Trying to beat the market is tough… and can be risky.
But today, I’m going to tell you about a stock that’s been doing this consistently: John Hancock Premium Dividend (NYSE: PDT).
It has fundamentals in place that should keep it going strong and, with a 7% yield, PDT’s got a lot to give savvy investors.
In 1989, John Hancock started the closed-end management investment company, providing high current income with capital growth and targeting dividend-paying preferred stocks and common equity securities.
Because preferred stocks are typically issued by banks, brokerage firms, and insurance companies, the portfolio has many big names in these industries, like Capital One. In addition to banking, brokerage, and insurance, their diversified portfolio spans many other industries, such as oil and gas, consumer finance, and integrated telecommunication services.
Overall, PDT focuses on financial and utilities stocks, which comprise about 80% of its assets.
With many of its holdings being regulated power and gas providers and dividend-paying preferred shares, PDT invests in companies that trade with much less volatility than regular issuers, meaning PDT provides robustness even during stormier times.
It also provides even further value to investors with dividend yields ranging between 6.15% to 11.12% over the past 10 years.
Since the start of the year, PDT has ratcheted up about a 20% return. That’s nearly double the asset class median at 10.80% and about 37% better than the Financial sector, which sits at 14.59% year-to-date.
In fact, Nasdaq lists PDT as one of the top stocks in its industry groups.
So what’s its secret? PDT consistently beats its competition by using methods outside the arsenal of conventional index funds.
For instance, it utilizes leverage expertly to borrow money and reinvest it profitably. This is one reason investors have benefited so much from PDT, with PDT outperforming virtually every single competitor for more than a decade, and experiencing a total return of 26.95% in the past 5 years. PDT’s strong strategy even had it outperforming the S&P 500 in 2009 during the financial crisis (which should give you some peace of mind).
And still, there’s even more to like about PDT….
Its current 7% dividend yield is higher than its industry’s 4.40% and sector’s 2.09%. Its P/S ratio of 13.16 is much lower than its industry’s 30.85, which could indicate a further rise in PDT’s future stock price. And finally, it’s a skillfully managed fund, such as when it bought Kinder Morgan preferred shares when they were low in 2017 and Morgan Stanley before that. This shows me that PDT’s managers know how to identify a good opportunity to bring even further growth for the company.
All in all, there could be even more promise coming from this robust stock… and you’ll get to enjoy its dividends along the way.
-Investing Insider Magazine
