Stocks To Buy With High Dividends
Dividends can be a great way to give your investment portfolio a boost of income, which is something many people are looking for during periods of high inflation and amid talk of a possible recession. Dividend stocks or dividend funds can help you earn regular passive income from some of the strongest companies in the economy.
stocks to buy with high dividends
When it comes to dividend stocks, the first thing many investors look at is a metric known as "yield." This is a simple calculation that involves taking the annual dividends per share paid by a given stock, and dividing that by the price per share to get a percentage.
A caveat, however: This trailing tally is not an indicator of future payouts. And as you'll see with some of the stocks on this list, the yield over the prior 12 months could be significantly lower or higher than it will be in the coming year.
At roughly $4.5 billion in market value, Lincoln National is one of the smaller stocks on this list. However, it's also proof that big yield can come in modest packages. The business of LNC is rather boring, including multiple insurance and retirement product businesses in the U.S. The margins aren't as high here as in other higher-risk financial services, but things like annuities and universal life insurance do offer incredible reliability. If you're an income-oriented investor, that's a big appeal because it means that LNC won't be as volatile as some other more "cyclical" financial stocks that rise and fall based on economic trends.
AT&T is one of the top S&P 500 dividend stocks, and not just because it has the yield. This is also a dividend stock with staying power, as evidenced by the fact the telecom giant has increased its dividend each year for the last 36 consecutive years. After spinning out its stake in Warner Bros Discovery Inc. (WBD) last year to pay down debt and focus on its core business, the refocused AT&T is looking good as a risk-off investment right now. Shares are up about 11% in the last year as of March 9, while the S&P 500 has slumped by about 8% in the same period.
Devon is an Oklahoma-based energy company that drills for oil and natural gas in the U.S., paying dividends based on the profitability of the fossil fuels it pulls out of the ground. It had a pretty good run in 2022, and the trailing yield of DVN stock is above double digits at present. But it's worth noting that distributions have stepped down steadily from $1.55 in August to $1.35 in December to just 89 cents in March. That said, DVN paid just $1.97 a share in total dividends across 2021 so the payouts this year could still be above prior years even if the high-water mark of 2022 isn't realistic going forward.
The investment landscape has changed dramatically in the last year or so. The unprecedented era of near-zero interest rates is now over: Between March 2022 and March 2023, the Federal Reserve raised the federal funds rate from a target range of zero to 0.25% to a range of 4.5% to 4.75%. With inflation high and the risk-free 10-year U.S. Treasury bond now paying about 4%, investors are demanding more income from their stock holdings. There are plenty of dividend stocks to choose from, but far fewer boasting yields that compete with Treasurys. Unlike government bonds, equities offer both dividend income and the potential for capital gains. While not all of these stocks have made big gains in this year's turbulent market, they offer relative stability combined with healthy yields.
While perhaps a bit off the beaten path, OneMain Holdings is a $5 billion mid-cap financial company based out of Evansville, Indiana. Now going strong for 111 years, OneMain underwrites personal loans and insurance, with a strong presence in auto loans, credit cards and life insurance. Rising rates are often good for businesses like OMF, which enjoys higher margins as a result. The stock looks cheap at about six times earnings, and its dividend rewards investors with a great income stream for holding the stock. Including dividends, OMF stock is up 17.3% year to date through March 10.
Next up is another household name: Xerox. Headquartered in Norwalk, Connecticut, and founded in 1906, Xerox was a prominent part of American industry in the 20th century. While its namesake copiers received the most mainstream attention, Xerox was also an innovator in graphic user interfaces and directly inspired later, more commercially successful uses of that technology by Apple Inc. (AAPL) and Microsoft Corp. (MSFT). While Xerox still makes its famous copiers, the company has also embraced the digital transformation and pivoted more heavily into fields like document digitization, workplace software and information technology services. As with Verizon, analysts don't expect any near-term growth from the company, but its high yield makes it a standout income stock.
Blackstone is a roughly $100 billion asset management company with a particular focus on alternative assets. Unlike traditional asset managers who tend to predominantly invest in publicly traded stocks and bonds, Blackstone is a major player in real estate, private equity, hedge funds and other fields that should theoretically have a low correlation to the wider market. While high interest rates are expected to slightly hit revenue and earnings this year, analysts expect operations to bounce back in a major way in 2024, with revenue and earnings per share both expected to jump by nearly 30%.
