Has inflation got you scared? If you’re an investor, it should. With inflation running at an annualized rate of 7.9% for the 12 months ending in February, that would outpace the growth of many investments. To help counter that, you might want to consider dividend stocks, especially those with yields of 8% or more that have safe, sustainable payout ratios for those yields. They should also demonstrate safety with at least three consecutive years of dividend growth and at least four straight years of revenue growth.
Camping World Holdings (NYSE: CWH), OneMain Holdings (NYSE: OMF), and Arbor Realty Trust (NYSE: ABR) all passed those metrics, and all three are attractively priced based on their price-to-earnings (P/E) ratios.
1. Camping World Holdings’ dividends travel well
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Camping World Holdings is the largest retailer of recreational vehicles (RVs) in the United States. It sells new and used RVs, including their parts and accessories, and services RVs. During the pandemic, Camping World’s business boomed as families looked for safer ways to vacation. While Camping World’s shares have dropped 30% so far this year, the company’s business hasn’t slowed even with COVID-19 cases on the decline.
What the price drop has done, however, is make the stock a better buy with a price-to-earnings (P/E) ratio of 4.46, compared to the auto and truck industry P/E average of 55.50. I think the stock’s price drop has more to do with what investors expect to happen than what is happening, as the industry still has a backlog of RV orders.
Camping World just raised its quarterly dividend by 25% to $0.625 per share, giving it a yield of 8.73% as of Friday’s share price. The company has increased revenue every year since it went public at the end of 2016 and more than tripled its annual net income over that period. There’s plenty of room for more growth, too, as the company’s dividend payout ratio is only 22.1%.
In 2021, the company reported revenue of $6.9 billion, up 26.9% over 2020. Net income was listed at $642.1 million, up 86.5% over the prior year, and annual earnings per share (EPS) was $6.07 compared to $3.09 in 2020.
Business doesn’t appear to be slowing yet, despite the increased cost of gas and lowered COVID-19 cases. The company reported a record $1.4 billion for the fourth quarter, up 21.5% year over year, with net income of $59.3 million, up 46.9%, and EPS of $0.90, compared to EPS of $0.48 for the same period in 2020. Another thing …….