24/7 Wall Street Insights

• Prices on basics like food, have risen dramatically, as much as triple figures for some items, due to unchecked inflation.
• Dividend stocks provide a wide range of selections to suit risk profile, liquidity needs, and ROI requirements.
• For investors seeking dividends, click here for a free report on two high dividend stocks.

Real Life Inflation Effects On Fast Food

While mainstream news often touts statistics stating that inflation is coming down from the previous high of 9% to 3-4%, those claims are somewhat disingenuous. The rate of inflation refers to its rate of increase, not its current state. Therefore, prices that went up dramatically since 2020 are still increasing, only less quickly than before.

Some perfect examples that starkly illustrate this fact are comparisons between typical fast food item prices between 2019 and 2024. Based on prices quoted from McDonald’s website or app, we have the following:

• A 2019 McDonald’s cheeseburger was $1.00. In 2024, it’s $3.15. Increase: +215%.
• A 2019 McDonald’s McChicken was $1.29. In 2024, it’s $3.89. Increase: +201.6%.
• A 2019 McDonald’s medium fries was $1.79. In 2024, it’s $4.19. Increase: +134.1%.

Dividend Stocks: A Solution For Consideration

24/7 Wall Street has been covering inflation in past articles, and the erosion of consumer buying power has not ceased; its threat continues at the time of this writing. A great majority of American households cannot make ends meet, with many having to forgo or postpone crucial medical care. A growing number of hospitals are even suing families for nonpayment of medical expenses, or sending debt collectors after them. The results have been calamitous, with some families left destitute. The options for those with their heads still above water are few: 

• A) Augment the family budget with paychecks from extra jobs or part-time side hustles. 
• B) Create passive income through investments.

For many households, the additional job is not an option, since the available jobs often will not pay enough to cover child care costs while working. In order to create passive income, the usual way is to invest in real estate or operating businesses. Those avenues can create a nice income stream, but getting out in case of an emergency can be difficult and time-consuming. Capital market investments present better liquidity and flexibility options. However, inflationary environments often are accompanied by rising interest rates and falling bond prices, so principal risk in fixed-income bonds is elevated. 

Dividend stocks may be a solution worth consideration. As one third of S&P 500 stocks fall into the dividend stock category, it is represented by a wide range of industrial sectors, volatility levels, and yields, in addition to also possessing a capital appreciation aspect.  24/7 Wall Street has published numerous articles on dividend stocks that are culled from its extensive database. For those with investable assets, the following 7 stocks can generate over $10,000 per year in passive dividend income. A $12,500 investment in each stock will equate to a roughly 12% APY, for the portfolio, based on market prices at the time of this writing. 

Qurate Retail Inc.

Stock #1 :  Qurate Retail Inc. (NASDAQ: QRTEP) – Preferred

Yield: 15.92%

Shares for $12,500: 249

Annual Dividend Amount: ~$1,990.00

If you have seen celebrities like Jamie Foxx, Martha Stewart, Katy Perry, and others on QVC, HSN (Home Shopping Network), or Garnet Hill on television or in merchandise catalogs, then you are looking at Qurate Retail Inc. brands. A pioneer in integrating print, television, and streaming media marketing for direct retail sales, Qurate is a Fortune 500 Company, and is the descendant corporate entity that was spun off from Liberty Media. Originally named Liberty Interactive, it was founded in 1991. 

Not unlike other large public entities, Qurate Retail has both common shares and preferred shares. Preferred shares trade like stocks, but they pay a regular coupon-like dividend and have a preset par value for redemption, should the issuer elect to take it off the market. 

In the case of Qurate Retail Inc., its preferred stock is the one to seek if dividend income is the goal, since it is currently yielding over 15% at the time of this writing. The common stock pays no dividend, although Qurate Retail President David Rawlinson recently filed that he had personally purchased an additional 7.4% of common stock, presumably for anticipated capital appreciation.

Vale S.A.

