We recently put together a list of 10 Dividend Stocks That Pay More Than the US Average Rental Yield. In this article, we take a closer look at Alliance Resource Partners, L.P. (NASDAQ:ARLP) and how it ranks against the other stocks in our list.

Investors have primarily favored dividend investments as a source of passive income. However, the recent rise in interest rates, geopolitical uncertainties after the change in the U.S. presidency, and fears of a potential economic slowdown have set the stage for a debate between stocks and rental income. Though real estate has traditionally been a reliable income source, Global Property Guide stated that the national average rental yield in the U.S. staggers around 6.1%. Rising property maintenance costs and mortgage rates owing to economic shifts affect the stability of the rental income, leaving investors unable to make their portfolio decisions. On the other hand, yields from several dividend stocks exceed this threshold, despite the unfavorable U.S. stock market.

READ ALSO: 7 Most Undervalued Dividend Stocks to Buy According to Hedge Funds

The U.S. stock market has experienced heightened volatility in recent months, influenced by Federal Reserve policy shifts. Meanwhile, corporate layoffs have increased, contributing to a slowdown in consumer spending. The rise in borrowing costs has added pressure to equity markets. Trade conflicts between the U.S. and China, as well as with neighboring countries like Canada and Mexico, have further contributed to uncertainty for international businesses. Even amid these headwinds, some dividend-paying stocks have remained resilient, acting as a source of stable income for investors, in a turbulent market.

Meanwhile, the real estate market is facing its challenges. Rising mortgage rates and the declining demand for properties in multiple U.S. regions have slightly reduced the attractiveness of rental investments. Landlords in various areas are experiencing a squeeze in their profit margins because of maintenance expenses, insurance costs, and property taxes. As a result, while real estate remains an option, dividend stocks provide an alternative for investors to generate passive income without burdening themselves with property management complications.

Liquidity and diversification enhance the appeal of dividend stocks. Unlike real estate investments, dividend stocks typically require less capital and can be sold more quickly. In this regard, dividend stocks offer flexibility for investors to adjust their portfolios in an evolving market condition. At times, such as now, when economic uncertainty along with Federal Reserve policies affect both equities and real estate markets, dividend-paying stocks interest investors seeking a balance between income generation and stability. Many companies continue to prioritize shareholder returns and offer dividend yield exceeding both inflation and the national average rental yield, providing an opportunity for investors to capitalize on consistent income streams without being tied to the challenges of property ownership.

Story Continues

Our article presents 10 dividend stocks that offer yields higher than the U.S. average rental yield, allowing investors to benefit from regular payouts and potential price appreciation – the advantages that rental properties do not always guarantee. Whether you are a retiree looking for steady income, an investor seeking to diversify away from real estate, or simply someone looking to sail through the volatile market of today with a reliable investment approach, these stocks could help in adjusting your portfolio.

Our Methodology

Our list has been compiled based on a few criteria. Primarily, we considered only those stocks that offer a dividend yield of more than 6.1%. This represented the U.S. average rental yield. Stocks with a Buy recommendation from analysts were included in our list to ensure the companies featured have solid fundamentals. The final list is ranked according to dividend yield, as of March 22. We additionally considered the number of hedge funds tracked by Insider Monkey as of Q4 2024 backing the stocks, to estimate the institutional interests for the stocks as well.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).Alliance Resource Partners, L.P. (ARLP): Top Dividend Stock that Pay More than the US Average Rental Yield

A coal-loading terminal with trucks lined up to be loaded.

Alliance Resource Partners, L.P. (NASDAQ:ARLP)

Dividend Yield: 10.67%

No. of Hedge Funds: 11

Headquartered in Tulsa, Oklahoma, Alliance Resource Partners, L.P. (NASDAQ:ARLP) is a diversified natural resource company engaged in the business of coal production and transportation. The focus of the company lies in integrating mining, logistics, and marketing to optimize operational efficiency. It also invests in energy infrastructure and minerals to diversify revenue streams. The company operates in the United States with mining operations in the Illinois Basin, Northern Appalachian, and Central Appalachian coal-producing regions.

Alliance Resource Partners, L.P. (NASDAQ:ARLP) offers a dividend yield of 10.67%, exceeding the U.S. average rental yield stands of 6.1%. In the last quarter’s earnings results, the company reported total revenues of $2.4 billion for the full year 2024. The strong performance in revenue was supported by the successful completion of major infrastructure projects at Tunnel Ridge, Hamilton, Warrior, and Riverview, ensuring reliable, low-cost operations for the future. The company’s oil and gas royalties business saw another record year of volumes, suggesting a high capability to cover dividend payments.

Our Insider Monkey database recorded 11 hedge funds backing up Alliance Resource Partners, L.P. (NASDAQ:ARLP), indicating moderate institutional interest. Analysts have assigned a Buy rating for the company, with a 1-year median price target of $29, representing a 10.48% upside to the current price. Investors interested in the stock can purchase them before the next ex-dividend date of May 07, 2025.

Overall, ARLP ranks 3rd on our list of top 10 stocks for dividend capture strategy in March 2025. While we acknowledge the potential for ARLP as an investment, our conviction lies in the belief that some AI stocks hold more significant promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ARLP but that trades at less than 5 times its earnings check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Invest In According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.

View Comments