The market's been hard on some of last year's hottest tech stocks, and investors have rotated into dividend-packing value stocks. What if I told you that there are still plenty of high-yielding stocks with strong fundamentals that have also sold off despite a flight to safety and quality?
B&G Foods (BGS -0.38%), UWM Holdings (UWMC 1.15%), and PetMed Express (PETS -2.61%) are three stocks that seem to offer growth and income. All three posted at least double-digit revenue growth last year, and they're all yielding 3% or better right now. They also happen to be trading 30% below their 52-week highs. Let's take a closer look at these three potential portfolio game changers.
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1. B&G Foods: down 30%
If your pantry is stocked with Ortega taco shells, Crisco shortening, or Green Giant canned veggies, you're a B&G Foods customer. B&G Foods has more than 50 brands in its portfolio, but it's a small fry in this game, with just $2 billion in annual sales.
Investors tend to view packaged-food companies as slow growers, but that's not the case here. B&G Foods has posted double-digit growth in seven of the past nine years, including a 19% top-line surge last year. Some of its growth in that span has come from acquisitions, but that's just part of the model's attractiveness, as it can take small or discarded brands and ramp them up with its own resources.
B&G Foods stock closed out the week 30% below the all-time high it hit in late January. The yield has ballooned to 5.8% in the process. B&G Foods hasn't increased its quarterly rate in three years, but it also didn't cut the distributions when it hit a bottom-line funk in 2019. The payout ratio is problematic at 92%, but with earnings per share inching higher again, it remains somewhat secure.
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2. UWM Holdings: down 45%
Short for United Wholesale Mortgage, UWM has been riding high in a hot real estate market fueled by low interest rates. Folks are buying homes. Homeowners are refinancing. As a mortgage banker, UWM Holdings has been thriving in this climate with its network of brokers keeping up with booming demand. It claims that its proprietary technology platform gives it a leg up delivering clients a faster, easier, and cheaper mortgage process.
The future may not be as rosy, with rates climbing, but UWM won't be shifting into reverse. It clocked in with a record $54.7 billion in loan originations in its latest quarter, a 71% year-over-year increase and a 69% surge for all of 2020. UWM expects closed loan volume to decelerate to a still-impressive pace of 23% to 34% growth for the current quarter.
Investors are fearful of the inevitable slowdown, but with the stock trading 45% since peaking three months ago, there's also a lot of value. UWM Holdings hit the public last year through a special-purpose acquisition company, and UWM initiated a quarterly dividend policy of $0.10 a share last month. That translates into a 5% yield. Patient investors will be rewarded.
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3. PetMed Express: down 41%
The relative glow-up at PetMed Express in the fiscal year that ends in a few days has been impressive. The direct seller of prescription and nonprescription pet medications and supplies through its 1-800-PetMeds phone line and website has seen its net sales climb 13% through the first nine months of fiscal 2021. If it can keep the good times going -- and that's not a given -- it will be the first time since fiscal 2009 that PetMed Express comes through with double-digit top-line growth.
The past year was certainly not a dog for pet stocks. Dog and cat adoptions spiked during the pandemic, and PetMed Express has rattled off double-digit growth in three of the past four quarters. The current quarter will be more challenging, and that may explain why the stock has plummeted 41% since peaking two months ago. The year-over-year comparisons will get harder in the current quarter, and analysts see modest earnings growth on flat sales for the upcoming report.
PetMed Express commands the smallest of the yields in this list -- a mere 3.4% -- but it has increased its payout nine times since initiating a distribution policy 12 years ago.
B&G Foods, UWM Holdings, and PetMed Express have come through with double-digit growth over the trailing 12 months, checking in with strong dividend yields, but they're trading 30% to 41% off their recent highs. These are dinner bells with quarterly appetizer checks in the mail.
