7 High Dividend Stocks to Buy Now
By: Ned Piplovic,
While income investors always seek high dividend stocks for income distributions, all investors can benefit from adding high dividend stocks to their portfolio.
Income investors’ main focus is identifying high dividend stocks to maximize the dividend income generated by their portfolio. To this end, income investors often trade strong capital gains for higher dividend yields. However, it is important to confirm that the high dividend yields are driven by strong dividend growth and not by falling share prices.
Even investors whose primary focus is capital gains, should consider adding dividend-paying equities as a component of their overall investment strategy. While most dividend distributions are subject to taxation at ordinary income rates, Qualified Dividends eliminate that disadvantage as 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 market capitalization of at least $1 billion that delivered positive total returns over the trailing 12 months.
7 High Dividend Stocks to Buy Now: #7
Magellan Midstream Partners LP (NYSE:MMP)
Dividend Yield: 6.48%
Headquartered in Tulsa, Oklahoma, and founded in 2000, Magellan Midstream Partners, L.P. engages in the transportation, storage and distribution of refined petroleum products and crude oil in the United States. The company has increased its annual dividend payout amount in 68 out of 72 quarters since introducing dividends in May 2001. In the aftermath of the 2008 crisis, MMP paid a flat dividend amount for five consecutive quarters before resuming hikes in May 2010. Since initiating dividend payments, MMP enhanced its quarterly payout amount nearly 14-fold, which is equivalent to an average quarterly growth rate of 3.7%, or 13.2% per year. Even since resuming dividend hikes in 2010, the company managed to maintain a 2.9% quarterly growth rate average. Combined benefit of the rising dividend income and a modest share price growth delivered a 12% total return over the past 12 months.
7 High Dividend Stocks to Buy Now: #6
Gabelli Equity Trust, Inc. (NYSE:GAB)
Dividend Yield: 10.34%
Domiciled in Rye, New York, and formed by GAMCO Investors, Inc. (NYSE: GBL) in 1986, Gabelli Equity Trust, Inc. is a closed ended equity mutual fund that invests in preferred stock, convertible or exchangeable securities, as well as warrants and rights. The trust’s annual dividend payout amount has increased over the past two years. The current 10.345% yield is in line with the trust’s own five year average yield and 230% higher than the Financials sector’s 3.14% average yield. Additionally, GAB’s current yield is also 60% higher than the 6.45% simple average yield of the trust’s peers in the Closed-End Equity Funds industry segment, as well as 18% above the 8.76% average yield of the sector’s only dividend-paying companies. The dividend distributions combined with a small share price gain for a total return of 11.5% over the past 12 months. Stronger asset appreciation made a larger contribution to the 53% total return over the past three years.
7 High Dividend Stocks to Buy Now: #5
Invesco Mortgage Capital, Inc. (NYSE:IVR)
Dividend Yield: 10.59%
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 the 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 declining for five years, the company increased its annual dividend payout amount over the past three consecutive years. The current $0.45 quarterly dividend is 7.1% higher than the previous quarter’s $0.42 distribution. IVR will distribute the next dividend on the April 6, 2019, pay date to all shareholders of record prior to the March 28, 2019, ex-dividend date. The share price is still recovering from the overall market pullback in late 2018, which pared back the double-digit-percentage dividend distributions to a total return of 9% over the past 12 months. However, a robust share price growth contributed significantly more to a total return of 67% over the past three years.
7 High Dividend Stocks to Buy Now: #4
Icahn Enterprises LP (NASDAQ:IEP)
Dividend Yield: 10.91%
Headquartered in New York, New York, and founded in 1987, Icahn Enterprises operates in investment, energy, automotive, food packaging, metals, real estate, home fashion and mining businesses. After paying a flat $6 annual dividend for three consecutive years starting in 2015, the company boosted its annual payout over the past three years. The current $2 quarterly payout amount is 14.3% higher than the $1.75 payout from the preceding period. Compared to the company’s own 9.6% five-year average, the current yield is 13% higher. IEP’s current yield is also nearly 250% higher than the 3.14% average yields of the overall Financials sector. After a 50% decline between mid-2014 and late-2016, the company’s share price reversed direction and has accelerated its growth rate over the past three years. This asset appreciation combined with the double-digit dividend yield has delivered a 37% total return on shareholders’ investment over the past year. Additionally, the combined total return over the past three years exceeded 42%.
7 High Dividend Stocks to Buy Now: #3
Global Net Lease, Inc. (NYSE:GNL)
Dividend Yield: 11.43%
Based in New York, New York and incorporated in 2011, Global Net Lease, Inc. is a publicly traded REIT focused on acquiring and managing a diversified global portfolio of commercial properties across the United States, as well as Western and Northern Europe. The trust currently distributes a $0.1775 monthly dividend distribution, which is equivalent to a $2.13 annual dividend amount and currently yields 11.43%. After loosing more than 40% of its value between mid-2015 and February 2018, the share price has reversed direction and has been trending higher over the past year. The asset appreciation of 15% complemented the double-digit dividend yield to reward shareholders with a 25% total return on investment over the past 12 months.
7 High Dividend Stocks to Buy Now: #2
New Residential Investment Corporation (NYSE:NRZ)
Dividend Yield: 11.95%
Based in New York, New York, and founded in 2011, the New Residential Investment Corporation is a REIT that focuses primarily on investing and managing residential mortgage related assets in the United States. The trust’s current $0.50 quarterly dividend payout amount corresponds to a $2.00 annual distribution and an 11.95% forward dividend yield, which is 15.6% higher than the company’s own 10.34% five-year average. NRZ has nearly doubled its annual dividend payout amount over the past six years, which corresponds to an average growth rate of 11.2% per year. The next ex-dividend date should occur in the last week of March with a late-April pay date. The total return on investment over the past 12 months is just 11% because the share price is still recovering from the market correction in December 2018. However, the total return over the past five years is nearly 90%.
7 High Dividend Stocks to Buy Now: #1
Two Harbors Investment Corporation (NYSE:TWO)
Dividend Yield: 13.48%
Headquartered in New York, New York, and incorporated in 2009, the Two Harbors Investment Corporation operates as a REIT that focuses on investing in residential mortgage-backed securities (RMBS), non-agency securities, mortgage servicing rights and other financial assets in the United States. The trust’s current quarterly payout of $0.47 corresponds to a $1.88 annualized payout and a 13.48% dividend yield. This current yield is 330% higher than the 3.14% average yield of the entire Financials sector and triple the 4.57% yield average of the Residential REITs industry segment. While up for 2019, the share price still has not recovered from the December pullback and the total return was only 5% over the past 12 months. However, a continued share price growth could bring shareholder returns close to the 50% level that the REIT delivered over the past three years. The REIT will deliver the next round of dividend distributions on the April 29, 2019, pay date to all shareholders of record before the March 28, ex-dividend date.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.