY started to increase its tobacco market share in its top five markets, which generate 72% of its profits. IMBBY will target tobacco-heating products in Europe and e-cigarettes in the United States, which should  reduce losses from its previous one-size-fits-all approach. Due to higher tobacco prices and higher next-generation product (NGP) revenue growth, IMBBY expects its group net revenue to grow by at least 1% on an organic, constant currency basis, in the first half of 2021. It  also expects higher profits from Logista, its logistics operations in Europe.

For the six months ended March 31, 2021, IMBBY’s revenue came in at £15.57 billion ($21.67 billion), which represents a 6.1% improvement year-over-year. The company’s gross profit increased 3.3% year-over-year to £2.86 billion ($3.98 billion). Its adjusted operating profit has been reported at £1.59 billion ($2.21 billion), up 8.2% from the prior-year period. IMBBY’s net profit increased 235.3% year-over-year to £1.84 billion ($84.20 million). Its adjusted EPS increased 4.6% year-over-year to £1.08. The company had  £765 million ($1.06 billion)  in cash and cash equivalents as of March 31, 2021.

Analysts expect IMBBY’s revenue to improve 2.7% year-over-year to $12.25 billion for its current fiscal year ending September 30, 2021. The stock has distributed $1.88 in dividends annually, which translates to an 8.5% dividend yield. The company’s four-year average dividend yield is 9.07%. The stock has gained 27.9% over the past nine months and closed yesterday’s trading session at $22.17.

IMBBY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.

The stock has a B grade for Growth, Value, Stability, Momentum and Quality. We have also graded IMBBY for Sentiment. Click here to access all IMBBY’s ratings.

IMBBY is ranked #2 of 11 stocks in the A-rated Tobacco industry.

Ternium S.A. (TX)

Based in Luxembourg, TX produces iron ore and finished and semi-finished steel products, which are sold either directly to steel manufacturers, steel processors or end users primarily in America and Europe. The company offers its products to the construction, automotive, manufacturing, home appliances, packaging, energy, and transport industries.

TX pays a $2.10 annual dividend, which translates to a 6.18% dividend yield. The company’s four-year average dividend yield is 3.49%. TX’s dividend has increased at a rate of 18.5% over the past five years.

TX’s net sales for its fiscal first quarter, ended March 31, 2021, came in at $3.25 billion, which represents a 43.1% year-over-year improvement. Its revenue from its steel segments increased 43.7% year-over-year to $3.24 billion. The company’s gross profit increased 216.3% year-over-year to $1.11 billion. Its operating income is reported at $905.80 million, up 567.5% from the prior year period. And TX’s net income came in at $706.70 million for the quarter, versus a $19.40 million net loss in the prior-year period. Its earnings per ADS were $3.07, compared to a $0.06 loss per ADS in the year-ago period.

Analysts expect TX’s EPS to improve 1509.1% year-over-year for the current quarter, ending June 30, 2021, to $3.54. It achieved the Street EPS estimates in each of the trailing four quarters. A $3.60 billion consensus revenue estimate for the current quarter represents a 106.3% rise from the prior-year period. Analysts expect the stock’s EPS to grow at 37.6% per annum over the next five years. TX has gained 139.8% over the past year and 92.6% over the past nine months. It closed yesterday’s trading session at $36.02.

TX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The stock also has an A grade for Growth, Value, Sentiment, and Quality, and a B for Momentum. To see more of TX’s component grades, click here.

TX is ranked #1 of 34 stocks in the A-rated Steel industry.

Note that TX is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.

CSUAY shares were trading at $9.19 per share on Friday afternoon, up $0.18 (+2.00%). Year-to-date, CSUAY has gained 23.03%, versus a 14.88% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.

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