12 of Wall Street's Newest Dividend Stocks

Academy Sports and Outdoors

• Market value: $3.3 billion
• Dividend yield: 0.8%

Academy Sports and Outdoors (ASO, $38.80) is a regional sporting goods and outdoors retailer operating 260 stores and three warehouse locations across 16 states, primarily in the Southern and Southeastern U.S. Founded in 1938 and publicly traded since 2020, the Texas-based company offers national sportswear brands like Nike (NKE), Columbia (COLM) and Under Armour (UAA), as well as 20 private label brands. Outdoor goods account for 35% of company sales, followed by apparel (25%), sports and recreation (22%) and footwear (18%).

Academy Sports and Outdoors posted outstanding 2021 results, with revenues up 19% to a record $6.8 billion and adjusted earnings per share (EPS) soaring 98% to $7.60. Comparable store sales improved 13.1% year-over-year (YoY) during the December quarter, marking the company's 10th consecutive quarter of rising same-store sales. These gains were attributed to rising consumer demand for outdoor and sporting goods, amplified by the ASO's foothold in faster-growing states like Texas and Georgia.

This retailer boasts an exceptional balance sheet, showing no borrowings on its $1 billion credit line at the end of 2021 and remaining cash of $486 million after completing a $411.4 million stock buyback.

ASO anticipates inflationary headwinds and supply-chain challenges will dampen sales and EPS growth this year. As such, it is focusing on managing expenses and deploying free cash flow – the money remaining after a firm has paid its expenses, interest on debt, taxes and long-term investments to grow its business – to reward shareholders in 2022.

Its plans also call for eight new stores in 2022 that will fill in its footprint in Florida, Georgia, Indiana, Kentucky and Texas and extend its reach into Virginia and West Virginia. Counting new stores – including the one it opened in Georgia in April – Academy Sports and Outdoors will have 267 locations across 18 states.

Oppenheimer analyst Brian Nagel named ASO his top pick in the sporting goods retail sector. He likes the new management team's initiatives to reposition and strengthen the company's business model and thinks shares of Academy Sports and Outdoors are meaningfully undervalued. He has an Outperform (Buy) rating and $50 price target on the retail stock.

ASO paid its first quarterly dividend of 7.5 cents per share on March 3. The annualized dividend of 30 cents per share yields 0.08% and represents a miniscule 4% payout of last year's adjusted EPS.

BayCom

• Market value: $304.9 million
• Dividend yield: 0.9%

BayCom (BCML, $22.40) is the holding company for United Business Bank, a full-service commercial bank that has 33 branch offices across California, Washington, New Mexico and Colorado. At year-end 2021, the bank had $2.4 billion of assets, $2.0 billion of deposits and loans totaling $1.7 billion.

BCML's target market is small to medium-sized businesses and consumers. The majority of its branches are located in the San Francisco Bay area and the bank primarily serves the San Francisco-Oakland-Hayward and San Jose-Sunnyvale-Santa Clara metropolitan markets, with operations in the Los Angeles-Long Beach-Anaheim metro region as well. All of these geographic markets are densely populated and all are characterized by above-average household incomes and wealth. Loans to California borrowers comprise over 70% of the bank's loan portfolio.

The company expanded its California footprint last February by acquiring Pacific Enterprise Bancorp, headquartered in Irvine, California. The combined portfolio of the two banks increases to $2.9 billion of assets, $2.1 billion of loans and $2.4 billion of deposits.

Reduced loan losses attributable to an improving California economy helped BayCom deliver 65% EPS growth in 2021.

The company also rewarded investors with new dividends, declaring a 5 cents per share quarterly payout. The 20 cents per share annualized dividend reflects 11% payout of 2021 EPS.

This West Coast financial firm earns ratings of Strong Buy from all three of its covering Wall Street analysts. BCML shares are up roughly 14% year-to-date and valued at an 11 times multiple to forward earnings – a modest premium to its fellow regional bank stocks.

