The 6 Best Dividend Stocks That Yield More Than 5%
By: Ned Piplovic,
Dividend yield — a ratio of the total annual dividend distribution amount per share and the equity’s current share price — is the most common metric that investors use to begin searching for the best dividend stocks to include in their investment portfolio.
While simple and easy to use, the dividend yield needs supporting metrics to deliver a more complete picture of an equity’s potential for growth and its merit to be included on any list of best dividend stocks. The definition of best dividend stocks also will vary from investor to investor and their individual investment goals or portfolio strategy. For some investors, best dividend stocks will provide high dividend income. Other investors will trade a portion of the high dividend income for a balanced total return approach in their search for best dividend stocks.
Using a 5% dividend yield as the main criterion for identifying best dividend stocks, the Dividend Screener available at DividendInvestor.com identified more than 1,100 individual equities that meet the requirement. Introducing a few additional constraints, narrowing the list to a manageable size and few additional tweaks generated the list of best dividend stocks below.
In addition to a dividend yield of at least 5%, all of the six best dividend stocks listed below have market capitalization of at least $5 billion and at least five consecutive years of annual dividend hikes, as well as positive total returns over the past 12 months and the last five years.
Sorted in ascending order by dividend yield and based on the above criteria, the six best dividend stocks yielding 5% or more are:
PPL Corporation (NYSE:PPL)
Market Capitalization: $23.12 billion
Dividend Yield: 5.14%
Dividend Payout Ratio: 64%
First Dividend: 1946
Consecutive Annual Hikes: 19 years
Headquartered in Allentown, Pennsylvania, and founded in 1920, the PPL Corporation delivers electricity and natural gas in the United States and the United Kingdom. Over the past two decades, the company has enhanced its total annual dividend payout amount 230%. That advancement corresponds to an average growth rate of 6.2% per year. The average dividend growth rate over the past three years is nearly 3%. A share price decline of nearly 38% in the second half of 2017 delivered a total loss over the three years. However, the share price performed substantially better more recently and combined with strong dividend distributions to deliver a 23.1% total return over the past 12 months. The PPL Corporation’s most recent ex-dividend date occurred in early March, with the April 1, pay date approaching quickly.
W.P. Carey, Inc. (NYSE:WPC)
Market Capitalization: $12.72 billion
Dividend Yield: 5.39%
Dividend Payout Ratio: 117%
First Dividend: 1998
Consecutive Annual Hikes: 18 years
Based in New York City and founded in 1973, W. P. Carey, Inc. is an equity real estate investment trust (REIT) that invests primarily in commercial properties. The trust has boosted its dividend distribution amount for the past 72 consecutive quarters. Over that period, the trust has enhanced its total dividend payout amount 144%, which translates to an average growth rate of 1.2% per quarter, or 4.8% per year, over the past 18 years. The trust’s rising unit price combined with the 5.4% dividend yield to deliver a total return of 30% just over the past 12 months. Furthermore, the three-year return was 46% and the five-year total return came in at 53%. Investors interested in collecting the next round of dividend payouts on April 15, must claim stock ownership before the upcoming March 28, 2019, ex-dividend date.
Medical Properties Trust, Inc. (NYSE:MPW)
Market Capitalization: $6.9 billion
Dividend Yield: 5.49%
Dividend Payout Ratio: 36%
First Dividend: 2005
Consecutive Annual Hikes: 6 years
Based in Birmingham, Alabama, and founded in 2003, the Medical Properties Trust, Inc. is a REIT that focuses exclusively on providing capital to acute care facilities of all kinds through long-term leases. Just a few years after formation and a streak of annual dividend hikes, the trust had to cut its dividend payout nearly 26% in the aftermath of the financial crisis in 2008. However, after five years of flat dividend payouts, the REIT boosted its annual payout over the past six consecutive years at an average growth rate of 3.8% per year. The trust’s current yield outperformed the 3.17% average yield of the overall Financials sector by more than 70% and is 27% above the 4.32% simple average yield of its peers in the Healthcare Facilities REITs industry segment. Trust’s strong share price growth combined with the robust dividend to deliver a total return of nearly 50% over the past 12 months, 68% over the past three years and more than 80% over the five-year period.
Kimco Realty Corporation (NYSE:KIM)
Market Capitalization: $7.42 billion
Dividend Yield: 6.36%
Dividend Payout Ratio: 110%
First Dividend: 2013
Consecutive Annual Hikes: 9 years
Headquartered in New Hyde Park, New York, and publicly traded on the New York Stock Exchange since 1991, the Kimco Realty Corporation REIT is one of North America’s largest publicly traded owners and operators of open-air shopping centers. The trust more than doubled its quarterly dividend amount over the decade leading to the 2008 financial crisis. After cutting its dividend more than 85% in the second period of 2009, the company resumed dividend hikes at the beginning of 2010. Since resuming annual dividend hikes, the trust has enhanced its dividend payout amount 75% over the past nine years, which corresponds to an average annual growth rate of 6.4%. The trust’s unit price lost nearly 60% between mid-2017 and April 2018, which delivered total losses of more than 25% over the past three years and limited the five year total returns to 7%. However, the unit price decline offers an opportunity to take advantage of discounted pricing as the REIT already delivered a total return of nearly 35% over the past 12 months. The trust’s next ex-dividend date is set for April 1, 2019.
Brookfield Property Partners LP (NASDAQ:BPY)
Market Capitalization: $5.18 billion
Dividend Yield: 6.63%
Dividend Payout Ratio: 64%
First Dividend: 2013
Consecutive Annual Hikes: 6 years
Based in Hamilton, Bermuda, and formed as a spinoff from Brookfield Asset Management in 2013, Brookfield Property Partners is a $70 billion REIT that owns and manages a diversified portfolio of multifamily and commercial real estate properties. The trust has increased its dividend distribution amount every year since its formation. Over the past six years the quarterly payout rose 32% for an average growth rate of 4.7% per year. The most recent hike from $0.315 to $0.33 in February 2019 was a 4.8% boost and the average growth over the pat three years is 5.85%. The unit price experienced a 25% pullback in the last quarter of 2018 but recovered for a small gain for the trailing 12 months. That pullback delivered a subpar total return of less than 3% over the past three years and limited the one-year total return to 7%. However, a continuation of the unit price’s current uptrend could bring total returns closer to the 35% gain over the past five years.
Omega Healthcare Investors, Inc. (NYSE:OHI)
Market Capitalization: $7.32 billion
Dividend Yield: 7.37%
Dividend Payout Ratio: 189%
First Dividend: 1992
Consecutive Annual Hikes: 15 years
Headquartered in Hunt Valley, Maryland, and founded in 1992, Omega Healthcare Investors is a self-administered REIT that finances sale, leaseback, construction and renovation of healthcare-related real estate properties located in the United States and the United Kingdom. After cutting it annual dividend nearly 65% in 2000, the trust resumed annual dividend hikes in 2003. Since 2003, the REIT has enhanced its total annual distribution amount 340%, which corresponds to an average growth rate of 9.7% per year. The unit price declined more than 40% between its all-time high in early 2015 and April 2018. However, the price has already recovered two-thirds of those losses and technical indicators point to a continued growth potential to complement the rising dividend distributions. The unit price decline limited the three-year total returns to just slightly over 25% and the total return over the past five years was 47%. However, the robust unit price recovery and the 7%-plus income distribution combined to deliver a total return of more than 40% over the past 12 months.
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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.