Combining growth and income can be extremely valuable when investing in the stock market. While dividends can provide a stable and consistent stream of cash, the potential for growth can lead to capital appreciation. These three stocks have provided significant income to shareholders and are expected to keep doing so. Additionally, they show avenues for solid growth.
Frontline: Income the Size of an Oil Tanker
First up is Frontline PLC (NYSE: FRO). Frontline operates a fleet of oil tankers. As of Jun. 30, 2024, the company operated 82 vessels. The company operates these ships using various ownership structures. These include outright ownership, leasing, and charter agreements. Over the past three years, the company’s trailing twelve-month revenues have seen very strong growth. Revenue has achieved a compound annual growth rate of 35% over that period.
This has coincided with the company’s share price rising 175% over the last three years. That big rise in share price has also given shareholders big dividends. Over the past twelve months, the company’s dividend yield is 7.9%. Its dividend yield has fluctuated widely over time from 0% to upwards of 20%. However, over the last 10 years, its average is 7.2%.
In addition, analysts see the company maintaining strong revenue and earnings per share growth. Analysts expect those figures to rise at a compound annual rate of 20.8% and 9.7%, respectively. Furthermore, Wall Street analysts see solid upside in the stock despite its strong rise in recent years. The average price target for the company implies a 16% upside from its current level. A recent upgrade by BTIG Research supports this potential upside. The firm moved its rating from Neutral to Buy, placing a $30 target on Frontline.
It is important to note that many of Frontline’s vessels, particularly its largest ones, transport oil from the Middle East to other regions. This adds geopolitical risk to the firm.
Blackstone: 3% Dividend Yield Combined with A Bottoming Market?
Next up is Blackstone (NYSE: BX). The financial services company is the largest alternative asset manager in the world. The company manages various, mostly private, investment funds. They focus on real estate, private equity, infrastructure, and hedge fund strategies. It generates revenue from fees that it charges for managing these funds, as well as from incentive fees generated when the funds perform well. Over the past year, the company has achieved strong share price returns and provided a notable amount of dividend income.
Shares are up 42%, and the company’s trailing twelve-month dividend yield is 2.3%. Analysts project that figure will rise by 3% in the next twelve-month period. On average, analysts expect the company’s revenue and earnings per share to continue growing strongly over the next two years. The expected compound annual growth rates for these metrics are 24% and 22%, respectively.
Some evidence shows that the private investment fund industry may be nearing a bottom. If current trends continue, the amount of capital raised for private equity and venture capital funds in 2024 will be the lowest since 2016. The number of these funds launched in the first half of 2024 is down 47% compared to the first half of 2023. Additionally, falling interest rates have historically led to more deals in this industry. Continued falls in interest rates would increase demand for new Blackstone funds, all else being equal. Additionally, the fact that the industry may be at a fundraising bottom could provide a strong tailwind going forward.
Seagate: More Data Means More Storage
Last up is Seagate Technology (NASDAQ: STX). Seagate makes hardware that stores data on computers. This includes things like hard drives and solid-state drives (SSDs). These devices are where files, videos, and various other types of information are stored on a computer.
Seagate mainly sells its storage solutions to large customers, like data centers. “Mass capacity” customers that require large-scale solutions make up over 90% of the storage Seagate sells. One might consider the company semiconductor-adjacent. Its products rely on semiconductors made by companies like Samsung.
As the world becomes more digitized, there must be more hardware to store digital information. The company cites an International Data Corporation report stating that increased digitization and increased information created by AI will drive demand for data storage. The report expects storage needs to rise by 24% annually through 2028. Analysts are projecting the company’s revenue to rise by 26% annually over the next two years. Additionally, Seagate is expected to provide a respectable dividend yield of 2.6% over the next twelve months.