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, a payout ratio below 50% – we have isolated seven potential investments worthy of consideration.
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 $0.44 distribution one year ago to the current $0.46 payout amount. This new quarterly distribution is equivalent to a $1.84 total annual payout and a forward dividend yield of 3.8%.
The company has advanced its total annual payout amount nearly almost 140% over the past ten consecutive years, which corresponds to a 9.5% 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.
MetLife’s share price remained constant and currently trades at the same price it did one year ago. In the trailing five years, however, the company has grown considerably, to the measure of 46.9%.
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 year 2020 saw an increase in KeyCorp’s annualized dividend yield of 5.6%, making its new quarterly distribution $0.19 and its new annual distribution $0.74. Its dividend yield has a forward rate of 4.4%.
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 20%.
The company’s combined total returns were a 6% loss over the last year, but a 79% gain over the last 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 3% above the $0.55 payout from the same period last year, the company’s current $0.56 quarterly dividend amount is equivalent to a $2.24 annualized payout and a 4.5% 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 12.3% per year.
The company has suffered minor losses in the trailing 12-month period, losing 4.9% and approximately equalizing investors’ total returns, but Principal Financial Group’s stock gained 57.1% in value over the course of the last five years.
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 two years earlier. This new quarterly dividend amount converts to a $0.60 annualized payout and yields 4.5%, 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 31.1%.
The combined benefit of rising dividend income and appreciating assets rewarded Huntington Bancshares’ stockholders with a 9% total return over the last 12 months and an 86.1% gain in share price over the last five years.
7 Highest Dividend Stocks That Are Actually a Buy: #3
Franklin Resources (NYSE:BEN)
Franklin Resources, or Franklin Templeton Investments, is an investment service catering to both institutional and individual investors. At the end of 2020, the company was managing $1.42 trillion in assets, distributed largely between fixed-income (46%), equity (31%), multi-asset funds (10%) and alternatives (9%). More than 40% of its assets are invested in international operations, and approximately 30% of assets are sourced from investors living in other countries than the United States.
Since its purchase of Legg Mason in July 2020, the company has been doing remarkably well. Its one-year total returns came to 21.3%, the majority of which is from capital appreciation and share price growth. Its most recent dividend hike in the fourth quarter of 2020 brought the quarterly amount to $0.28, meaning the company pays an annual total of $1.12.
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 previous $1.00 distribution. This new quarterly payout corresponds to a $4.20 annual payout and a 4.9% forward dividend yield, which is higher than the company’s own 3.8% yield average over the last five years. Since 2011, the company has doubled its total annual dividend, which converts to a 22.5% 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 13.1%. Over the last five 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.
Dividend increases and dividend decreases, new dividend announcements, dividend suspensions and other dividend changes occur daily. To make sure you don’t miss any important announcements, sign up for our E-mail Alerts. Let us do the hard work of gathering the data and sending the relevant information directly to your inbox.
In addition to E-mail Alerts, you will have access to our powerful dividend research tools. Take a quick video tour of the tools suite.
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.