These 3 Big Dividend Payers Also Boast Strong Price Growth

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Key Points:

• Dividend-paying stocks can help offset price declines in a volatile market

• Certain industries, like utilities, are fairly reliable dividend payers

• Dividend increases reflect the company’s earnings growth

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Dividend payers like Black Hills NYSE: BKH, Unum Group NYSE: UNM, and Pioneer Natural Resources NYSE: PXD provide a way of getting a return even during a period of equity-market downturns. 

Whether you hope to generate income or boost your total return, dividend stocks can offer a respite during the current bout of market uncertainty. 

In the U.S., dividend payers are typically larger, well-established companies with high levels of cash on the books. These larger companies, which are no longer in fast growth mode, often use dividends as an incentive to attract investors. 

While income investing is often associated with retirement savers, the magic of reinvesting and compounding make dividend stocks appropriate for stock buyers of all ages.

Here are some stocks with dividend yields above 4%, and which have also notched strong price appreciation in recent months. 

Black Hills falls a little outside the typical market capitalization of a U.S.-based dividend payer, but it hails from the utility industry, known to return capital to shareholders through dividends.

The Rapid City, South Dakota-based electricity and gas provider has a history of raising its yearly dividend, making it an attractive choice in the generally sleepy utilities sector. I should note: That’s true of pretty much all utilities, but Black Hills also boasts some strong price performance, which makes it more attractive.

The stock is up 11.21% in the past three months and 8.48% year-to-date. It pays an annual dividend of $2.38 per share, for a yield of 3.13%. That’s not the highest yield among utility stocks, but when combined with its recent price appreciation, that’s a healthy return.

The company has increased its dividend in each of the past 10 years, according to MarketBeat data. Future increases will depend, in part, on earnings. Since 2016, earnings increased every year except 2019. Next year, Wall Street expects an increase of 10%, with another 5% tacked on in 2023.

Unum Group is a mid-cap that provides group and individual disability insurance, and group life insurance in the U.S. and U.K. The stock gapped up more than 14% in early August following the company’s earnings report. Since the report, shares are up 27%. 

The company topped analysts’ bottom-line views, according to MarketBeat earnings data. Unum missed revenue expectations, but there were bright spots in its report. 

Unum raised its guidance, saying it expects better trends for the remainder of the year in its core business, due to strong growth in premiums and reduced effects of Covid. 

Unum expects an increase in after-tax operating income per share of 40% to 45%, a big increase over the previous guidance, which called for a boost of 15% to 20%. That’s what caused the gap-up and subsequent rally.

Dividend data compiled by MarketBeat show that Unum has increased its payout consistently since early 2013. Its current quarterly dividend stands at $0.33 per share, for a yield of 4.11%. 

Finally, Pioneer Natural Resources has been correcting recently, but that’s partly offset by the stock’s quarterly dividend yield of 1.93%, according to MarketBeat data. The company also has a share buyback program for a combined annual total yield of 10.64%.

Pioneer is a Texas-based oil-and-gas explorer with a market cap north of $54 billion. It’s a component of the S&P 500.

The stock has been in a correction since June. It’s forming a cup-with-handle pattern with a potential buy point above $265.87. 

Despite the recent pullback, Pioneer is up 36.21% year-to-date. Nonetheless, it hasn’t been able to get much traction since its earnings report in early August, although the stock’s price movements more or less mirror those of the S&P 500 energy sector. 

MarketBeat earnings data reveal that Pioneer topped analysts’ expectations in the most recent quarter. Both earnings and revenue grew at triple-digit rates in the past five quarters. For the full year, analysts expect the company to earn $33.22 per share, an increase of an almost unbelievable 151% over 2021. 

However, that kind of monster gain has been almost normal for the energy sector this year. For 2023, Wall Street is eyeing earnings of $29.11 per share, which would be a 12% decrease.

Many large oil-and-gas companies pay a regular dividend, and Pioneer has been growing its payout significantly since 2018.