It’s not a particularly great environment for investing lately, that’s for sure. The market is churning amid unrest in Ukraine. The rate of inflation is the highest since 1982. And the Fed has signaled an interest rate hike is all but certain.
But you may be surprised to learn there are plenty of dividend stocks that aren’t just surviving right now, but thriving. This elite group of “hidden gems” is enjoying rising share prices even as they offer up dividends twice as big as their peers.
These aren’t the usual suspects, of course. Because in 2022, the old rules of investing simply don’t apply.
I’m very bullish on one stock in particular right now, thanks to its resilience and it’s unique business model. This top dividend stock yields 3.5% — more than twice the typical S&P 500 stock – and is protected from geopolitical pressures and spiking energy prices.
And to top it off, it actually stands to benefit from rising interest rates in the months ahead.
That stock is Radian Group Inc. (RDN).
Radian – An underappreciated dividend darling
You may not have heard of this small insurance player, which focuses on real estate services including mortgage insurance.
But that’s the point.
Readers of Brett Owen’s Hidden Yields dividend-growth service know the power of looking beyond the usual suspects to find underappreciated stocks. And I’m a big believer in that approach myself, too.
Boring blue chip stocks are simply too weak right now, or too overpriced thanks to “risk-off” investors piling into shares without doing their research.
On the other hand, misunderstood, mid-sized companies like Radian have a lot to offer in an uncertain environment like this.
Consider that Radian is up 11% so far, while the market has declined.
On top of that, it just increased its dividend 43% from 14 cents to 20 cents per quarter after tremendous earnings.
This is exactly the kind of “safe haven” stock investors are looking for right now.
But unfortunately, most people don’t learn about opportunities like this until it’s too late.
Forget the old rules in 2022
Dividend stocks like Radian have impressive stories to tell, but many investors simply haven’t heard them yet.
That’s because it’s a challenge to find stocks like Radian. You have to look at all stocks, not just the popular tickers. And then you have to actually dig into the numbers to find a dividend growth opportunity like this one.
That’s exactly what I did. And here are the numbers that stuck out to me the most:
- Radian’s net income surged from $393 million in fiscal year 2020 to $601 million in 2021 – a massive 53% growth rate.
- The percentage of defaults in its loan portfolio dropped from 5.2% in 2020 to 3.4% in 2021. That means its risk-management is spot on.
- And looking forward, Radian’s “new insurance written” skyrocketed 45% to the second-highest number on record for the company.
- The result is earnings that are back above pre-pandemic levels, and trending to new highs!
Maybe this company doesn’t have a recognizable brand. But those numbers are impressive regardless of a company’s nameplate or size.
Looking forward, this niche insurance player should continue to thrive, too. It’s not exposed to oil prices or global economic trends since it largely insures residential mortgages. And with the U.S. economy at full employment and the housing market red hot, there are big tailwinds here despite broader market volatility.
Best of all, a rising rate environment is great for an insurer like Radian. That’s because it sits on a significant cash cushion to cover any potential defaults. Specifically, as of the end of last year the total was $844 million in its insurance loss reserves.
Much like a savings account at a bank, that idle doesn’t generate much in a low interest rate environment. But as rates rise, Radian can get a bit more payback from these funds – creating yet an additional tailwind for the business.
For these reasons, and for many more, Radian has an enviable track record of increasing its payouts significantly over the last few years – from 3 cents quarterly before the pandemic to 20 cents as of February of 2022 — even as many big-name stocks cut or eliminated payouts because of the pandemic. That’s proof this stock is one that can serve you well regardless of what Wall Street throws our way.
Doubling your money as others lose their shirts
The familiar dividend darlings of years past are getting crushed right now. Stocks like Franklin Templeton, Ford and Clorox are all down roughly 20% since Jan. 1.
But a small, overlooked basket of recession-proof stocks are not just surviving—they’re set to thrive.
These “Hidden Yield stocks” offer savvy investors the opportunity to double their money roughly every five years with predictable, reliable 15% returns no matter what the wider market does.
These stocks rely on three crucial factors for their success:
Factor #1: Consistent dividend increases
Factor #2: Lagging stock price
Factor #3: Stock buybacks
No, these stocks don’t have ludicrous yields of 5% or 7% or 9%. But what they do offer is consistent payouts and share price appreciation for a strong one-two punch.
Selecting companies with a proven track of increasing their dividend payments is the safest, most reliable way to get rich in the stock market. And “Hidden Yields” can show you how it’s done. Click here to get a FREE copy of 7 Recession-Proof Dividend Stocks With 100% Upside, including tickers, dividend growth histories, full analyses of each pick … and a few other bonuses, too!