Covenant Logistics

• Market value: $372.0 million
• Dividend yield: 1.1%

Covenant Logistics (CVLG, $21.75) is benefiting from an exceptionally strong freight market fueled by gross domestic product growth, low inventories and supply-chain disruptions. The company ranks among the nation's top 25 truckload transportation carriers and operates a fleet of approximately 2,300 tractors and 5,300 trailers. Its services include expedited freight, dedicated freight, freight brokerage and logistics and warehousing services.

COVG is differentiated from smaller competitors by the modernity of its fleet and its sophisticated software and systems for routing, tracking and fuel optimization. The average age of its fleet is approximately 2.1 years, or roughly one-third of the 7.3-year U.S. commercial truck fleet average.

Rising fleet utilization and 14% higher freight revenues per loaded mile helped Covenant Logistics generate 25% revenue growth in 2021, to more than $1.0 billion. EPS came in at $3.61, up from a loss of $2.46 per share in prior year.

Recent acquisitions and additions to its fleet will fuel 2022 revenue growth for one of Wall Street's new dividend stocks. Covenant Logistics recently inked a deal to purchase 50 electric rigs from Nikola (NKLA) and closed the acquisition of AAT Carriers, a specialist in time-sensitive loads for the U.S. government. The acquired business should add approximately $25 million to annual revenues.

In addition to recently announcing a $30 million share repurchase plan, Covenant Logistics unveiled new dividends for 2022. The first 6.25 cents per share quarterly dividend (25 cents per share annualized) was paid on in late March and represents a meager 7% payout of 2021 EPS.

Trucking stocks including CVLG have declined in early 2022 due to warnings from industry watchers that spot rates and freight volume are declining. Shares appear bargain-priced at a 5 times forward earnings, which is a roughly 70% discount to industrial sector peers.

Laboratory Corporation of America

• Market value: $23.4 billion
• Dividend yield: 1.1%

Laboratory Corporation of America (LH, $251.95), better known as Labcorp, is a leader in providing diagnostic testing services to patients, healthcare providers, hospitals and medical researchers worldwide. The company has a presence in over 100 countries and two businesses – diagnostic testing services and a drug development group – that assist pharmaceutical companies in clinical trials of new drugs.

COVID testing was a huge boon to Labcorp's 2021 revenues, fueling greater than 19% year-over-year growth for its base diagnostic testing business. The company's overall revenues rose 15% to $16.1 billion and adjusted EPS improved 19.1% to $28.52.

Labcorp supplements organic growth with acquisitions. The company recently expanded its advanced cancer testing capabilities via the purchase of Personal Genome Diagnostics, a leader in tissue-based genomic products and services. New lab service locations across 10 U.S. states were also added via a long-term relationship with Ascension, one of the nation's largest health systems.

LH announced initiatives to enhance shareholder value last December that included a $2.5 billion share repurchase, $350 million in cost savings from process improvements, and a new 72 cents-per-share quarterly dividend. The $2.88 per-share annualized dividend represents a lowly 10% payout of adjusted 2021 EPS.

Labcorp expects COVID-related revenues to decline this year and is guiding for 2022 revenues 4% lower at the midpoint of guidance, adjusted EPS ranging around $19.25 and free cash flow to arrive around $1.8 billion. Longer term, LH targets 4%-7% annual revenue growth and 11%-14% annual adjusted EPS gains.

Analysts think LH is one of the top stocks to invest in. Shares are rated Buy or Strong Buy by 14 of 16 covering Wall Street analysts. Bullish investors cite Labcorp's dominant market share in diagnostic testing, solid fundamental and attractive valuation as reasons to invest.

Marcus & Millichap

• Market value: $1.7 billion
• Dividend yield: 1.2%

Real estate services firm Marcus & Millichap (MMI, $43.61) provides property brokerage and financing for sellers and buyers of commercial real estate. The company operates through approximately 80 offices across the U.S. and Canada, and is the only national brokerage focused on the private client market, which represents roughly 80% of all commercial real estate transactions.

Marcus & Millichap has ranked as the top U.S. real estate brokerage firm for 15 years in a row and closed 13,255 real estate transactions last year, together totaling $84.4 billion of sales volume.

The company plans to grow by expanding its market share in office and industrial segments of the private client market, penetrating new specialty niches like hospitality and senior housing, and expanding its financing business.

