This Mid-Cap Dividend Stock Has Very Strong Momentum

One of my favorite things about the summer months is minor league baseball. You can get a dog and a beer on the cheap, most games are followed by fireworks and there’s no hour-long wait to pull out of the parking lot.

Besides, if you’re a student of baseball then there’s so much to appreciate. Talent in the big leagues makes it all look easy. And while the minors is messy at times, it makes you appreciate the importance of things like shrewd baserunning, taking pitches or placing the perfect bunt.

I love the investing version of “small ball,” too. Less flashy long-term plays may not ever become household names, but that doesn’t mean they aren’t valuable players in your portfolio as a whole. Role players that regularly deliver singles and doubles can make a big difference – especially when there’s a chance of striking out if all you do is swing big.

As an added bonus, lesser-known stocks can also be less susceptible to the volatility that characterizes more fashionable plays. There’s less risk of overpaying for a big name just because it’s popular, and less chance momentum traders will abandon ship on a whim and punish share prices unfairly.

Let me show you this “small ball” approach to investing in action, via a boring but potentially lucrative stock – Enviva (EVA).

Niche Play Enviva Dominates Its Category

Admittedly, Enviva is an oddball company. The mid-cap stock is valued at just under $5 billion, and produces and sells utility-grade wood pellets in what may be the strangest specialty business in the sector.

Coal power generation is quite dirty, and many utilities around the world have curtailed or outright eliminated the use of coal. But wood pellets offer a unique bridge between legacy power and the better-known renewables like wind and solar. After all, you can always grow more wood. The company’s products serve electric utilities worldwide, but mainly “biomass” facilities in the U.K, Europe, and Japan.

Right now, the biomass biz is booming given the disruptions to global natural gas supplies in the wake of the Ukraine war. EVA is plotting more than 20% revenue growth both this fiscal year and next. And while it’s mostly flat year-to-date, that’s still an attractive return compared with double-digit declines for the S&P 500. It also has very strong momentum as we enter this summer after mounting a nice comeback lately, with shares up more than 30% from their 52-week low earlier this year.

The icing on the cake is that Enviva has built its business around long-term “offtake” agreements which are legally binding contracts that require utilities to specify purchase price and terms well before the delivery date. This allows for incredible reliability as a result, and dividends continue to march steadily higher. Payouts were initiated in 2015 at a little more than 26 cents per share soon after the company began trading publicly as a standalone entity, and are now up to slightly more than 90 cents per share at present – more than 3X the dividends in about seven years.

Singles and Doubles: A Winning Strategy

Admittedly, we’re never going to see 50% revenue growth in a weird stock like this that specializes in utility-grade biomass. And while shares have put up some moderate outperformance in the current “risk-off” environment, if Wall Street returns to its obsession with growthy tech stocks then a stock like Enviva is surely going to lag behind the latest Silicon Valley darling.

But that’s not the point.

— Jeff Reeves

Sponsored Link: EVA is a consistent, crash-resistant stock that delivers a generous 5.3% yield you can depend on for years to come. Those are the kinds of investments we build our portfolios around at Contrarian Outlook, because they are the kind of stocks that have proven to deliver for us time and time again. They also have significantly less downside, as far less can go wrong.

These are the kind of solid, reliable investments that make up our “7% Monthly Payer Portfolio.” As you can see, a stock like EVA is actually on the lower end of the dividend-paying stocks that make up this strategy, with a portfolio that can generate massive and consistent yields that you can depend on in the long term.

And make no mistake, while the day-to-day returns may not blow the doors off … there is tremendous, life-changing potential in the profits these stocks can deliver over time. We’re talking 10% upside potential in shares annually, yields of 7% and a nest egg that can generate an upper-class income without you withdrawing a single penny of principal!

It’s simple math. Build a $1 million nest egg and 7% dividends generate $70,000 a year. And as those dividends continue to grow over time, that paycheck moves higher and higher – until you’re harvesting six figures without breaking a sweat!

Even better is that this portfolio is built to deliver that income consistently on a monthly basis. That ensures you will avoid a cash crunch, and can simply let these powerful dividend payers keep generating big payouts without interruption.

You don’t need to settle for stingy blue chips that pay 2% or less, and you don’t need to risk striking out with fashionable names other investment services are pushing. Many of the unsung all-stars in our 7% monthly payer portfolio are trading at bargain prices right now, and have a proven track record of delivering for shareholders. Click here for all the details!

Source: Contrarian Outlook