The sharp rise in energy prices kept consumer inflation at elevated levels in August. As a result, the Fed is clearly in no mood to back down from its hawkish stance just yet, with policymakers echoing a “higher for longer” mantra toward rates until prices cool. Coupled with rising bond yields, it's been a rough month for the equity markets, as investors' risk appetite takes a hit.

While today's action is providing a bit of relief from the heavy selling, the S&P 500 Index ($SPX) and the Nasdaq Composite ($NASX) have shed 4.7% and 6.0%, respectively, over the past month. In this type of environment, it's worth discovering - or rediscovering - the benefits of dividend stocks, which can help provide a buffer against periods of equity volatility by providing consistent passive income. 

Here's a look at three top dividend stocks that are not only outperforming the S&P 500 Index on price - they also offer yields in excess of 7%.

Euroseas

We kick off our list with a shipping company based out of Greece called Euroseas (ESEA). Euroseas is a global ship management company that provides technical and commercial management services to a fleet of vessels. The company's fleet of 19 vessels has a cargo capacity of 58,861 teu. 

With a current market cap of $182.7 million, the company offers an attractive dividend yield of 7.6% - way higher than the sector median of 1.64%.

And Euroseas stock has had a stellar run in 2023 so far, too. The stock has soared 52% YTD, easily outperforming an 11.9% gain for the SPX since the start of the year.

Revenues for the company's second quarter came in at $47.7 million, down 1.6% from the previous year on a fall in one-year time charter rates. EPS for the quarter stood at $4.15 - down 2.1% from the year-ago period, but well above the consensus estimate of $2.83. 

Meanwhile, the company revealed that it has seven more vessels under construction, with the latest being delivered by Q4 2024. Once these vessels are delivered, its fleet will reach 26, with a total carrying capacity of 75,461teu. This is also expected to lower the average age of Euroseas' fleet (currently less than 16 years) further.

Analysts are projecting the company to report earnings growth of 3.8% and 22% in the current and next quarters, respectively.

However, analyst coverage of Euroseas is limited, with only two following the stock. Both have assigned a “Strong Buy” rating on ESEA, with a mean target price of $39.50 - indicating upside potential of about 50% from current levels.

Ternium

Founded in 2005, Ternium (TX) is a Latin American-focused steel company headquartered in Luxembourg, with operations in Argentina, Brazil, Colombia, Guatemala, Mexico, and the United States. According to Bank of America Global Research, TX is the leading flat steel producer in Latin America, with a crude steel capacity of 12.4 million tons. 

The company has a market cap of $7.68 billion, and its impressive dividend yield of 7.03% is well above the sector median of 2.24%.

Notably, Ternium's share price has bested the broader market in 2023 so far, gaining over 36%.

Ternium reported a net sales decline of 13% for the second quarter to $3.87 billion, and EPS fell 21.6% to $3.19. However, Wall Street was expecting earnings of just $1.95 for the period. Operationally, Ternium reported a rise in steel shipments (up 1% YoY) and iron ore shipments (up 4% YoY). 

Analysts are expecting earnings growth of 118% and 625% in the current and next quarters, respectively.

Overall, analysts have earmarked a “Moderate Buy” rating on the stock, with a mean target price of $52.40. This denotes an upside potential of about 31% from current levels. Out of five analysts covering the stock, 3 have a “Strong Buy” rating and 2 have a “Hold” rating.

Nordic American Tanker Shipping

We finish off our list with international tanker company Nordic American Tanker Shipping (NAT). Nordic American owns and operates a fleet of crude oil and product tankers, and has a current market cap of $835.2 million. Notably, the company fleet of 19 Suezmax tankers is one of the largest in the world.

NAT's dividend yield of 12% is considerably higher than the sector median of 3.49%, and the share price performance is impressive too. Nordic American Tanker's stock has easily bested the broader markets in 2023, rising 47.2%.

In the second quarter, net voyage revenues almost doubled from the previous year to $67.9 million, supported by strong demand in the oil market. Although the company's EPS of $0.13 was an improvement from the previous year's loss per share of $0.02, it missed the consensus estimate of $0.14. 

However, the company reduced its long-term debt levels to $157.51 million, from $266.34 million at the beginning of the year, with solid cash flow from operations. Also, NAT's average spot daily time charter equivalent of $43,200 more than doubled from the year-ago period.

Looking ahead, analysts are estimating that the company will report earnings growth of 60% for the current quarter.

Analysts have a mean target price of $5.50 for NAT, which indicates expected upside potential of about 35% from current levels. Out of 2 analysts covering the stock, both have a “Strong Buy” rating.