Accretive acquisitions have also been used to supplement organic growth. Marcus & Millichap closed nine transactions in the past 36 months. The most recent is a deal for M&T Realty Capital that expands the company's agency financing in the multi-family sector.

Last year's key acquisitions helped MMI boost 2021 revenues by 80.8% to $1.3 billion and more than triple EPS to $3.55.

Marcus & Millichap began paying a 25 cents-per-share semi-annual dividend in early April. The 50 cents per share annualized dividend reflects 14% payout of 2021 EPS. In addition, the company declared a $1.00 per share special dividend.

Although the company doesn't provide EPS guidance, consensus analyst estimates look for a 5.3% rise in EPS and 12.9% revenue growth in fiscal 2022.

As for the valuation for this new dividend stock, MMI shares trade at 12.3 times forward earnings, which is a 68.4% discount to other real estate stocks.

ChampionX

• Market value: $4.6 billion
• Dividend yield: 1.4%

ChampionX (CHX, $22.54) is enjoying major tailwinds from sky-rocketing oil and gas prices that are spurring new oilfield drilling. This Texas-based company is a leading global provider of oil and gas production optimization solutions to the energy industry, with its chemical-based technologies supported by over 1,700 issued patents.

CHX plans to expand into oilfield emissions monitoring, a niche market forecast to grow 20% annually, and is building upon its digital and digitally enabled capabilities with new services such as remote monitoring via drones. In addition, ChampionX is widening its global presence and portfolio of services via acquisitions and in-house development.

The company is on track to realize $125 million of cost synergies from its 2020 merger with Apergy, and also achieved $30 million of revenue synergies from the merger in 2021.

In the first full year post-merger, ChampionX produced revenues totaling $3.1 billion, up 62% from 2020 and EPS of 54 cents versus a per-share loss of $5.01 in the year prior.

The company also repaid $47 million of debt during the December quarter, which enabled it to achieve its target leverage ratio of 1.0x net debt-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) and initiate cash dividends. The first 7.5 cents-per-share quarterly dividend (30 cents per share annualized) represents a 56% payout of 2021 EPS.

Herc Holdings

• Market value: $3.7 billion
• Dividend yield: 1.8%

Herc Holdings (HRI, $122.70), known under its brand Herc Rentals, is one of the largest equipment rental businesses in North America. The company rents earthmoving and material handling equipment, forklifts, booms and other specialty heavy machinery to contractors, industrial businesses and government agencies across the U.S. and Canada. HRI's equipment fleet is valued at $4.4 billion and includes 2,900 equipment categories, and rentals are made through its 312 offices.

The company's growth has resulted from increasing its fleet and locations, mainly in urban markets, improving fleet utilization and making acquisitions. Herc Holdings closed 12 acquisitions in 2021 that added 37 new locations. HRI estimates future acquisition opportunities will exceed $500 million per year.

A nearly 20% increase in fleet utilization and higher rental rates emerging from the pandemic helped Herc Holdings achieve 23.8% equipment rental revenue growth in 2021 and adjusted EPS that was 150% higher at $7.52.

Secular trends favoring equipment rental over ownership and an equipment rental market forecast to grow 5% annually over the next three years provide tailwinds that should help Herc Holdings deliver on its goal of 17%-20% annual EBITDA growth through 2024.

HRI joined the list of new dividend stocks when it initiated payments at 50 cents per share during the December quarter. It also raised its dividend by 15% in February to a new rate of 57 cents per share. The expanded $2.30 per share annual dividend pays out a moderate 31% of 2021 adjusted EPS.

Wells Fargo analyst Seth Weber recommended HRI shares along with two other equipment rental stocks in March, noting that equipment rentals tend to outperform equipment manufacturers early in economic upcycles.

VAALCO Energy

• Market value: $387.7 million
• Dividend yield: 1.9%

VAALCO Energy (EGY, $6.48) is the second energy name on this list of new dividend stocks. EGY produces oil and natural gas in West Africa, primarily from off-shore wells near Gabon and Equatorial Guinea.

