Undiscovered Dividend Payers To Buy Today
Lawrence Meyers: Small caps are a great place to find undiscovered dividend stocks.
There are some dividend stocks hidden in plain sight, dividend stocks that the market and the media don’t give must love to. This often happens because they aren’t large companies and so get passed over for bigger names. Yet lurking in these uninteresting names are some of the market’s most reliable high-yielding dividend stocks you can’t miss out on.
Sometimes these undiscovered dividend payers remain a secret because they are in sectors that investors aren’t interested in, or that the financial media doesn’t really understand.
That’s a shame, because each pay dividends that are generous, solid, and offer capital gains based on their business models. You should consider seeking these undiscovered dividend stocks out for more research.
Dividend Payer #1: AHT
Ashford Hospitality Trust (NYSE:AHT) is a hotel Real Estate Investment Trust, and is thus required to pay out 90% of its income to shareholders. Ashford owns 114 hotels with 22,667 rooms, and invests across segments and all levels of capital structure.
Few investors really understand the economics of the hotel industry, and that’s why Ashford is a great find. As a small-cap dividend stock, it is underfollowed. Yet
Ashford stock has outperformed its peer average in hotel REITS over every one to ten year period in the past ten years. It has also outperformed every benchmark in the 1, 3, and 5 year period, as well as since its 2003 IPO.
While other hotel REITs cancelled both common and preferred dividends during the financial crisis, Ashford maintained its preferred payments. While other hotel REITs struggled with debt maturities, Ashford was able to repeatedly refinance maturities and balances. This is all a testament to management’s ability to manage capital and remain a dividend stock for the long term.
Ashford also has the highest insider ownership, by far, of its peers. 18% of shares are held by insiders. The nearest competitor has only 4% held by insiders. Best of all, it pays a 4.5% dividend, a yield usually reserved for widows-and-orphan stocks, not dividend stocks in a sector with improving revenue and cash flow.
Ashford has done more and more investor road shows. I don’t think the stock will stay a hidden dividend stock for long.