4 Dividend Champions With 5% Yields

Energy sector names present some interesting high dividend yield opportunities.
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When it comes to finding companies to add to your portfolio of US dividend stocks, there are a few places to start looking. Many investors, for example, look to the Dividend Aristocrats on the S&P 500 Index. Members of the Dividend Aristocrats must have increased their dividend for 25 years or more and be part of the S&P 500.

Apart from the Aristocrats, investors can use a variety of additional dividend-paying stock lists or indexes. The Dividend Champions is one of these lists.

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To become a Dividend Champion, all you have to do is have 25 years of yearly dividend increases consecutively. While the Dividend Aristocrats and Dividend Champions have considerable overlap, several Dividend Champions are not Dividend Aristocrats. Due to their remarkable track records of annual dividend growth, income investors may want to consider these stocks.

The following four Dividend Champions are to be kept on your radar, as they currently have dividend yields of 5% or more.

Chevron (CVX)

Chevron is a global energy business with operations in refining, exploration, and production. Chevron is the United States' third-largest oil producer, producing on average 791,000 barrels of net oil equivalent per day in 2018.

A more closely concentrated portfolio has resulted from the global restructuring of its downstream and chemical businesses. Chevron ranked first or second among its peers in earnings per barrel and return on capital employed from 2010 to 2015.

Chevron's downstream sector had its best year ever in 2015, with revenues of $7.6 billion. Since opening a base oil facility at the Pascagoula, Mississippi, refinery in 2014, Chevron has become a leading worldwide producer of premium base oil.

With forecasts predicting a one-third rise in global energy demand by 2040, humanity will require all energy available from all accessible sources, including natural gas, coal crude oil, nuclear, and renewables. Chevron is committed to developing that energy safely and responsibly through a diverse portfolio of significant capital projects.

Chevron has been paying a dividend since 1912 and has increased it for 34 years in a row, earning it the titles of Dividend Aristocrat and Dividend Champion. The dividend yield is currently 5.05%.

As of July 16, 2021, CVX stock is trading at $98.62.

First Quarter Financial Earnings 2021

Chevron released its first-quarter results for 2021. Here are some of the highlights:

  • For the first quarter of 2021, earnings were $1.4 billion ($0.72 per diluted share), compared to $3.6 billion ($1.93 per diluted share) in the first quarter of 2020.
  • Pension settlement expenses and legal reserves totaled $351 million in the current quarter.
  • Earnings were reduced by $2 million due to currency fluctuations.
  • In the first quarter of 2021, adjusted earnings of $1.7 billion ($0.90 per diluted share) compared to adjusted earnings of $2.5 billion ($1.31 per diluted share) in the first quarter of 2020.
  • In the first quarter of 2021, sales and other operating revenues totaled $31 billion, up from $30 billion the year before.
  • In the first quarter of 2021, free cash flow excluding working capital was $3.4 billion, and the Board approved a 4% dividend increase.

ExxonMobil (XOM)

ExxonMobil is a multinational oil and gas company headquartered in Houston, Texas, and is considered one of the world's largest companies by revenue. Its key brands include Exxon, Mobil, Esso, and ExxonMobil Chemical.

Off the coast of Guyana at the Stabroek Block, Exxon made many world-class oil discoveries. It struck another oil potential off the coast of Guyana at the Longtail-3 well. These latest discoveries will result in increased production quantities. By 2027, daily output is estimated to exceed 1 million barrels.

By 2025, ExxonMobil plans to invest between $20 billion and $25 billion per year. The funds will most likely get invested in profitable growth initiatives that generate a lot of cash flow. They also intend to make a profit of more than 30% on such investments.

Exxon should be able to grow its cash flow due to these factors, allowing it to keep increasing its dividend. ExxonMobil has been paying a dividend since 1911. It has increased its dividends for 38 years in a row, making it a Dividend Aristocrat and Dividend Champion. Currently, they have a dividend yield of 5.50%, with their stock trading at $57.32 as of July 16, 2021.

In April 2021, ExxonMobile announced a cash dividend of $0.87 per common share, payable in June 2021.

