7 High Dividend Stocks to Buy Now
By: Ned Piplovic,
7 High Dividend Stocks to Buy
Income investors almost always seek high dividend stocks but such holdings can also make sense for other people to boost their total return beyond share price appreciation.
Income investors typically try to identify high dividend stocks to increase their payouts. To this end, they are often willing to trade off the capital appreciation gains typically sought by others in exchange for enhanced dividend yields. However, it is important to confirm that the high dividend yields are driven by strong cash flows that can be sustained. Otherwise, the payouts could be short-lived.
While most dividend distributions are subject to taxation at ordinary income rates, Qualified Dividends eliminate that disadvantage, since they are taxed at the same rates as capital gains.
The seven equities below, selected with a Dividend Screener tool available at DividendInvestor.com, do not have the highest yields on the market. However, all picks are high dividend stocks with a market capitalization of at least $1 billion that delivered positive total returns in the trailing 12 months prior to the COVID-19 market crash.
7 High Dividend Stocks to Buy Now: #7
BHP Group Ltd. (NYSE:BHP)
Dividend Yield: 5.74%
Based in Melbourne, Australia, and founded in 1885, BHP Group Ltd. is an Anglo-Australian multinational mining, metals and petroleum public company. It also is one of the world’s largest mining companies by its market capitalization of $30.8 billion.
The company has paid dividends since 1990 and increased its payout by 17.5% in the past year. Furthermore, the company has a semi-annual dividend for an annual payout expected to be $2.86 this year.
Due to the COVID-19 market crash, the current share price is 13% lower than it was one year ago and contributed to a total loss of 6.9% in the past year. This loss largely is attributed to the major hit on the mining industry from the COVID-19 pandemic shutdowns. However, since its low on March 12, 2020, the share price has recovered more than 61%.
7 High Dividend Stocks to Buy Now: #6
Sixth Street Specialty Lending, Inc. (NYSE:TSLX)
Dividend Yield: 7.47%
Sixth Street Specialty Lending Inc. is a business development company that provides senior secured loans, mezzanine debt, non-control structured equity and common equity with a focus on co-investments for organic growth, acquisitions, market or product expansion, restructuring initiatives, recapitalizations and refinancing.
The company’s current $0.41 quarterly dividend would produce a $1.27 annualized payout, which corresponds to a 7.47% forward dividend yield. While Sixth Street does not consistently increase its dividend payouts, the company has distributed three to four special dividends in both 2018 and 2019. It already has distributed two special dividends in 2020. If the past two years are any indication of Sixth Street’s dividend distribution pattern, the company will most likely deliver another special dividend payout in November 2020.
The share price declined more than 20% this year from the COVID-19 market crash, which also brought the share price growth to a halt from its five-year high on February 17, 2020. Due to high market volatility during the pandemic, the share price has yet to regain most of its recent losses and currently trades in the $17 range.
Just over the trailing 12 months, the company’s share price drop has caused a total loss of 3.79%. However, over the last three years, the total return was nearly 4% and the total return over the past five years was 8%.
7 High Dividend Stocks to Buy Now: #5
Omega Healthcare Investors, Inc. (NYSE:OHI)
Dividend Yield: 9.17%
Omega Healthcare Investors is a real estate investment trust (REIT) that finances the sale, leaseback, construction and renovation of long-term health care facilities in the United States and the United Kingdom.
Since resuming dividend distributions in late 2003, this REIT has advanced its consecutive annual dividend increases for five years and five-year dividend growth of 5.58%. Omega Healthcare’s current $0.67 quarterly payout would convert to a $2.68 annualized dividend and yield 9.17%
This yield level is 209% higher than the 2.96% simple average yield of the overall financial sector, as well as four times higher than the 1.35% average yield of the entire health care facilities industry segment.
Due to its struggle over the last few years and the impact of the COVID-19 market crash, the share price dropped over the past few months to deliver a combined total loss of 16% over the trailing 12 months. Because of the market and share price volatility, the total return over the last five years has been approximately 20%.
