Dividend.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.
Energy company Magellan Midstream Partners has taken the first spot in the list, as the high-yield dividend firm has reported very weak results. Iron Mountain, a REIT providing storage solutions for paperwork, is second in the list, as the company makes the transition to data centers. Defense contractor Lockheed Martin follows in third, as the company gained attraction with new deals. Mall real estate company Simon Property Group closes out the list.
Don’t forget to read our previous edition of trends here.
Magellan Midstream Partners
Magellan Midstream Partners (MMP) has trended first this week, as the company released a set of disappointing results, although guidance showed a strong recovery might take place this year. Magellan has seen its traffic advance by 48% this week.
Magellan pays a rich dividend of $4.11 per share, which yields 9.6% annually. Trading at around $42 per share, Magellan’s stock remains below the levels before the March 2020 sell-off when it was trading north of $63 per share. Despite seeing revenues drop continuously since the second quarter, Magellan has resisted cutting shareholder payouts.
In the fourth quarter of 2020, Magellan reported revenues of $586 million, down from $740 million in the same period a year ago, and $598 million in the third quarter. The drop was due to lower volumes shipped through its pipelines as demand for fuel declined following broad stay-at-home orders from the government. While some areas recovered, demand for aviation fuel and gasoline remained subdued, Magellan management explained. For the full year, Magellan’s revenues declined by 11% to $2.43 billion, while its net income was down by 20% to $816 million.
Magellan hopes 2021 will bring better days. It forecasted an increase of 13% in product shipments, largely thanks to higher gasoline and aviation fuel demand.
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Iron Mountain (IRM) has taken the second spot in the list with a rise in viewership of 32%. Iron Mountain is a $10-billion real estate company that provides storage services for paperwork. The company’s annual dividend of $2.47 yields an impressive 7.15%, which is twice as much as a typical REIT.
However, with a forward payout ratio of well over 100%, a high debt load and a business transition, Iron Mountain’s dividend might be at risk. Indeed, the company recently warned that dividend growth might slow or stand still for a while as the company invests heavily in transitioning from a slowly dying industry of paperwork to data centers.
Just recently, Iron Mountain reached a joint venture agreement with India’s Web Werks, a top colocation data center provider, under which the company will invest $150 million over the next two years.
Shares in Iron Mountain are up by nearly 10% over the past 12 months, although volatility was pretty high for a REIT.
Check out our latest Best Dividend Stocks List here.
Lockheed Martin (LMT) has taken the third spot in the list this week, as the largest U.S. defense contractor was in the news.
First, Lockheed Martin received a boost after it signed a $414 million contract with the Pentagon for the production of long-range anti-ship missiles. The company also reached an agreement with Saudi Arabia to set up a joint venture to enhance the Kingdom’s defense and manufacturing capabilities. The company already works on a project to set up a missile defense system that is worth at least $15 billion.
Meanwhile, Lockheed Martin has put aside a dispute with the U.S. government over the delivery of aircraft parts that were faulty. As a result of the agreement, Lockheed Martin will hand out about $71 million in services for the government’s F-35 jet scheme.
Lockheed Martin has hardly felt the effect of the coronavirus as its business with the military has not suffered. Revenues for 2020 climbed by nearly 10% to $65.4 billion, while net income jumped by 10% to $6.8 billion.
Lockheed Martin pays a forward annual dividend of $10.6 per share, amounting to a yield of just over 3%. Its forward payout ratio stands at nearly 40%.
Simon Property Group
Mall real estate company Simon Property Group (SPG) closes out the list with a 9% advance in viewership. Mall real estate companies have suffered from the coronavirus pandemic as a result of stay-at-home orders, but Simon Property proved remarkably resilient.
In 2020, Simon Property reported funds from operations (FFO) of $3.24 billion, down from $4.27 billion a year ago – a decline that was smaller than many of its competitors. The company collected around 90% of its rent but still has around $400 million to collect. The occupancy rate declined to 91.3% from around 95% before the coronavirus pandemic.
Simon Property pays a dividend of $3.90 per share, resulting in an annual yield of 3.45%. Shares in Simon Property have appreciated by 153% since reaching the lowest point during the pandemic sell-off last year.
The Bottom Line
Magellan Midstream Partners resisted cutting its dividend after the company reported a set of disappointing results. Iron Mountain has a high dividend and the company is a cash cow, but it has to make a smooth transition from storing paper to providing data centers. Lockheed Martin has closed a few more contracts, continuing its strong track record in recent years. Real estate operator Simon Property has posted solid results given the massive headwinds from the coronavirus pandemic.
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