Highest Paying Dividend Stocks – In Focus SGU

Star Gas Partners (SGU) is not only one of the highest paying dividend stocks we cover, but it is also one of the best monthly dividend stocks we cover. We will explain why in this report.

Background

Star Gas Partners (SGU) is an energy provider (mainly home heating products and services) to residential and commercial customers primarily in the Northeast and Mid-Atlantic regions of the United States. Specifically, it is a service provider of home heating oil and distributor of propane. Through its subsidiaries, SGU also installs, maintains, and repairs heating and air conditioning equipment. SGU also sells gasoline and diesel fuel on a delivery only basis.

Star Gas is headquartered in Stamford, Connecticut; and it is structured as a master limited partnership (MLP). As an MLP, its unitholders are required to report for federal income tax purposes their allocable share of SGU’s income, regardless of whether SGU makes cash distributions or not.

Stock Fundamentals

Despite being in the “Oil & Gas Operations” industry, SGU is a fairly safe business. The role it fills it almost like that of a utility; and it shows in its numbers. Its cash flows from operations and free cash flows have been consistently positive. Its beta is an incredibly low 0.20. And it has raised its dividend every year since at least 2008.

SGU uses a great deal of leverage (equity-asset ratio = 0.410). But this is not excessive given the steady nature of its business, and it is not out of line with how much leverage it has used in the past.

There is only one thing about SGU that concerns us. It is a very small company. In many ways, smaller companies are harder to scrutinize than the larger companies; consequently they sometimes can surprise in very unpleasant ways. However, as long as investors do not fill a portfolio with stocks exactly like SGU in this regard, and they remember SGU should be one stock in a well-diversified portfolio, the risk is not too great.

Stat Sheet – Star Gas Partners 4/15/16

  Information
Ticker SGU
Industry Oil & Gas Operations
Price $ 8.65
Market Cap  $ 495
Dividend Yield 4.39
Dividend/CFOp 0.159
Equity/Assets 0.410
Average Equity/Assets 0.426
Financial Strength Average
Growth Prospects Above Average
Beta 0.20
Price Volatility Below Average
Stock Fundamentals A

(Our assessment of this firm’s fundamentals will be in effect for the rest of calendar year 2016.)

Even Warren Buffet puts more than one stock in a portfolio. No one can forecast with perfection a single stock. No matter how much promise a stock has, it can disappoint; and SGU may disappoint. But we feel strongly that if you buy predominantly stocks that have a stock fundamentals rating (i.e. a Comprehensive Fundamental Rating) of “B” or higher (like SGU), your portfolio will beat the market over time on a risk-adjusted return basis.

If you would like to see more of the top dividend paying stocks and stocks that have other characteristics we feel are admirable, click the link below.

Best Dividend Paying Stocks and More

If you would like even more powerful information on the best monthly dividend stocks, login to your account and zero in on those companies that have a Comprehensive Fundamental Rating (i.e. stock fundamentals) of “B” or higher.

Over our nine-year existence, those firms that had stock fundamentals we rated as “B” beat the average firm significantly in terms of both risk and return.

Disclaimer – Information contained herein has been obtained from sources believed to be reliable. Neither the author nor the publisher guarantees the accuracy or completeness of the information and methods described. This information is offered as general commentary only. It is not intended as investment advice. Investment and trading of securities involves risk, including of loss of capital. Market conditions change over time, and no assurance can be given that a reader may apply the principles described to make a profit. The author and publisher expressly disclaim all and any liability to any person for any investment or trading decisions that the reader may make in reliance on this information.

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Highest Paying Dividend Stocks – In Focus SGU

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