High-dividend yields are often thought to be the purview of stocks from sleepy sectors like utilities, telecom, and real estate investment trusts (REITs). But here are three stocks that will boost your dividend income with payouts north of 5%, and all three are from unorthodox sectors that are off the beaten path for typical dividend stocks.
These three choices avoid the aforementioned sectors as well as other usual suspects for high yields like tobacco companies, business-development companies (BDCs), and financials. Let's take a look at an RV retailer, an orange grower, and an apparel retailer that can help you to diversify and grow your dividend-income streams.
Camping World Holdings (CWH 1.12%) is far surpassing the headline here with a forward dividend yield of over 8%. Like many stocks, the $2.4 billion recreational-vehicle (RV) retailer has struggled with inflation concerns in 2022, sliding 27% year to date. The investment community seems worried that higher gas prices will cool demand for RVs.
However, these concerns look like they're baked into the stock price already. It is very inexpensive now, trading at just under six times next-year's earnings. Despite the macro concerns, the company posted record sales numbers in the first quarter of 2022.
Camping World is placing a high priority on its dividend. The company only recently raised its quarterly dividend from $0.25 to $0.50 in the second half of 2021. In March, Camping World increased the payout yet again -- to the tune of a quarterly payout to $0.625, which comes out to a $2.50 payout annually.
Camping World also has some potentially interesting catalysts developing, such as its peer-to-peer RV-rental platform and its all-digital shopping experience.
The stores offer maintenance and other services, so Camping World isn't limited to big-ticket but lumpy RV sales that could suffer during a downturn. The company believes the total number of RVers has grown by 1 million over the past three years, so there should be a larger pool of potential consumers on the market for these services.
Apparel retailer American Eagle (AEO 0.61%) is another stock paying out a compelling dividend, currently yielding just over 5%. Not only is American Eagle paying out this attractive dividend, but its shares are also very inexpensive, trading at just seven times earnings and an even cheaper 5.6 times next-year's earnings even as profits are projected to grow this year.
American Eagle also sports a price-to-earnings-growth (PEG) ratio of just 0.84, which is attractive; many analysts use 1.00 as a benchmark for fair valuation. The PEG ratio was designed to level the playing field between growth stocks and value stocks and divides the price-to-earnings multiple by annual earnings-per-share growth.
While American Eagle is trading at a cheap valuation, it's hardly a struggling brand. Earnings and revenue are both growing, and the brand is in a strong position. American Eagle is ranked as the No. 1 brand of jeans for consumers between the ages of 15 and 25, according to research by the NPD Group, a market-research company. .
Furthermore, investment-bank Piper Sandler finds that American Eagle is the No. 2 women's-apparel brand and the No. 3 men's-apparel brand, based on its "Taking Stock with Teens" survey. The company has also grown digital sales at a 20% compound annual growth rate (CAGR) of 20% over the past five years, so it's fighting back against the "death of the mall" talk that often plagues fashion retailers.
Alico (ALCO 1.09%), a Florida-based citrus grower that owns 81,000 acres of land in the Sunshine State, also pays out a dividend of just over 5% . While high dividend yields can be the result of a stock price falling and a yield growing for the wrong reason, Alico sports this high yield while also boasting a strong performance over the past year.
The company has been a port in the storm of a turbulent market. The stock has gained over 28% over the past 12 months and is up 10% year to date in a market where the major indices are down overall. The dividend payout has increased by over 800% since 2018 when the company was paying out $0.24 annually.
Diversify your dividend income
Investors can look beyond the confines of energy, utilities, telcos, and tobacco when searching for dividend income. All three of these stocks offer very attractive payouts of at least 5% and can help you to both increase and diversify your dividend-income streams.