Capital Returns: Insider Confidence Shines in High-Yield Stocks
Capital returns, which include dividends and share buybacks, play a crucial role in the stock market. The companies highlighted here are actively engaging in these practices, demonstrating strong insider purchasing. Investors now face the challenge of determining whether these capital returns are sustainable and if these stocks present good buying opportunities.
Myers Industries: Insider Confidence Powers High-Yield Potential
Myers Industries (NYSE: MYE) operates a diversified range of manufacturing and equipment businesses. It consists of two main segments: Material Handling, producing pallets and containers for various industries, and Distribution, which offers tools and supplies for tire and under-car service sectors. While the business outlook for fiscal year 2024 appears modest, it remains competent enough to maintain a solid dividend yield of over 5% in early January 2025. The payout ratio is under 50%, with expected earnings growth further enhancing this financial metric.
Recently, insider buying has surged, marking a notable shift after a five-quarter drought. In the fourth quarter of 2024, insider purchases hit a multi-year high, with significant buys from the CEO on three occasions and contributions from four directors. Despite insiders holding only 1.5% of the stock post-transactions, the volume of buying reflects substantial confidence in the company’s future.
Institutional interest also mirrors this optimism. For nine consecutive quarters, institutions have been purchasing shares. The 2024 activity nearly doubled compared to the previous year, with buyers like JPMorgan Chase & Company, Barclays, and State Street Capital Management. Institutions collectively own about 91% of the stock, which limits available shares on the open market. Currently, just one analyst rates the stock, suggesting a Hold position with a potential for 100% upside.
Mid Penn Bancorp: Insider Buying Peaks, Boosting Market Confidence
Mid Penn Bancorp (NASDAQ: MPB) has also witnessed significant insider buying, especially in the fourth quarter of 2024, reaching a multi-year high. Eleven insiders, including the CEO and several directors, owned approximately 10.7% of the stock by year-end. The financial environment, characterized by higher interest rates and a strong economy, has propelled business growth on both top and bottom lines. While institutions hold a smaller stake of 43%, they have consistently purchased shares over the last three quarters, showing an upward trend in activity as 2024 concludes.
Analyst coverage is limited but more favorable compared to Myers Industries. InsiderTrades shows three analysts rating the stock as a Moderate Buy, with a potential upside of 35%. Following the fourth-quarter earnings report, two reports updated their targets, further boosting the stock’s outlook. As of mid-January, the stock yields around 3%.
Centene: Strong Buybacks Offset Lack of Dividends
Centene (NYSE: CNC) is a healthcare company that focuses on providing services for underinsured and uninsured individuals, along with various clinical offerings. Insider trading has been mixed; however, there’s been notable buying activity in the latter half of 2024 after a period of selling earlier in the year. This marks the first substantial insider buying in two years, signaling confidence from leaders like the CEO and CFO.
Institutional buying has also been varied; however, it aligns with potential price growth in 2025. As of the end of 2024, institutions owned over 90% of the stock and favored buybacks as a strategic move. Although Centene does not offer dividends, the company has reduced its share count by over 3% in fiscal 2024 through buybacks, which serves as a compensation for the absence of direct payouts to shareholders.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.