First Quarter Financial Earnings 2021

ExxonMobil released its first-quarter results for 2021. Here are some of the highlights:

  • Cash flow from operations of $9.3 billion wholly financed dividends and capital expenditures while also reducing debt by nearly $4 billion.
  • Earnings of $2.7 billion in the first quarter of 2021, or $0.64 per share assuming dilution, compared to a loss of $610 million in the first quarter of 2020.
  • From the fourth quarter, total production volumes climbed by 98,000 oil-equivalent barrels per day.
  • ExxonMobil has agreed to sell most of its non-operated upstream properties in the central and northern North Sea of the United Kingdom for more than $1 billion. Based on contingent payments linked with future commodity price rises, the transaction price might have an additional upside of up to $300 million, subject to closing adjustments.

Universal Corporation (UVV)

Universal Corporation is a major tobacco retailer globally. Universal is a tobacco company that buys, sells, and processes flue-cured and burley tobacco. It also owns a 49% stake in Socotab, LLC, a major oriental leaf tobacco distributor. Although Altria Group (owner of Philip Morris USA) is its primary customer, it does not manufacture cigarettes or other consumer tobacco products.

Universal Corp has been paying dividends for the past 50 years, and declared a quarterly dividend of $0.78 per common share in May 2021, which will get paid in August 2021. Based on the $59.06 closing price on May 25, 2021, this increase represents an annualized rate of $3.12 per common share and a yield of 5.45%.

As of July 16, 2021, UVV stock is trading at $52.95. In June 2021.

Annual Financial Results Fiscal Year 2021

Universal Corporation released its annual results for 2021. Here are some of the highlights:

  • For the fiscal year 2021, net income, diluted earnings per share, and non-GAAP adjusted operating income are up over 20% from the fiscal year 2020.
  • Net income was $87.4 million, or $3.53 per diluted share, for the fiscal year ended March 31, 2021, compared to $71.7 million, or $2.86 per diluted share, for the fiscal year ended March 31, 2020.
  • Operating income grew by $21.4 million to $147.8 million for the year ended March 31, 2021, compared to $126.4 million for the year ended March 31, 2020.
  • As a result of variances in tobacco shipment volumes and green tobacco prices, as well as the acquisition of businesses in the Ingredients Operations segment, the cost of goods sold increased by 3% to $1.6 billion and declined by 6% to $493.6 million in the fiscal year and quarter ended March 31, 2021, respectively, compared to the same periods in the prior fiscal year.

Enbridge (ENB)

Enbridge is a gas and oil company operating in the following sectors:

  • Liquids Pipelines
  • Gas Distributions
  • Energy Services
  • Gas Transmission & Midstream
  • Green Power & Transmission

Enbridge is one of North America's largest pipeline companies and plans to grow through 2023 steadily. Its huge asset base gives it a significant competitive advantage, as new market entrants would have to invest several billions of dollars in competing with Enbridge.

Even in fluctuating energy markets, Enbridge's liquids pipelines are strategically positioned, providing it with stable cash flows. The company's gas operations, on the other hand, are largely regulated, which adds to its profits stability.

Regulators set tariff rates based on cost-of-service, which allows pipeline operators to recoup their expenditures with a profit margin — similar to utilities. This ensures that the owner of the infrastructure in question has a consistent financial flow.

Enbridge's consistent operations have allowed the company to increase its dividend for the past 26 years. The dividend yield is 6.8% at current share prices. Furthermore, in 2021, Enbridge aims to put CA$10 billion in growth projects into operation, which should help propel future payout increases. By 2023, they expect robust annual distributable cash flow (DCF) growth of 5% to 7% per share.

As of July 16, 2021, ENB stock is trading at $39.08.

First Quarter Financial Earnings 2021

Enbridge released its first-quarter results for 2021. Here are some of the highlights:

  • GAAP earnings of $1.9 billion, or $0.94 per common share, compared to a GAAP loss of $1.4 billion, or $0.71 per common share in 2020.
  • $3.7 billion in adjusted profits before interest, taxes, depreciation, and amortization (EBITDA), compared to $3.8 billion in 2020.
  • $2.8 billion in distributable cash flow (DCF) or $1.37 per common share, up from $2.7 billion or $1.34 per common share in 2020.
  • Advancing a $17 billion secured capital program, with $10 billion scheduled to be put into service in 2021, allowing for a considerable cash flow increase in 2022.

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