7 High Dividend Stocks to Buy Now

By: Ned Piplovic, January 8, 2021

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.

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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. Some of them, amid all of the economic confusion, have even thrived.

7 High Dividend Stocks to Buy Now: #7

BHP Group Ltd. (NYSE:BHP)

Dividend Yield: 3.3%

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 $184 billion.

The company has paid dividends since 1990 and has a semi-annual dividend of $1.10, corresponding to an annual payout of $2.40 in the trailing 12 months.

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In spite of the COVID-19 market crash, the current share price is 40.5% higher than it was one year ago — we most recently recommended BHP Group six months ago when the share price was hovering around $51.45. Today it has soared to a closing price on January 8, 2021 of $72.87. Long-term investors have seen greater reward still, with the stock returning 84% in the last three years and 319% in the last five.

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7 High Dividend Stocks to Buy Now: #6

Sixth Street Specialty Lending, Inc. (NYSE:TSLX)

Dividend Yield: 7.9%

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 $1.64 annualized payout, but the company paid four special dividends of varying amounts throughout the year, bringing the annual payout for 2020 to $2.30. This marks a pattern for Sixth Street Specialty Lending, which has distributed three to four special dividends in both 2018 and 2019.

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. That said, the share price has successfully regained most of its recent losses and currently trades in the $21 range. It was grown 9.1% in the trailing 12 months, bringing investors total returns of 17%.

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7 High Dividend Stocks to Buy Now: #5

Omega Healthcare Investors, Inc. (NYSE:OHI)

Dividend Yield: 7.5%

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 3.7%. Omega Healthcare’s current $0.67 quarterly payout would convert to a $2.68 annualized dividend and yield 7.5%

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 loss of 7.4% over the trailing 12 months. Because of its dividend, however, investors have just about broken even for the year with total returns of 0.1%.

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7 High Dividend Stocks to Buy Now: #4

Iron Mountain, Inc. (NYSE:IRM)

Dividend Yield: 8.6%

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 8.6%. The current dividend yield is also 36% above its own five-year average yield.

The company’s share price has largely recovered from its drop in April 2020 due to lingering fallout from the COVID-19 crisis. In the trailing 12 months, the share price has fallen 1% but shows signs of a gradual recovery, giving investors total returns of 9.6%. Long-term investors have earned a more significant gain with a total return of more than 55% over the past five years.

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7 High Dividend Stocks to Buy Now: #3

AllianceBernstein Holding L.P. (NYSE:AB)

Dividend Yield: 7.9%

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 grown its annual dividend an average of 9.9% per year.

The current $0.69 quarterly distribution amount would distribute a $2.76 annualized dividend and a 7.9% 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.

The company’s share price currently hovers around its 52-week high of $36.06 — on January 8, 2021, the stock closed at $35.17. In spite of the economic confusion surrounding the COVID-19 pandemic, AllianceBernstein has grown 24.1% in the trailing 12 months, meaning it has a total return of 32%. Its three-year return was an impressive 77.5% and its five-year return, 146.3%.

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7 High Dividend Stocks to Buy Now: #2

Arbor Realty Trust, Inc. (NYSE:ABR)

Dividend Yield: 9.2%

This REIT boosted its annual dividend distribution by 7.9% in the last year, from an annual payout of $1.14 to $1.23. It pays its dividends quarterly, each of which is currently $0.32 and expected to go up — Arbor Realty Trust has boosted its dividend every year for the last 8 years.

In addition to a steady dividend income, ABR has rewarded its shareholders with robust asset appreciation. In light of the COVID-19 pandemic, the company still grew its stock price 8.3%, giving investors total returns of 17.5%. Long-term investors has been more rewarded still, as those holding ABR for the last three years have doubled their money with a 118.9% return, and those holding for the last five has tripled it — 214.2%.

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7 High Dividend Stocks to Buy Now: #1

Invesco Mortgage Capital, Inc. (NYSE:IVR)

Dividend Yield: 9.4%

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.

The company’s current dividend payout is low — $0.08 per quarter, to be exact. This is a sharp change from Invesco Mortgage Capital’s regular dividend which usually hovers around $0.50, and this is directly caused by a critical share price plummet in March of 2020, when the price dropped nearly 79%. IVR has yet to recover from this pullback, meaning investors looking for a bargain might consider purchasing shares while they’re cheap and riding the steady growth upward.