3 soaring stocks with yields over 5%

These big gainers also offer some juicy payouts.

By InvestorPlace Aug 16, 2013 1:22PM

copyright Photodisc, SuperStockBy Alyssa Oursler


iplogoWhen looking for dividend stocks, it's common to find yourself in lazy corners of the market, betting on blue chips with steady payouts but little room for upside.


Utilities like Verizon (VZ) and AT&T (T) come to mind, along with names like Consolidated Edison (ED) or McDonald's (MCD).


Still, every investor dreams of buying dividend stocks that can offer a little bit of everything -- namely, big income and sweet share appreciation. That combo, however, is difficult to find, especially considering that dividend stocks' yields naturally dwindle as their prices rise.


But that's doesn't mean these companies don't exist -- a handful of dividend stocks have put on a stellar performance so far this year but still offer eye-popping yields.


Thing is, these stocks could ride that hot momentum into the fall ... or their gains could be in the rear-view. But if the latter's the case, that's where these big dividends come in. With yields north of 5% right now, you can afford for these dividend stocks to tread a little water until the needle heads back north.


With that in mind, let's take a look at big-time gainers offering big-time dividends:


Summit Midstream Partners, LP

Year-to-Date Gain: 73%
Dividend Yield: 5.1%


You had to know that a limited partnership would make its way into this list.


The one that's put on the biggest show so far in 2013 is Summit Midstream Partners LP (SMLP), a natural gas MLP that hit the markets in late 2012. Year-to-date, the company has posted a 73% climb -- that's nearly four times the broader market.


One obvious reason to like Summit: The natural gas market has a promising future as an alternative to coal. SMLP recently made two acquisitions in the Bakken and Marcellus shales -- both promising regions in the natural gas landscape.


And the kicker is that -- as a midstream firm -- SMLP doesn't have to worry about the nitty gritty of extraction, the economics of selling to people, or even natural gas prices. Instead, it's really just a glorified toll taker; it provides natural gas gathering and compression services, charges some money, then passes along most of that money to unitholders.


While there's not a long payout history to look at here, natural gas' promising prospects mean there's a good chance its distributions -- currently at 43.5 cents quarterly -- will keep marching upward.


Giant Interactive

Year-to-Date Gain: 50%
Dividend Yield: 5.2%

The first stock on our list is one of China's top online game developers, Giant Interactive Group (GA).


Earlier this week, Giant Interactive shares crept higher along with other Chinese stocks thanks to "optimism the biggest emerging economy is stabilizing after a two-quarter slowdown," according to Reuters.


Of course, while talk of a Chinese slowdown has held back a lot of equities so far this year, Giant has weathered the storm just fine. GA's year-to-date gains sit at a hefty 50% -- more than double the S&P 500 -- thanks in part to most-recent quarterly earnings that showed 11% revenue growth year-over-year and net income improvement of nearly 20%.


That's not to say Giant is guaranteed to keep up its rocketing growth, especially considering the fact that, for now, it has had little competition. The sale of gaming consoles has been banned in the country for over a decade, but chatter has been getting louder that such a ban might be lifted. If companies like Sony (SNE) and Microsoft (MSFT) have a chance to grab part of the Chinese online gaming market -- which is estimated to be more than $11.9 billion this year -- Giant's future could be a bit rockier. (Microsoft owns and publishes Top Stocks, an MSN Money site.)


Of course, GA's dividend is there to easy your worries. The company came public in late 2007 and has been paying a dividend (annually) since early 2009. Last year, GA increased its dividend from about 30 cents to 42, helping Giant's yield keep up with its sprinting shares.


NutriSystem

Year-to-Date Gain: 58%
Dividend Yield: 5.4%

While Weight Watchers International (WTW) took a post-earnings pounding earlier this month, rival dieting service NutriSystem (NTRI) has been moving steadily in the opposite direction.


The main reason: Investors think a turnover is on the way. The company got a new CEO last November, picked up big-box behemoth Walmart (WMT) as a distribution channel, then lifted its full-year outlook by 10% in July.


InvestorPlace contributor James Brumley, for one, is a strong believer in the turnaround. He wrote earlier this month:

"Given the comparative performance of the two stocks, it would be easy to call WTW an oversold equity ripe for a bounce and deem NTRI an overbought name that’s ready to pull back. But, in the case of Weight Watchers vs. NutriSystem, the results each stock has seen of late are deserved. And more of the same (respectively) could be in store."

NutriSystem's appeal is only sweetened when you consider dividends. There's little growth in that aspect -- it has been paying a 17.5-cent quarterly dividend since 2008 -- but that's still good for a yield around 5.4%. WTW's payout of 1.9% pales in comparison. 


For two more soaring dividend stocks, go here.


As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.


More from InvestorPlace

2Comments
Aug 16, 2013 6:29PM
avatar
Buy low sell high doesn't usually include stocks that have doubled in a year when the markets near record highs despite good yields.
Aug 16, 2013 6:36PM
avatar
Nice items, but let me point out some caveats:

1) MLPs - there are some with better yields.  They may all be hitting their peak right now, though
2) Chinese companies-  can we trust their numbers?  Can we ??
3) How many times has one been taken in by latest diet fad or program?
4) Same as above...
5) "Decreasing dividends"? How do we know it wont decrease more?

I rest my case.

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