3 overlooked dividend stocks to add to your watchlist
While larger, well-known dividend-paying companies get all the attention, there are some hidden gems that can dramatically increase your dividend income as well. These forgotten actions are not often discussed, so it may take some time to understand the strengths and risks associated with them. But a little research could go a long way in improving the income of your dividend portfolio.
Here are three of those actions that are absolutely worth being on your watchlist.
Kronos in the world
Kronos in the world (NYSE: KRO) is a leading producer of titanium dioxide, a whitening pigment used in a wide range of products such as coatings, plastics and paper. Titanium dioxide enjoys constant growth in demand and Kronos is an established player in the segment.
Image source: Getty Images.
Approximately 50% of Kronos common stock is held by Valhi (NYSE: VHI) and an additional 30% belong to Netherlands Industries (NYSE: Netherlands). Notably, Valhi also owns approximately 83% of the common shares of NL Industries. A family trust, in turn, controls Valhi.
With a debt ratio of around 37% and a debt ratio of 0.6, the company’s balance sheet looks strong.
KRO Debt / Capital Data (Quarterly) by YCharts
Kronos is a century-old company with largely stable operations. The stock currently offers a 5.6% dividend yield. The company’s operations and performance aren’t exactly exciting, but the stock is certainly appealing to dividend investors, who are always on the lookout for such boring but stable companies.
Formed in 2013, Enviva Partners (NYSE: EVA) supplies wood pellets to UK, Europe and Japan. With a capacity of 6.2 million metric tonnes per year, Enviva is the world’s largest producer of utility grade wood pellets. The company has nine pellet production plants, all located in the United States. It exports wood pellets through its own terminal at the Port of Chesapeake, Va., As well as through third party terminals.
Enviva’s production is supported by long-term firm purchase contracts and is fully contracted until 2025. The contracts also include price indexations and provisions to protect Enviva’s margins. The company has an order backlog of $ 16 billion with a weighted average remaining life of 13.2 years.
EVA Revenue Data (TTM) by YCharts
Enviva’s contractual structure has enabled it to increase its distribution every year since its IPO. The company has a development pipeline of more than 3 million metric tonnes per year, which should allow it to continue to develop its distribution in the years to come. Enviva shares currently offer an attractive yield of 5.8%.
Compass Minerals International
Compass Minerals International (NYSE: CMP) supplies minerals, including salt, plant nutrients, and magnesium chloride, primarily in North America. Its salt segment primarily supplies highway de-icing salt in North America and the UK. The company generated 57% of its sales in 2020 in the salt segment. Compass Minerals also supplies plant nutrition products and fertilizers, which account for the remaining 43% of its sales.
It is estimated that salt production in the United States has historically increased at an average rate of 1% per year. During this time, salt prices are estimated to have increased on average 3-4% per year. Compass Minerals benefits from its geographic locations, assets and distribution network, all of which are essential in this otherwise inexpensive product.
CMP Revenue Data (Quarterly) by YCharts
Compass Minerals has generated steady growth in revenues over the years. The level of indebtedness of the company increased after the acquisition of a plant nutrition business in South America in 2016. However, in March of this year, the company announced the divestiture of its business in South America, as well as its micronutrient business in North America, as part of optimizing its strengths. This should strengthen the company’s balance sheet, while allowing it to focus on its growth segments. Compass Minerals reported a loss of $ 256 million from discontinued operations in the first quarter.
Going forward, in addition to the established salt and plant nutrition businesses, Compass Minerals is also expected to benefit from its recent lithium discovery. The stock is currently trading at an attractive yield of 4.3%.
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Rekha Khandelwal has no position in the mentioned stocks. The Motley Fool owns shares and recommends Compass Minerals. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.