7 High Dividend Stocks to Buy Now
By: Jonathan Wolfgram,
Income investors tend to 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. 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: 9.2%
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 $212 billion.
The company has paid dividends since 1990. Through 2020, its dividend distribution ranged from $1.10 to $1.30 biannually. In 2021, however, BHP Group has significantly increased its payout — in March of 2021, the company paid investors $2.20 per share, and in September 2021, it paid $4.00. This payout increase continued into 2023, where its last three distributions have been $3.00, $3.50 and $1.80. The company has a pleasant dividend yield of 9.2%.
However, this high dividend yield is partially inflated by a dropping share price in the last few months. In the trailing 1-year period, BHP has returned 4.6%, but the company has dropped nearly 5% in the last year. Investors can make their own decisions regarding whether this is an ill omen for the company or an ideal buying opportunity.
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7 High Dividend Stocks to Buy Now: #6
Sixth Street Specialty Lending, Inc. (NYSE:TSLX)
Dividend Yield: 10.7%
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 $0.46 quarterly dividend would produce a $1.83 annualized payout, but the company paid four special dividends of varying amounts throughout the year will likely bring the annual total higher still. This marks a pattern for Sixth Street Specialty Lending, which has distributed three to four special dividends in all of 2018, 2019 and 2020, and two in 2022.
The share price of TSLX has dropped in the trailing 12-month period and may represent a buying opportunity for investors. TSLX has dropped 15.9% in the last year, but still shown long-term growth with its 68.8% increase the last three years.
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7 High Dividend Stocks to Buy Now: #5
Omega Healthcare Investors, Inc. (NYSE:OHI)
Dividend Yield: 9.9%
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.
After resuming its dividend payout in 2003, this REIT has increased its dividend an average of 5.3% per year. These gradual increases have led OHI to its current dividend distribution of a quarterly $0.67 — this payout annualizes to $2.68 per share and has stayed level since the end of 2019.
Omega Healthcare Investors has mostly followed the S&P 500 in its recent growth patterns. The company has dropped 5.7% in the trailing 12 month period.
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7 High Dividend Stocks to Buy Now: #4
Iron Mountain, Inc. (NYSE:IRM)
Dividend Yield: 4.9%
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.
IRM pays a quarterly dividend of $0.62, an amount it has kept level since the end of 2019. This distribution annualizes to a payment of $2.47 per share and a dividend yield of 4.9%.
Investors need not worry much about the company’s high payout ratio of 128.9%. Although we ideally want payout ratios between 35 and 65%, IRM is a real estate investment trust, or REIT. REITs characteristically have much higher payout ratios than typical equities. For an explanation as to why, read our article Why Do REITs Have High Payout Ratios?
IRM has stayed mostly level for the year 2023, having grown 2.1% YTD (year-to-date). In the last three years, however, the company still exhibits major growth, spiking 124% since 2020.
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7 High Dividend Stocks to Buy Now: #3
AllianceBernstein Holding L.P. (NYSE:AB)
Dividend Yield: 8.4%
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 current $0.70 quarterly distribution amount would distribute a $2.40 annualized dividend and an 8.4% forward dividend yield. While the company displays a high dividend yield, it does not maintain consistent dividend increases year over year, rather opting to increase and decrease its dividend relative to quarterly success.
The company’s share price has sharply increased in the trailing three year period, but dropped meaningfully since 2022. Shares of AB have dropped 18.4% in the last 12 months, but increased 139.3% in the last 36 months.
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7 High Dividend Stocks to Buy Now: #2
Arbor Realty Trust, Inc. (NYSE:ABR)
Dividend Yield: 14.3%
Arbor Realty Trust is a specialized real estate finance company operating as a REIT. It invests in a diversified portfolio of commercial real estate assets, preferred and direct equity mortgages and structured finance assets.
The company pays its shareholders a consistently growing quarterly dividend distribution. ABR’s current dividend payout is $0.40, annualizing to $1.60 paid out per share. However, the company tends to increase its dividend distribution by a small amount — typically around $0.01 — every quarter. Although this income gain is not guaranteed, it fits with management’s behavior that ABR will continue to increase its dividend on a regular basis.
In addition to a steady dividend income, ABR has rewarded its shareholders with robust asset appreciation in the long term, but its stock has dropped significantly in 2023. ABR shares have decreased in value by 36.5% in the last year, representing a dangerous low but also potential buying point for opportunistic investors.
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7 High Dividend Stocks to Buy Now: #1
Invesco Mortgage Capital, Inc. (NYSE:IVR)
Dividend Yield: 24.6%
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 level at $0.65 per quarter after a sharp decrease at the end of 2022. Its shares have dropped considerably in the trailing 12 months, falling 39.9%. This share price means the 24.6% dividend yield is rather inflated, but the company still shows strong enough history that investors comfortable with risk may be able to capitalize on this recent price dip.
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