NS Stock: Collect a Double-Digit High Dividend Yield
September 25, 2017
NS Stock’s Consistently High Dividend Yield
Have you ever felt that investors on Wall Street know a secret investment strategy? And that’s why they beat the markets annually?
Well, their income source isn’t that big of a secret: it’s double-digit-yielding investments. And while it may still often sound too good to be true, there’s no catch and only a single requirement: patience. Investors simply buy into a high-dividend-yielding stock that pays out a large portion of earnings because of heavy cash flow, then waits to collect their checks.
One company this could be applied to is NuStar Energy L.P. (NYSE:NS), a provider of storage, pipelines, and marketing for petroleum products, fuels, specialty chemicals, and liquids.
NS stock is currently offering an annual dividend yield of 10.8%, going by its $40.43 trading price. The dividend at this time is $1.095 per share and tends to be paid out every February, May, August, and November.
The shareholder payout has been a very solid, with no misses or cuts since 2010 and growth ever since then. This shows the markets that the company’s revenue is very steady and can be counted on to stay that way. Also keep in mind that the dividend has been paid out regardless of the performance of the stock market.
Strongly Managed
The dividend yield is only one reason to consider NS stock. Consider one reason why there is a high yield in the first place: the company’s also-high margins. Margins calculate what remains following accounting for revenue and operation costs.
The high margins are possible because of strict cost control put on operations, such as reduced spending on business trips, and only obtaining additional office space when needed. Simply put, less reckless spending is coming from the company’s senior management.
Another reason for NuStar’s strong margins is that its revenue is protected from inflation. Inflation would normally be seen as a negative because it means the costs of operating the business increasing, leading to margin compression. But with NuStar, higher costs stemming from inflation are passed along to its customers and clients, costing them more and providing NuStar with greater profits.
Insider Buying
NuStar is also no stranger to insider trading. Everyday retail investors and analysts could be bullish on NS stock, but the most important investors are company insiders–those employed by the company who both are buying shares in the company and have a say in its major decisions. In this case, you want to see if NuStar’s insiders are buying shares of NS stock with their own money. Over the last year, NuStar has seen aggressive insider buying, with more than 550,000 shares, valued in the millions, purchased by multiple company managers. (Source: “NS Insider Activity (SEC Form 4),” NASDAQ, last accessed September 21, 2017.)
The presence of insiders tends to mean that management is very bullish on the company, believing it is both cheap and should be trading at a higher price. Insider buying is a bullish signal because it the interests of investors and senior managers are aligned. It also has the benefit of giving confidence to the markets and investors that the company will only make decisions in the best interests of shareholders. No one likes to lose money, after all, so insiders will do what it takes to ensure their own capital and that of investors grows.
Final Thoughts About NS Stock
An investment in NS stock should help investors’ bottom lines, as it offers growth in both the share price and the dividend.
NuStar Energy L.P. is also paying out a double-digit yield, which many other income sources, such as bond investing and money market investments, do not provide.
