A recent trend in the financial sector has been a focus on insider buying rather than insider selling, as insiders tend to believe that their stock prices are undervalued and likely to increase. While insider buying activity has been quiet due to the market setting new highs regularly, there have been some significant insider buys in top-paying companies. These companies not only believe in the potential growth of their stock prices but also have confidence in their dividend yields, ranging from 6.4% to 12.3%.
One notable company with a 6.4% dividend yield is Sunoco LP (SUN), which saw four of its top executives purchasing shares in May. Sunoco, a master limited partnership that distributes motor fuel across multiple states, experienced a recent jump in insider buying totaling over half a million dollars. This buying spree followed Sunoco’s positive Q1 2024 results, an increased distribution rate, and its acquisition of NuStar Energy LP, which is expected to provide the company with significant growth opportunities in the Midwest region.
Another company with a 7.4% dividend yield is Granite Ridge Resources (GRNT), which operates as a hybrid energy firm investing in various oil and gas operators. Despite challenging financial results and a decline in share value, insiders at Granite Ridge purchased shares totaling around $30,000 in May and ramped up their buying as the stock price decreased in June. The company’s financial profile presents a mixed bag, with low leverage but a significant shift from net cash to net debt, raising concerns about its sustainability.
Claros Mortgage Trust (CMTG) offers a high dividend yield of 12.3% and specializes in originating loans for transitional commercial real estate assets. As a mortgage real estate investment trust, Claros operates by buying mortgage loans and earning interest on them, but the recent rise in long-term rates has impacted its profitability. Despite hitting all-time lows since its IPO and a dividend cut in 2023, insiders at Claros engaged in a buying spree, possibly in anticipation of a reversal in rates or a recovery in the company’s performance.
These insider buying activities offer a glimpse into top-paying companies’ potential for growth and dividend sustainability. Investors may find value in examining these insider purchases as a signal of confidence in the company’s future prospects. While the financial market continues to set new highs, insider buying remains a relevant indicator of undervalued stocks with potential for appreciation and income generation through dividends. Insiders’ belief in their company’s growth and income potential can provide valuable insights for investors looking to make informed decisions in the volatile market environment.