Stock #2 : Vale S.A. (NYSE: VALE)

Yield: 14.45%

Shares for $12,500:  1,029.6

Annual Dividend Amount: ~$1,806.25

As the `B’ in BRICS, Brazil, along with Russia, India, China and South Africa, have become a formidable economic bloc with currencies that can boast tangible assets to guarantee them. As one of the most resource rich nations on the planet, Brazil has a number of multinational companies that handle the cultivation, development, production and sales of those raw materials and commodities. With a $53 billion market cap, Vale S.A., headquartered in Rio De Janeiro, is one Brazil’s top conglomerate entities. 

Saratoga Investment Corp.

Stock #3 : Saratoga Investment Corp. (NYSE: SAR)

Yield: 12.60%

Shares for $12,500: 539

Annual Dividend Amount: ~$1,575.00

From its Madison Ave. offices just a block and a half away from New York’s Museum of Modern Art, Saratoga Investment Corp. operates as a Business Development Company (BDC), providing debt and equity capital to small and middle market private corporations. 

Saratoga Investment Corp. provides funds for companies usually seeking short term capital for such activities as: Leveraged and Management Buyouts, Debt Refinancings, Recapitalizations, Acquisitions, Growth Initiatives, and Corporate Transitions.

Like its peers in the BDC field, Saratoga may deploy structures such as mezzanine debt, senior secured or unsecured bonds, high-yield debt, preferred or common equity, and other means to close a financing deal. It targets companies with EBITDA between $2 million and higher and revenues from $10 to $250 million. Its financing per deal size often falls between $60 and $75 million.

The company only invests in US companies, and while first lien debt underwritings are Saratoga’s primary financing vehicle, it will sometimes syndicate a deal to spread the risk, while still taking a majority stake. 

For investors – companies that increase dividends are also worth paying attention to, since that is often a harbinger of more upside to come. Saratoga Investment Corp, announced a 1.4% dividend increase in May, 2024.

PennyMac Mortgage Investment Trust

Stock #4 : PennyMac Mortgage Investment Trust (NYSE: PMT)

Yield: 11.86%

Shares for $12,500: 926.6

Annual Dividend Amount: ~$1,482.50

Founded in 2009, and based in Westlake Village, CA, PennyMac Mortgage Investment Trust is a Real Estate Investment Trust (REIT) registered with the SEC. REITs must disburse 90% of profits to their shareholder in order to satisfy their tax exemption status. PennyMac Mortgage Investment Trust is presently the largest US correspondent lender of mortgages. 

Under its Credit Sensitive Strategies segment, PennyMac engages in Credit Risk Transfer swaps, CRT securities, subordinate mortgage-backed securities, distressed loans, and direct real estate finance. Agencies such as Fannie Mae and Freddie Mac use CRT swaps to provide a vehicle for offloading risk.

PennyMac Mortgage Investment Trust’s Interest Rate Sensitive Strategies division handles agency and non-agency senior mortgage-backed securities,  interest rate spreads, mortgage servicing rights, and hedging strategies.

The Correspondent Production arm acquires, pools, and resells mortgages or securitizes them for sale to government sponsored entities. 

Star Bulk Carriers Corp.

Stock #5 : Star Bulk Carriers Corp. (NASDAQ: SBLK)

Yield: 11.14%

Shares for $12,500: 463.8

Annual Dividend Amount: ~$1,392.50

According to the Veson Nautical reference database, VesselsValue, Japan, China and Greece are the top 3 maritime nations in terms of fleet size and value, as of March 2024. Headquartered in Marousi, Greece, Star Bulk Carriers Corp. contributes to Greece’s top European standing with a dedicated bulk cargo carrier fleet, hauling metal ores, grains, fertilizers, minerals, and steel to maritime ports around the globe. Star Bulk also has a Singaporean branch for coordination of bulk shipping logistics with Pac Rim clients. 

