“The true investor… will do better if he forgets about the stock market and pays attention to his dividend yields and the operating results of his companies.” – Benjamin Graham
Taking that quote to heart, here are two companies with high dividend yields and improving operations or future growth potential that income investors should pay close attention to: United Parcel Service (NYSE: UPS)and LTC Properties Inc. (NYSE: LTC).
Return to growth
UPS is one of the largest companies in the world. It provides a range of logistics solutions for customers in more than 200 countries and territories. While Wall Street might currently have lower expectations for UPS, that doesn’t mean income investors should shy away from a stock that offers a solid dividend and could rebound any time soon. The stock has lagged broader markets as customers have opted for lower-cost shipping options, hurting the company’s finances.
In fact, second-quarter consolidated revenue fell 1.1% compared to the prior year, but consolidated operating income fell a staggering 30.1% compared to the second quarter of 2023. Adjusted diluted earnings per share also They fell a brutal 29.5%.
But something else happened that should pique investors’ interest: The second quarter could prove to be a turning point, as UPS returned to volume growth in the United States for the first time in nine quarters. While one quarter doesn’t mark a trend, it’s certainly a change of pace worth noting going forward.
UPS also moved in July to acquire Estafeta, a leading Mexican express delivery company. The acquisition is targeted for completion by the end of 2024 and will boost UPS’s business as Mexico’s role in global trade continues to grow.
UPS has returned to growth and made key acquisitions. It offers a 4.8% dividend yield and has maintained or increased its dividend every year since going public in 1999. That makes it a solid dividend stock to buy as you position yourself for a rebound.
Aging population
LTC Properties is a real estate investment trust (REIT) that invests in senior housing and healthcare properties through leasing transactions, mortgage loans and other investments. It has become an intriguing income investment option as it maintained monthly dividends during the COVID-19 pandemic, when most healthcare REITs reduced their dividends.
LTC Properties has a long-standing executive leadership team with decades of experience in healthcare real estate and has recorded 233 consecutive monthly dividend payments. It also offers a conservative, strong balance sheet with cash flow-aligned debt maturities and portfolio maturities, meaning investors can sleep easier at night.
However, growth is what makes this income investment interesting. It specializes in senior housing and skilled nursing properties, and it’s worth noting that the U.S. population is aging. More than 4.1 million Americans will turn 65 each year through 2027, creating huge demand for LTC properties. Additionally, the U.S. adult population aged 85 and older is expected to continue growing rapidly, reaching 11 million in 2035 and surpassing 17 million in 2050.
As income investors wait for an aging population to drive demand for LTC properties, the company will pay a healthy 6.2% dividend yield, making it a smart income strategy for investors.
Buy now?
UPS offers a potential recovery story as it returns to volume growth in the US and offers investors a dividend yield near 5% as they wait for the financial sector to return to growth. LTC Properties has a bright future as America’s population ages and demand for its senior housing and skilled nursing properties increases, and its 6.2% dividend yield is just the icing on the cake. Both stocks look like great high dividend yield options and could soar in the future.
Should I invest $1000 in LTC Properties right now?
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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy.
2 High-Yield Dividend Stocks Set to Soar was originally published by The Motley Fool