Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.
At 247 Wall St., we always like to remind our readers about the impact total return has on portfolios because it is one of the best ways to help improve the chances for overall investing success. Again, total return is the combined increase in a stock’s value plus dividends.
For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%—10% for the increase in stock price and 3% for the dividends paid.
We decided to screen our 24/7 Wall St. dividend research database for companies that pay gigantic dividends that investors have likely never heard of. Five companies that make sense for investors looking for solid passive income flows and the potential for a solid total return hit our screens.
Frontline
While well off the radar of most investors, this shipping company could explode higher and pay a massive 13.02% dividend. Frontline PLC (NYSE: FRO | FRO Price Prediction) engages in the seaborne transportation of crude oil and oil products worldwide. It owns and operates oil and product tankers.
In a press release earlier this year, the company announced it would sell its five oldest VLCCs (Very large crude carriers), built in 2009 and 2010, for an aggregate net sale price of $290 million.
The vessels are expected to be delivered to the new owner during the first quarter of 2024. After repaying existing debt on the ship, the transaction is expected to generate approximately $207 million in net cash proceeds.
The company expects to record a gain in the first quarter of 2024 in the range of roughly $68 million to $76 million, depending on the delivery date of each vessel to the new owner. The sale is subject to certain closing conditions, per industry standards.
Following the transaction and the completion of the delivery of all 24 VLCCs acquired from Euronav, Frontline’s fleet will consist of:
- 84 vessels comprised of 41 VLCCs
- 25 Suezmax tankers
- 18 LR2/Aframax tankers
Medifast
This company offers fast weight loss products and a massive 12.05% dividend. Medifast Inc. (NYSE: MED) manufactures and distributes weight loss, weight management, healthy living products, and other consumable health and nutritional products in the United States and the Asia-Pacific.
The company offers these products under: OPTAVIA, Optimal Health by Take Shape for Life and Flavors of Home brands.
- Bars
- Bites,
- Pretzels
- Puffs
- Cereal crunch
- Drinks
- Hearty choices
- Oatmeal
- Pancakes
- Pudding
- Soft serves
- Shakes
- Smoothies
- Soft bakes
- Soups
It markets its products through point-of-sale transactions over e-commerce platforms.
Nu Skin Enterprises
Skin products for women rarely go out of style, and this company pays a solid 8.26% dividend. Nu Skin Enterprises Inc. (NYSE: NUS) develops and distributes beauty and wellness products worldwide.
It offers:
- Skincare devices
- Cosmetics, and other personal care products
- ageLOC LumiSpa
- ageLOC LumiSpa iO
- ageLOC Body Spa
- Nutraceuticals skin care products
The company also provides wellness products like:
- ageLOC Meta,
- LifePak nutritional supplements
- ageLOC TR90 weight management system
- Beauty Focus Collagen+
In addition, it is involved in the research and product development of skin care products and nutritional supplements.
The company sells its products under the Nu Skin, Pharmanex, and ageLOC brands through retail stores, websites, digital platforms, independent direct sellers and marketers, and a service center.
Omega Healthcare Investors
This stock makes sense with an aging population and a significant 9.05% dividend. Omega Healthcare Investors Inc. (NYSE: OHI) is a REIT that invests in the long-term healthcare industry, primarily in skilled nursing and assisted living facilities.
The company is focused on owning Skilled Nursing Facilities (SNFs). Most of its assets are SNFs, but Omega Healthcare also owns assisted living facilities, specialty facilities, and medical office property. Its portfolio of investments is operated by a diverse group of healthcare companies, predominantly in a triple-net lease structure. The assets span all regions within the United States, as well as in the United Kingdom.
The company has increased the dividend paid to shareholders every year since 2003, and the annual dividend growth rate comes in at a solid 4.80%.
PennantPark Floating Rate
Almost ignored by Wall Street, this is a business development company with a massive 10.93% dividend. PennantPark Floating Rate Capital Ltd. (NYSE: PFLT) seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies.
It primarily invests in the United States and, to a limited extent, non-U.S. companies. The fund typically invests between $2 million and $20 million.
The fund also invests in:
- Equity securities
- Preferred stock
- Common stock
- Warrants or options received in connection with debt investments or through direct investments
It primarily invests between $10 million and $50 million in senior secured loans and mezzanine debt. It seeks to invest in companies not rated by national rating agencies.
The fund invests 30% in non-qualifying assets like:
- Investments in public companies whose securities are not thinly traded or do not have a market capitalization of less than $250 million
- Securities of middle-market companies located outside of the United States
- High-yield bonds
- Distressed debt
- Private Equity
- Securities of public companies that are not thinly traded
- Investment companies, as defined in the 1940 Act
Under normal conditions, the fund expects at least 80% of its net assets plus any borrowings for investment purposes to be invested in floating-rate loans and investments with similar economic characteristics, including cash equivalents invested in money market funds. It expects to represent 65% of its portfolio through senior secured loans.
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