The Star Bulk Carriers fleet is a formidable 163 vessels, with a maximum Newcastlemax 210,00 DWT all the way down to a 53,000 DWT Supramax. In addition, the fleet will be taking delivery of (1) 66,000 DWT Ultramax and (2) 82,000 DWT Kamsarmax carriers by Q4 2024, with (5) more Kamsarmax vessels between 2025-2026. 

A number of Wall Street analysts are bullish on the upside price potential for Star Bulk Carriers. (10) analysts, including Stifel, Nicklaus and Jeffries, rate Star Bulk a “Buy” or “Strong Buy”, as of May, 2024. Investors should note that recent dividend payments from Star Bulk have been reliable, but were significantly reduced during the pandemic. Management has acknowledged this inconsistency, and have adjusted current cash flow levels to adequately protect future dividends and regain investor confidence. Steps like these have helped to justify the
“Buy” recommendations.  

Golden Ocean Group Limited

Stock #6 : Golden Ocean Group Limited (NASDAQ: GOGL)

Yield: 8.32%

Shares for $12,500: 873.5

Annual Dividend Amount: ~$1,040.00

Sporting the largest Capesize (avg.: 180,000 DWT) bulk carrier fleet in the shipping industry, Bermuda based Golden Ocean Group Limited has a total of 83 Newcastlemax, Capesize, and Panamax class vessels operating in the spot and time charter markets. Cargoes include: bulk commodities, grains, ores, coal, and fertilizers. 

In its Q1 2024 financials, the company impressively cut $800,000 from its operational costs and held the line with drydock and daily OpEx per ship. Financial management has demonstrated hedging savvy against market volatility for fuel costs and other variables, resulting in $7.3 million derivatives and financial income gain. It is maintaining $147.5 million  cash on the books with an untapped $125 million credit line. 

B&G Foods, Inc.

Stock #7 : B&G Foods, Inc. (NYSE: BGS)

Yield: 8.28%

Shares for $12,500: 1,361.6

Annual Dividend Amount: ~$1,035.00

Horatio Alger-type stories often have drawn skepticism to unbelieving derision from millennials. However, those tales are based on the struggles and triumphs of entrepreneurial immigrants from the 1800s. If there was a model for Horatio Alger that continues to thrive today, it would be hard to find a better candidate than B&G Foods, Inc.

Founded in 1889 by New York pickle vendor immigrants Joseph Bloch and Julius Guggenheimer, B&G retains its name for its line of pickle and pickle related products, but has expanded to understatedly acquire and market the following household name brands over the ensuing decades, and through the entire 20th century, including:

• Cream of Wheat
• Green Giant Vegetables
• Crisco Oil
• B&M Beans
• Ortega Mexican Foods
• Durkee Spices and Sauces
• Polaner Jams and Jellies
• …and many others….

Of particular interest to investors is the fact that B&G Foods has never failed to pay its dividend to shareholders since it went public. For a more in depth look at B&G Foods, click here. 

Of course, any stock portfolio should receive prudent monitoring so that any market or news events that could affect any of the portfolio dividends can be immediately addressed. Fortunately, there are many stocks to choose from with comparable dividends that can be swapped seamlessly if needed, thanks to new T+1 policies. 

If the extra $10,000 per year helps to take care of outstanding bills, there will hopefully be enough to take the sting out of that cheeseburger that tripled in price!

Name:	Yield:	Annual Dividend Amount:
Qurate Retail Inc. (NASDAQ: QRTEP) – Preferred	15.92%	~$1,990.00
Vale S.A. (NYSE: VALE)	14.45%	~$1,806.25
Saratoga Investment Corp. (NYSE: SAR)	12.60%	~$1,575.00
PennyMac Mortgage Investment Trust (NYSE: PMT)	11.86%	~$1,482.50
Star Bulk Carriers Corp. (NASDAQ: SBLK)	11.14%	~$1,392.50
Golden Ocean Group Limited (NASDAQ: GOGL)	8.32%	~$1,040.00
B&G Foods, Inc. (NYSE: BGS)	8.28%	~$1,035.00
Total Annual Passive Dividend Income:		$10,321.25

 

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