Its Gabon assets consist of 8,100 net acres and 14 producing wells in the Etame Marin block, which is located 20 miles offshore from the country. The company also controls a 25-year joint license to drill an undeveloped area known as Block P, offshore from Equatorial Guinea. VAALCO has completed feasibility studies of Block P and is in the process of developing a production plan with its partners.

The company's proved reserves rose 250% in 2021 to 11.2 million barrels of oil as a result of field life extension and acquisitions. EGY has commenced a four-well drilling program in 2022 that will increase this year's annual production by 40% to 10,000 barrels per day.

Other growth initiatives include a new facility that will trim storage and offloading costs by 50% and being awarded two more offshore drilling blocks in Gabon as part of a three-member consortium. The new offshore blocks are adjacent to two highly successful oil and gas production projects.

VAALCO Energy's revenues from oil and gas sales nearly doubled in 2021 to $199.1 million and EPS soared to $1.37 from a per-share loss of 83 cents in 2020.

Tailwinds from multi-year high energy prices should allow VAALCO Energy to benefit from expanded oil and gas production in 2022. The company's drilling program is supported by a debt-free balance sheet, cash of $48.7 million and excellent cash flow generation. Adjusted EBITDA more than tripled in 2021 to $85.8 million.

At 2022 production averaging 10,000 barrels per day, EGY estimates 2022 adjusted EBITDA roughly 75% higher at more than $150 million, assuming $75 per barrel oil prices.

The company recently established a 3 cents per share quarterly dividend. The new 13 cents per share annualized dividend represents a lowly 9% payout of 2021 EPS.

EGY stock is rated Buy by both of its Wall Street analysts. Bullish investors like this company's increasing reserves and production, opportunities for expense reductions and modest valuation. Shares trade at a meager 2.9 times forward earnings, which is a nearly 70% discount to its fellow energy stocks.

Algoma Steel Group

• Market value: $1.4 billion
• Dividend yield: 2.1%

Canadian steel producer Algoma Steel Group (ASTL, $9.28) returned to the public market in 2021 via a transaction with special purpose acquisition company (SPAC) Legato Merger. ASTL manufactures hot and cold rolled steel products, including steel sheet and plate.

Already among the top flat steel producers in North America, Algoma Steel Group has a competitive advantage from its advanced steel hot rolling technology that enables the company to transform liquid steel to hot rolled coil steel in 30 minutes, using 60% less energy than a conventional mill and at significantly lower cost.

In addition, ASTL is making upgrades to its facility that will increase annual production by 32% to 3.7 million tons and reduce CO2 emissions by 70%, positioning the company as Canada's largest producer of "green" steel.

Record product pricing and an expanding order book helped Algoma Steel generate stunning results during the first nine months of fiscal 2022. Revenues rose 147% to $2.8 billion and EPS swung to $6.75 from a loss of $2.46 per share in the year-ago period.

During the December quarter, the company repaid all of its outstanding senior debt and commenced construction of a new electric arc furnace. Algoma Steel ended the quarter with $587.5 million of cash and no long-term debt on its balance sheet.

The company initiated a quarterly dividend of 5 cents per share in 2022. The 20 cents per share annualized dividend pays out just 3% of trailing nine-month EPS.

BMO Capital analyst David Gagliano initiated coverage of ASTL shares in December with an Outperform rating and C$17 price target. Bulls see the company's new electric arc furnace, scheduled to come online in 2024, as a major growth catalyst. This construction project is supported by Canadian government subsidies.

Dell Technologies

• Market value: $35.9 billion
• Dividend yield: 2.7%

Computer manufacturer Dell Technologies (DELL, $47.26) is best known for its PCs, but the company also holds industry leading positions in external enterprise storage, storage software, converged systems and a host of other IT infrastructure categories. After spinning off 81% of its virtualization software business VMware (VMW) to investors last November, Dell's core remaining businesses are enterprise infrastructure and personal computing.

The company plans to grow by leveraging its deep channel partner relationships to enter new IT infrastructure markets such as telecom networking, technology outsourcing, data management and system infrastructure software.

Fiscal 2022, which ended in January, was the best year in Dell's history, according to management. Sales rose 17% to a record $101.2 billion and adjusted EPS gained 27% to $6.22. The company also generated $10.3 billion of cash flow, paid down $16.5 billion of debt and raised its credit rating to investment grade. Dell ended the year holding $11.3 billion of cash and investments.

