If you are looking for high-yield dividend stocks that can beat the market, you might want to check out these three companies. They all have dividend yields above the 10% mark and have delivered market-beating returns for shareholders. Here is a brief overview touching on the pros and cons of each stock.
These high-yield dividend stocks are crushing the market
1. Frontline plc (FRO 1.54%), one of the world's leading oil tanker operators, prides itself on having one of the industry's largest and most contemporary vessel fleets. The company thrives on the high demand and fluctuation in the oil market, enabling it to command premium prices for its services.
While Frontline doesn't always pay a quarterly dividend, its yield over the past 12 months comes in at a staggering 11%. The stock has also delivered an incredible 50.8% total return rate (dividends plus stock-price increase) over the previous 12 months, significantly outpacing the S&P 500 index over this period.
Despite this growth spurt, the prevailing opinion on Wall Street suggests that this sizzling shipping stock could potentially see a further 25% rise in the coming 12 months. Wall Street price targets are rarely a reason to buy a stock, but the company's tantalizing forward momentum is hard to deny.
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2. CVR Energy (CVI -0.48%) is a multifaceted energy corporation that generates revenue from renewable fuels, petroleum refining, and nitrogen-fertilizer production through its interest in CVR Partners, LP. The company typically operates under favorable market conditions despite its core petroleum business being inherently cyclical.
In 2023, CVR Energy distributed dividends amounting to $4.50 per share to its shareholders, translating to a trailing annualized yield of 13.3%. Even so, the company's shares have underperformed the broader markets by roughly nine percentage points over this same period.
Nonetheless, assuming dividends were reinvested and pre-tax, CVR Energy has yielded higher total returns than the S&P 500 throughout its existence (see graph below). It's worth noting, however, that CVR Energy's shares have historically been on the volatile side, mirroring the cyclical nature of its energy operations.
Therefore, CVR Energy might not be an ideal investment for conservative investors with a short-term outlook. However, aggressive investors with a long-term perspective might want to consider incorporating this energy and fertilizer stock into their portfolios.
3. International Seaways (INSW 1.01%), an oil tanker company, operates a substantial fleet of 76 vessels, inclusive of 13 very large crude carriers. The company's flexible business model enables it to capitalize on opportunities in the oil market.
Over the past four quarters, International Seaways has distributed a cumulative dividend of $6.29 per share to its shareholders, equating to a trailing-12-month yield of 12%. Additionally, the stock has produced total returns of 251% over the past three years, significantly surpassing the broader market.
Wall Street's consensus take is that this shipping stock could potentially see a further rise of 21.7% in the next 12 months. However, this price target might be overly ambitious given the company's anticipated 6.4% drop in earnings per share in 2024.
Nevertheless, since becoming an independent entity in 2016, International Seaways has experienced a sustained bull run, with its shares yielding total returns exceeding 557% during this time. This significant forward momentum could propel it to meet -- or even surpass -- Wall Street's forward-looking price target.
Key takeaway
Frontline plc, CVR Energy, and International Seaways are three high-yield dividend stocks that are not only providing their shareholders with substantial payouts but also delivering exceptional capital-appreciation performance. Therefore, these three ultra-high-yield dividend stocks are worth considering due to their promising income potential and robust upward trajectory.