7 High Dividend Stocks to Buy Now: #4
Iron Mountain, Inc. (NYSE:IRM)
Dividend Yield: 9.46%
Headquartered in Boston, Massachusetts, and founded in 1951, Iron Mountain, Inc. is an enterprise information management company that focuses primarily on storage, data recovery and information management services.
Its current $0.619 quarterly dividend would provide a one-year dividend growth of 3.29% since 2019. This new quarterly dividend would also correspond to a $2.47 annual payout and yield 9.46%. The current dividend yield is also 36% above its own five-year average yield.
The company’s share price was unable to recover fully from its drop in April 2019 due to lingering fallout from the COVID-19 crisis. Since the start of this year, the share price has fallen 14% but shows signs of a gradual recovery.
Impacts of the COVID-19 market crash also affected the stock’s performance, with a total loss of 11% during the past 12 months. Over the past three years, Iron Mountain’s shareholders enjoyed a total return of more than 35%. However, long-term investors have earned a moderate gain with a total return of more than 14% over the past five years.
7 High Dividend Stocks to Buy Now: #3
AllianceBernstein Holding L.P. (NYSE:AB)
Dividend Yield: 10.26%
AllianceBernstein Holding L.P. is a global asset management firm that operates in investment management and research services through three distribution channels — institutions, private clients and retail. The company has paid dividends every year since 1990. Over the past five years, the company has enhanced its total annual dividend distribution amount by 4%.
The current $0.64 quarterly distribution amount would distribute a $2.68 annualized dividend and a 10.26% forward dividend yield. This current dividend yield is 18% above AllianceBernstein’s own five-year average yield of 8.71%. While the company displays a high dividend yield, it does not maintain consistent dividend increases year over year.
Before the COVID-19 market crash, the share price experienced consistent growth toward its five year high of $35.82 in February 2020. However, since the beginning of the year, the effects of COVID-19 have offset the growth and the share price dropped by 17.14%. Due to this, AllianceBernstein had a total loss of 2.44% over the last year. However, the company had a total return of nearly 44% and 25% in the last three and five years, respectively.
7 High Dividend Stocks to Buy Now: #2
Arbor Realty Trust, Inc. (NYSE:ABR)
Dividend Yield: 12.04%
This REIT boosted its quarterly dividend distribution by 3.4% from $0.29 in the previous quarter to $0.30 for its most recent distribution scheduled for late June. This new payout would correspond to a $1.20 annualized distribution and a 12.04% forward dividend yield. Additionally, the current dividend yield is also 29% above the company’s own 9.35% five-year yield average.
Arbor Realty’s current 12.04% yield is more than three times the 3.36% simple average yield of the entire financial sector. Additionally, the REIT’s current yield is 83% higher than the 6.58% yield average of the company’s peers in the diversified REITs industry segment.
In addition to a steady dividend income, ABR had rewarded its shareholders with robust asset appreciation, when looking past the recent results affected by the COVID-19 market crash. While there was a total loss of 9% over the trailing 12 months, the total return over the past three years was nearly 57%. Furthermore, the long-term shareholders more than doubled their investment with total returns of 110% over the last five years.
7 High Dividend Stocks to Buy Now: #1
Invesco Mortgage Capital, Inc. (NYSE:IVR)
Dividend Yield: 35.17%
Headquartered in Atlanta, Georgia and incorporated in 2008, Invesco Mortgage Capital, Inc. is a holding company and a real estate investment trust (REIT) that invests in residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS), residential and commercial mortgage loans, as well as other real estate-related financing arrangements.
After having a declining dividend payout for five years, the company has increased its annual dividend payout amount over the past three consecutive years. The current $0.50 quarterly dividend is 11.11% higher than the previous quarter’s $0.45 distribution.
Despite the extremely high dividend yield, the share price took a significant blow from the COVID-19 market crash and has yet to recover, as it fell 77% since the start of this year. Its current low price in the $4 range provides a high trailing 12-month dividend yield of 35.17%. Impacted by the market crash, the company’s share price lost 65% in the past 12 months. Invesco Mortgage Capital also absorbed a share price loss of 45% for the last three years.
Editorial intern Katie Kao contributed to this article.