The company warns of headwinds from computer-chip shortages and supply-chain challenges in fiscal 2023 that are negatively impacting computer shipments and likely to limit revenue growth.

Longer term, the tech stock remains committed to performance goals that include 3%-4% annual organic sales growth, greater than 6% annual EPS growth, converting 100% of net income to adjusted free cash flow and returning 40%-60% of free cash flow to investors.

To make its way on this list of new dividend stocks, the company in February initiated a quarterly payment to shareholders of 33 cents per share. DELL anticipates full-year dividend payout totaling approximately $1.0 billion in fiscal 2023. The $1.32 per share annualized dividend represents a moderate 21% payout of fiscal 2022 EPS.

Epsilon Energy

• Market value: $176.5 million
• Dividend yield: 2.7%

Epsilon Energy (EPSN, $7.45) is another one of the new dividend stocks hailing from the energy sector.

EPSN is an independent oil and natural gas producer operating in the Marcellus basin of northeast Pennsylvania and the Anadarko basin of Oklahoma. The company produced and sold 54.4 million barrels of oil last year and gathered and delivered 22.3 billion cubic feet of natural gas. Proved reserves at year-end 2021 totaled 111.0 billion cubic feet of natural gas and 1.1 million barrels of oil.

The company drilled seven new wells last year. And it has plenty of drilling opportunities on its vast acreage, with over 12,700 net acres of drilling leases. Epsilon energy also owns a gas gathering system that delivers natural gas to the Tennessee Gas Pipeline.

Epsilon Energy benefited from significant rises in oil and gas prices last year. Average selling prices for natural gas tripled to $3.10 per million cubic feet (Mcf) and oil prices more than doubled to $52.02 per barrel.

Due mainly to higher prices, EPSN's revenues increased 74% last year to $42.4 million and EPS rose to 49 cents to 3 cents one year earlier. The company also generated $24.1 million of adjusted EBITDA (up 54% year-over-year) and doubled its balance-sheet cash to $27 million after completing $2.4 million of share repurchases. Its balance sheet remains debt-free.

Oil prices currently above $100 per barrel and natural gas prices near $6.34 per Mcf bode well for the company's 2022 operating results. Plus, Epsilon Energy plans to bring two new wells on line in early 2022.

In February, Epsilon Energy announced plans to initiate a 6.25 cents per share quarterly dividend. The 25 cents per share annualized dividend reflects 51% payout of 2021 EPS.

Seanergy Maritime Holdings

• Market value: $199.7 million
• Dividend yield: 8.7%

Seanergy Maritime Holdings (SHIP, $1.12) is another of the new dividend stocks headquartered outside of the U.S. The marine shipping company is based in Athens, Greece, and specializes in dry bulk cargo such as coal, bauxite and iron ore.

SHIP expanded its fleet by 70% last year and nearly doubled its carrying capacity. Its fleet currently consists of 17 Capesize dry bulk vessels, representing a combined 3.0 million dry weight tons of cargo capacity. Seanergy's fleet is relatively modern, with an average ship age of 12 years.

The company's freight customers include leading miners, commodity traders and operators such as Rio Tinto (RIO), BHP (BHP), Vale (VALE) and Cargill. Fleet utilization was 97% last year and charter rates rose 129%, ending the year at $36,642 per day.

Seanergy achieved record operational results in 2021. Revenues rose 142% to $153.1 million, EBITDA nearly tripled to $78.9 million and adjusted EPS climbed to 28 cents per share from a per-share loss of 68 cents during the pandemic. The book value of the company's fleet grew 66% to $426.1 million.

This dry bulk freighter's 2022 outlook appears equally bright. Iron ore and coal shipments are continuing to rise due to expanding energy requirements from a recovering global economy. Global fleet expansion is forecast at 20-year lows in 2022 and 2023, which should help Seanergy keep charter rates near current record highs.

SHIP began paying a 2.5 cents per share quarterly dividend this year and also recently declared a 2.5 cents per share special dividend. The annual dividend yield represents a modest 10.9% payout to last year's earnings.