7 Top Dividend Stocks to Buy Now
By: Ned Piplovic,
Income investors are always looking for top dividend stocks and the first search criterion is generally the dividend yield.
A high dividend yield indicates substantial dividend income distributions relative to the equity’s share price. As such, high dividend yield is certainly a desirable metric. However, because of its inverse proportionality with the price, a high yield can be a direct result of a steep share price drop. Even if the dividend distributions are rising, the pace of a fast declining share price will generally outpace the dividend growth, hence, resulting in overall losses.
Listed below are the 7 top dividend stocks to buy now:
7 Top Dividend Stocks to Buy Now: #7
Armada Hoffler Properties, Inc. (NYSE:AHH)
Armada Hoffler’s current quarterly yield is $0.11, equivalent to an annual distribution of $0.44 and yielding 4.0%. This yield is still meaningful, but a definite cut from its $0.22 quarterly yield at the beginning of 2020 pre-financial crisis. The company temporarily cut is dividend, paying out no distributions for the second quarter of 2020, and then quickly reinstating its dividend in the third quarter with its new $0.11 payout.
The company had a rough year, losing nearly half of its share value, but demonstrated strong resilience in its ability to resume dividend payments so quickly. In the long-term, Armada Hoffler has performed better, returning 35.4% over the last five-year period.
7 Top Dividend Stocks to Buy Now: #6
ONEOK, Inc. (NYSE:OKE)
ONEOK has hiked its annual dividend payout for 17 consecutive years. Since 2002, the total annual dividend advanced more than 11-fold, and in the last ten years has maintained an annual growth rate of 14.6%. The company’s current $0.94 is a 6.2% increase on its dividend payout at the end of 2019. It yields 9.0% and pays an annual distribution of $3.74.
This high yield is somewhat less indicative of dividend strength than many would like to believe however, as it is inflated by the company’s nearly 40% loss this year. Once again, the long-term has been much kinder, where the share price has more than doubled with growth of 138.3%.
7 Top Dividend Stocks to Buy Now: #5
Medical Properties Trust, Inc. (NYSE:MPW)
The REIT’s upcoming $0.27 quarterly dividend payout is 5.9% higher than its dividend amount this period last year. This upcoming payout amount corresponds to a $1.08 annual dividend and currently yields 5.2%. While lower than the REIT’s own 6.42% average yield over the last five years, Medical Properties Trust’s current yield is nearly double the 2.96% average yield of the Financial sector and still above the 3.79% yield average of the Health Care Facilities REITs industry segment.
Medical Properties Trust has more than 8 consecutive years boosting dividends. Its total returns for the trailing 12-month period were 2.9%, and considerably higher in the years prior. Its three-year returns came to 86% and in the last five years, the REIT grew 161.2%.
7 Top Dividend Stocks to Buy Now: #4
AT&T, Inc. (NYSE:T)
The company’s current $0.52 quarterly dividend distribution is level with its dividend payment 12 months ago. This distribution amount is equivalent to a $2.08 annualized amount and a 7.0% forward dividend yield, which is an improvement on the company’s own 5.36% average yield over the past five years.
Not only better than its five-year average, AT&T’s current 7.0% yield is over 700% higher than the 0.93% simple average yield of the overall Technology sector, as well as nearly triple the 2.62% average yield of the Domestic Telecom Services industry segment.
Tracing back through its past iterations and business entities, AT&T began paying dividends more than 135 years ago. Similarly, AT&T began its current streak of 35 consecutive annual dividend hikes in May 1984 when the company started paying dividends as the Southwestern Bell Corporation. However, just over the past two decades, AT&T more than doubled its total annual dividend payout amount, which corresponds to an average annual growth rate of 1.9%.
7 Top Dividend Stocks to Buy Now: #3
Kimco Realty Corporation (NYSE:KIM)
The Kimco Realty Corporation — a retail Real Estate Investment Trust (REIT) — pays a quarterly distribution of $0.16. This payout corresponds to a $0.64 annualized distribution and a 3.7% forward dividend yield.
Since resuming dividend hikes in 2011, Kimco has enhanced its annual dividend 75%, which is equivalent to an average annual growth rate of 6.4%. Due to the financial confusion surrounding COVID-19 in March 2020, however, Kimco Realty was force to suspend its dividend for a quarter. The company quickly reinstated its dividend in the third quarter of 2020 at a rate of $0.10, and promptly increased it to its current $0.16 amount. At the beginning of 2020, Kimco Realty paid $0.28 per quarter, and is likely to head back in that direction as the share price recovers.
7 Top Dividend Stocks to Buy Now: #2
Omega Healthcare Investors, Inc. (NYSE:OHI)
Omega Healthcare’s most recent distribution of $0.67 converts to a $2.68 annualized distribution amount. This total annual payout amount converts to a 7.5% forward dividend yield. This pushed the current yield above the company’s own 7% average yield over the past five years.
However, while trailing its own five-year yield average, Omega’s current yield is more than twice the 2.83% simple average yield of the overall Financial sector, as well as over 100% above the 3.37% average yield of the equities in the Healthcare Facilities industry segment. Furthermore, the REIT’s current yield also outperformed by 28% the 5.16% average yield of the segment’s only dividend-paying companies.
Over the past 17 years of consecutive annual dividend hikes, Omega Healthcare has enhanced its annual distribution 340%, which is equivalent to and average annual growth rate of nearly 10%. A significant dip in March 2020 limited the company’s one-year returns to a 10.5% loss, but the three-year returns are far more impressive, rewarding investors with 63.4% growth in capital appreciation alone.
7 Top Dividend Stocks to Buy Now: #1
Arbor Realty Trust, Inc. (NYSE:ABR)
The Real Estate Investment Trust (REIT) boosted its annual dividend distribution 7.9% from 2019. This has been implemented through a series of smaller dividend increases throughout 2020, hiking its dividend in both the third and fourth quarters. Arbor Realty currently pays a quarterly distribution of $0.32, making an annualized payout of $1.28. It yields an impressive 8.9%, and has grown its payout an average of 19% per year for the last three years.
The company has been incredibly successful in both the short and the long-term. It provided total returns of 17.1%, roughly half of which was from dividends and the other half from capital appreciation. The REIT’s long-term returns are stronger still, rewarding its investors with 126.5% growth in the last three years and 264.0% growth in the last five.
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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.