7 Highest Dividend Stocks That Are Actually a Buy
By: Ned Piplovic,
While income-seeking investors desire highest dividend stocks, all high-dividend stocks are not viable investment options.
Rising or high dividend yields can be a result of a falling share price. Since share prices can decline much faster than dividend payouts grow, a share price decline will generally offset any gains from rising dividends and deliver investors overall losses.
To find the highest dividend stocks that are actually a buy, investors must look past high yields and consider additional metrics to filter out the equities best suited for their investment portfolio strategy. The Dividend Screener available on DividendInvestor.com is an example of tools available for filtering tens of thousands of equities to find stocks worth consideration.
Using just a few criteria – 3%-plus dividend yield, $1 billion minimum market capitalization, at least three years of consecutive annual dividend hikes, payout ratio below 50% and a 12-month total return higher than the dividend yield – revealed nearly two dozen options. Of those potential investments, below is the list of the seven equities with the highest dividend yields – sorter in ascending order by their current dividend yield.
7 Highest Dividend Stocks That Are Actually a Buy: #7
MetLife, Inc. (NYSE:MET)
Headquartered in New York and founded in 1863, MetLife, Inc. engages in the insurance, annuities, employee benefits and asset management businesses. MetLife boosted its quarterly dividend payout nearly 5% from the $0.42 distribution one year ago to the current $0.44 payout amount. This new quarterly distribution is equivalent to a $1.76 total annual payout and a forward dividend yield of 3.64%, which is 4.5% higher than the company’s own 3.48% five-year average yield.
The company has advanced its total annual payout amount nearly almost 140% over the past seven consecutive years, which corresponds to a 13.2% average annual growth rate. Despite paying flat annual dividends from 2007 through 2012, MetLife still enhanced its annual dividend payout nearly nine-fold since beginning dividend distributions in 2000. This annual payout enhancement is equivalent to an average rate of 12.6% per year over the past 19 years.
Share price gains combined with dividend income for a total return of more than 13% over the trailing 12 months and nearly 26% over the last three years.
7 Highest Dividend Stocks That Are Actually a Buy: #6
Headquartered in Cleveland, Ohio and founded in 1849, KeyCorp operates as the holding company for KeyBank National Association that provides various retail and commercial banking services in the United States.
The firm raised its quarterly dividend 8.8% for the most recent dividend payout from $0.17 in the previous period to the $0.185 current distribution amount. This new quarterly payout converts to a $0.74 annualized payout and currently yields 3.86%. The current yield is 45% higher than KeyCorp’s own five-year yield average of 2.66%.
In the aftermath of the 2008 financial crisis, KeyCorp cut its quarterly payout from $0.375 to $0.01 in just four periods. Since resuming dividend hikes in the second quarter of 2011, KeyCorp advanced its dividend payout more than 18-fold, or at an average growth rate of 44% per year. Even over the last five years, the annual growth still exceeds 25%.
The company’s combined total returns were nearly 7% over the last year, 46% over a three year period and almost 60% over the past five years.
7 Highest Dividend Stocks That Are Actually a Buy: #5
Principal Financial Group, Inc. (NASDAQ:PFG)
Based in Des Moines, Iowa and founded in 1879, Principal Financial Group, Inc. provides retirement, asset management and insurance products and services to businesses, individuals, and institutional clients worldwide.
After a boost of nearly 2% above the $0.54 payout from the same period last year, the company’s current $0.55 quarterly dividend amount is equivalent to a $2.20 annualized payout and a 3.87 forward dividend yield. The company enhanced its annual dividend distribution nearly five-fold over the past 11 consecutive years. This pace of advancement corresponds to an average dividend growth rate of 15.5% per year.
A share price pullback in 2015 held the three-year total return below 17%. However, the share price advancement over the trailing 12-months helped deliver 22% one-year total return. Affected by the 2015 price pullback, the five year total return was only slightly higher at almost 25%.