You might not know Cal-Maine Foods off the top of your head, but you're certainly familiar with its product: eggs. Valued at around $2.5 billion, the Ridgeland, Mississippi-based Cal-Maine is one of the more modestly sized companies among these high-yield dividend stocks, but its business is currently undergoing a boom due to the skyrocketing cost of eggs. This is (hopefully) only temporary, but a rapid spread of avian flu in the U.S. has wiped out tens of millions of birds in the last year, and chickens have been hit hard. Cal-Maine enjoys a roughly 17% market share in the U.S. egg industry, and analysts expect CALM revenue to surge 70% in 2023 on the heels of soaring prices. Prices will eventually normalize, but in the meantime CALM is able to finance its hefty dividend by using just 18% of its earnings.
Last up is AT&T, another major U.S. telecom giant. Worth about $130 billion, the Dallas-based AT&T enjoys many of the same secular advantages that fellow dividend stock Verizon enjoys: low competition, high barriers to entry, and decades of capital-intensive infrastructure buildout that make it a force to be reckoned with among cellular networks and internet service providers. In April 2022, AT&T divested itself of its ill-considered move into content by combining CNN and HBO owner WarnerMedia into a newly public company, Warner Bros. Discovery Inc. (WBD). AT&T received $40.4 billion and shareholders received a fraction of WBD shares as a part of the transaction, which should allow AT&T to focus on its bread and butter business once again.
The best dividend stocks are a great hedge against inflation, as they provide both appreciation and capital gains to offset rising costs. From 1973 to 2021, S&P 500 dividend stocks delivered twice the return of stocks that paid no dividends.
To help you find reliable dividend investments, Forbes Advisor has identified 10 of the best dividend stocks available in the U.S. stock market today. These companies have boosted annual dividend payouts for at least 10 years with attractive yields, have delivered long-term price stability, and have grown their earnings year after year.
AMGN also offers good price stability. Its biggest price decline over the last decade was 25% (adjusted for dividends, based on closing prices). All the other stocks have seen larger declines, but none have had declines of greater than 45%. More than half of all stocks in the US have had at least one decline of 50% or more over the last decade.
While many other technology stocks saw big declines in 2022, Texas Instruments weathered the storm fairly well. The stock is 14% off its November high. The stock has outperformed the S&P 500 by 9% per year over the last decade, making it the best-performing stock by this measure on our list.
An experienced financial analyst selected the stocks above, but they may not be right for your portfolio. Before you purchase any of these stocks, do plenty of research to ensure they align with your financial goals and risk tolerance.
Many investors choose to own dividend stocks to generate income from their equity investments. They get price appreciation over time, but they also get regular dividend payouts that provide cash flow without the need to sell off shares of stock.
The demand for stocks that followed a dividend payout led to measurable, immediate market outperformance, according to the analysis. Days with low dividend payments had an average return of 2 basis points and days with high dividend payments had an average return of 8 basis points. Returns on the week with the highest dividend payments were more than 17 basis points per day. Seeing a similar pattern in 58 international markets, the researchers claim this is strong evidence that supply and demand matter even for the level of the entire stock market.
In many cases, that is nothing for investors to get too concerned about. Dividend-paying stocks tend to be in defensive industries that are consistent performers in any economy. However, investors should pay close attention to see if there are other reasons to be concerned about the company's fundamentals. Some financially troubled companies will issue a high dividend in order to attract investors.
In this article, we'll help investors understand when a high-yield dividend stock offers real safety and when they should be avoided. We'll also give you some sectors that are the best for finding quality high-yield dividend stocks.
High-yield dividend stocks are those stocks that pay the highest dividend in terms of yield. While there is no particular percentage that constitutes a stock as having a high dividend yield, you can compare it to stocks in its sector that have a similar market cap. In some cases, a dividend yield of around 4% is considered a high yield. However, there are some sectors where a 2-3% dividend is considered an exceptional yield. 041b061a72