A 10% Yield, Strong Coverage, With An Industry Turnaround Just Starting

Guess which sector is in the doghouse? One of our favorites - Basic Materials, a sector which provides many of the high-dividend stocks we cover in our articles. It has been lagging lately, but had a nice rise on Friday, along with crude oil gaining and the US dollar falling. This stock yields 9.9%, with strong distribution coverage of 1.22x. It's now 11% below analysts' consensus price target, but management sees strong growth coming in the second half of 2017, which should lift its price. Its payouts are supported by long-term, fee-based contracts ranging up to 11.6 years. There's also an alternative short-term trade included in this article, yielding over 15% annualized.

We initiated coverage on Summit Midstream Partners LP (NYSE:SMLP) in mid-April. Since then, it has struggled a bit, falling around 3%, and it continues to lag the market, although it has outperformed the Alerian MLP ETF (NYSEARCA:AMLP). SMLP's underperformance has left it at 11% below analysts' average price target of $26.08. Formed in 2012, SMLP provides natural gas, crude oil and produced water-gathering services, primarily via long-term, fee-based contracts with its customers.

Source: Seeking Alpha

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