7 Highest Dividend Stocks That Are Actually a Buy: #4
Huntington Bancshares, Inc. (NASDAQ:HBAN)
Founded in 1866 and headquartered in Columbus, Ohio, the Huntington Bancshares Incorporated operates as a holding company for The Huntington National Bank, which provides standard banking and lending services in eight Midwest states through five business segments.
The firms’ $0.15 quarterly dividend distribution represents a 7.1% hike above the $0.14 quarterly dividend payout from one year earlier. This new quarterly dividend amount converts to a $0.60 annualized payout and yields 4.0%, which is more than 30% above the firm’s own 3.07% average yield over the last five years.
During the financial crisis, the company cut its quarterly dividend from $0.265 to $0.01 by the second quarter of 2009. Since resuming dividend hikes in 2011, the bank has enhanced its annual dividend 15-fold or at average annual rate of 31%.
The combined benefit of rising dividend income and appreciating assets rewarded Huntington Bancshares’ stockholders with an 8% total return over the last 12 months, a 60% total return over the last three years and a total return of nearly 70% over the last five years.
7 Highest Dividend Stocks That Are Actually a Buy: #3
Legg Mason, Inc. (NYSE:LM)
Legg Mason, Inc. is a publicly owned asset management holding company. The company’s current $0.40 quarterly payout amount marks a 17.6% boost above the $0.34 distribution one year earlier. Since cutting its quarterly dividend nearly 90% from $0.24 to $0.03 in 2009, the company has advanced its dividend distributions more than 11-fold. This advancement pace corresponds to a 31% average growth rate over the past nine years.
The current quarterly distribution of $0.40 corresponds to a $1.60 annualized amount and a 4.17% forward dividend yield, which is 33% higher than the company’s own 3.07% five-year yield average.
After losing approximately half of its value during 2018, the share price has reversed trend in 2019 and has delivered asset appreciation of 37.5% over the trailing 12 months. Combined with dividend distributions, shareholders enjoyed total returns of more than 40% over the last 12 month and more than 47% over the last three years.
7 Highest Dividend Stocks That Are Actually a Buy: #2
LyondellBasell Industries NV (NYSE:LYB)
Incorporated in the Netherlands, and with operational headquarters based in London and Houston, Texas, LyondellBasell Industries N.V. is one of the largest plastics, chemicals and refining companies in the world. The company develops products and solutions in four key areas — Chemicals, Polymers, Fuels and Technologies. LyondellBasell is a leading producer of basic chemicals and plastic resins used in production of fuels, automotive fluids, furniture, coatings, adhesives and cleaners, automobile parts, packaging, piping and textiles.
The current $1.05 quarterly payout is 5% higher than the company’s $1.00 distribution from the same period last year. This new quarterly payout corresponds to a $4.20 annual payout and a 4.24% forward dividend yield, which is 11% higher than the company’s own 3.8% yield average over the last five year. Since 2013, the company has doubled its total annual dividend, which converts to a 13.2% average annual growth rate.
The company accompanied its increasing dividend payouts with varying levels of asset appreciation. Over the trailing 12-month period, share price growth and rising dividend payouts delivered a total return of 8.3%. Over the last three years, the company’s shareholders enjoyed a total return of nearly 40%
7 Highest Dividend Stocks That Are Actually a Buy: #1
Aircastle Ltd. (NYSE:AYR)
Based in Stamford, Connecticut, and founded in 2004, Aircastle Limited leases, finances, sells and manages commercial flight equipment to airlines worldwide. Over the last eight consecutive years, the company has advanced its annual dividend distribution amount three-fold, which is equivalent to an average growth rate of 13% per year.
The company’s current $0.30 quarterly payout is 7.1% higher than the $0.28 dividend amount from the same period last year. This new payout corresponds to a $1.20 annualized amount and a 4.35% forward dividend.
In addition to the above-average dividend yield the company also delivered asset appreciation of nearly 40% over the past 12 months. More than half of those gains occurred in the past 30 days. The combined total return over the last year was 43.5%, the three-year total return exceeded 50% and was nearly 70% over the last five years.
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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.