My Top Dividend Stock To Buy In June
PRESENTED BY SNOWBALL ANALYTICS
Disclaimer: This page contains some affiliate links that might just lead you to the promised land of awesomeness (or at least some cool products). I personally use all of the products promoted, and recommend them because they are companies I have found to be helpful and trustworthy. I may receive commissions for purchases made through links in this post.
One of the perks of my “job” of running a YouTube channel and a newsletter about dividend investing is that I have a constant influx of stock ideas being sent to me—too many to keep up with, actually.
One thing I’ve noticed over time is that the same names start popping up again and again, with one of those names being EOG Resources (EOG), which is my top dividend stock to buy in June.
Now, in case you’ve never heard of this company before, EOG Resources is an upstream oil and gas company that makes its money by exploring for and producing oil and natural gas.
Unlike other companies such as Chevron (CVX) and ExxonMobil (XOM), EOG isn’t refining the product or running gas stations. They’re the ones actually looking for and pulling the stuff out of the ground.
As you can see from the map below, most of their operations are here in the U.S., and what sets EOG apart is their intense focus on efficiency. They’re one of the lowest-cost and highest-returning exploration and production companies around, which is exactly what you want to see from a business that operates in an industry as cyclical as oil and gas.
Source: Investor Fact Sheet
On this point, I think Morningstar said it best. In a recent write-up, they wrote:
“EOG’s capital allocation strategy sits somewhat alone relative to other US exploration and production players. While the consolidation bug has bitten its peers and the integrated majors, EOG principally focuses on organic exploration efforts. And, like other US Exploration and Production peers, EOG has embraced a capital allocation policy that emphasizes returning cash to shareholders, yet retains a willingness to invest in modest production growth. Finally, in an industry that overextended itself during the shale revolution, EOG pivoted sooner than most in becoming a low-cost provider.”
In other words, EOG is running a tight ship. But even with all that going for it, the company’s share price hasn’t exactly reflected its strengths as of late.
As I’m writing this, the stock is down almost 9% year-to-date and just over 2% over the past 12 months. With that, the P/E ratio is sitting pretty low at 10.48, and the stock has a free cash flow yield of 8.8%—well above both its five- and ten-year averages.
All of that is to say that from a valuation standpoint, the stock looks pretty cheap compared to its relative history. And with a Snapscore of 7.85 out of 10, EOG seems to be a solid buying opportunity for dividend investors in search of above-average businesses.
Source: Snapstock
Diving a bit deeper into the Snapscore, EOG is putting up high numbers in all categories—growth, profitability, dividends and buybacks, capital efficiency, and even debt, which is one of my favorite things about this business.
The company currently has negative net debt, which means they have more cash than debt on the balance sheet. Like I said, that’s one of my favorite things to see because it tells me that EOG isn’t at risk of going bankrupt anytime soon, and it just adds an element of resilience to the business.
Now getting into the good stuff, EOG has been a dividend growth monster. While the starting yield of 3.2% isn’t too shabby, the growth rate is what really stands out—over 20% per year on average over the past decade.
Not to mention, in both 2022 and 2023, the company was paying out special dividends almost every quarter. And in a lot of cases, those special dividends were even bigger than the regular ones.
Source: Snapstock
Overall, I think there’s a lot to like about EOG. And at today’s prices, I think this is one to seriously consider if you’re looking for an above-average dividend grower that hasn’t run up in price like a lot of the rest of the market has.
With that said, EOG isn’t the only good buying opportunity on the market right now. It looks like there are quite a handful more, and I want to hear from you: Which discounted stocks do you have your eye on as we jump into June? Write to me here and let me know.
And if you want to learn about some other great buying opportunities right now, I've got a few more for you here.
Dividend Investing Democratized
Join thousands of savvy investors in the pursuit of early retirement. Get Retire With Ryne delivered straight to your inbox every week as you build your perpetually growing, cash-flowing dividend stock portfolio.
One of the most essential tools for any investor is a reliable portfolio tracker, and Snowball Analytics is the ultimate command center for your portfolio, providing all the tools you need (and more) in one place.
Plus, it’s one of the only portfolio trackers out there designed specifically for dividend investors.
The layout is clean and intuitive, offering charts, graphs, and other features you didn’t even know you needed but now can’t live without—like the event calendar, portfolio backtest tool, and the dip finder tool (this has been a game changer).
I’ve been using Snowball for a while now, and it's the most in-depth portfolio tracker I’ve ever used (you can see it in action here). I highly recommend it to any dividend investor looking for maximum functionality and data for tracking their portfolio.
Right now, Snowball Analytics is offering a 14-day FREE trial so you can try it out risk-free. The best part is, if you end up loving it (which, as you'll find out, is not hard to do), you can save 10% on your subscription when you use code “rynewilliams” upon signing up.
IN MY PORTFOLIO 📈
Start tracking your portfolio with Snowball Analytics today—free for 14 days! Plus, use code "rynewilliams" at checkout to get 10% off your subscription.
ICYMI 🎥
This Is How You Know It's Time To Sell Your Stocks | Ep. 21
In this episode of The Deep End, Ari and I wrestle with a tough question: Should I finally sell my stake in Altria Group (MO)?
CAREFULLY CURATED 🔍
📺 Restaurants Are Back - A very insightful video from CNBC exploring how different restaurant chains like Chili's, Wingstop, and McDonald's are attracting customers back into their stores.
🎧 The Art of Growth - A great conversation with James and Abigail Zimmerman on We Study Billionaires about the strength of growing and sustainable cash-flowing businesses, the importance of strong balance sheets, and why simplicity is so important in an age of complexity.
📚 Going Beyond Buffett - A read-worthy article from The Leading Edge reflecting on the limits of the Buffett blueprint in today’s complex world.
SINCE YOU ASKED 💬
"Would you advise a younger person to go into dividend investing or growth?"
- I Didvidend | YouTube
So here’s the thing—you don’t have to choose between dividends and growth. For some reason, that seems to be a common belief, but dividends and growth aren’t mutually exclusive.
You can invest in companies that are both paying a dividend AND growing. In fact, I think those are some of the best businesses you can own.
I’m not exactly sure where the idea comes from that you have to either be a growth investor or a dividend investor. Or that there are “growth stocks” and “dividend stocks,” like they’re two completely different species.
In reality, there are growing companies and not-growing companies. And there are companies that pay dividends and companies that don’t.
Dividend or not, you do want to be invested in companies that are growing. That should be non-negotiable. After all, why would you want to put your money into something that doesn’t look likely to be bigger and better in the future than it is today?
Now as far as the dividend goes, that more so comes down to preference. Personally, I only invest in companies that pay a dividend. There are a few reasons for that—which I write more about here—but that’s just what I like.
And again, there are plenty of companies out there that give you the best of both worlds.
Visa (V) is a shining example of this. Although it doesn't have the highest dividend yield by any means, it is still a rapidly growing, dividend-paying company.
Zoetis (ZTS) is another great example. Intrinsically, it’s growing like a weed and has raised its dividend by more than 20% per year on average over the last five years.
Even on the higher yield end of the spectrum, we can look at Main Street Capital Corporation (MAIN). With a yield north of 7%, it usually gets thrown into the “dividend stock” bucket, but it’s also a very solid grower. That’s why I don’t think it’s helpful to get too caught up in these labels.
Instead, you're better off trying to figure out what actually matters to you in a business or in an investment. That might take some time to figure out—and that’s totally fine—but once you know what you’re looking for, just follow that.
Have a question? Ask me here to see it featured in an upcoming newsletter.
