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, the 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 the best dividend stocks.
Using a 5% dividend yield as the main criterion for identifying the 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 a market capitalization of at least $5 billion and positive total returns over 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:
Best Dividend Stocks #6: Medical Properties Trust, Inc. (NYSE:MPW)
Market Capitalization: $11 billion
Dividend Yield: 5.1%
Dividend Payout Ratio: 123%
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 by 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 4.2% per year. The trust’s current 5.1% yield outperformed the 1.5% average yield of the S&P 500 and is still above the 4.7% 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 19% over the past 12 months, 84.4% over the past three years and more than 161% over the five-year period.
Best Dividend Stocks #5: Gaming and Leisure Properties, Inc (NYSE:GLPI)
Market Capitalization: $9.75 billion
Dividend Yield: 5.5%
Dividend Payout Ratio: 125%
First Dividend: 2014
Consecutive Annual Hikes: 0 years
Headquartered in Wyomissing, Pennsylvania, Gaming and Leisure Properties is a real estate investment trust (REIT) owning properties related to the gaming and entertainment industry. The company collects most of its revenue from rental income by casinos located in the American Midwest. Nearly all of its leases are long-term, with its primary payer — Penn National Gaming — maintaining the option to extend its leases further.
GLP currently pays a quarterly dividend of $0.60 per share, which corresponds to an expected annual distribution of $2.40 and a forward dividend yield of 5.5%. Lockdowns in early 2020 caused a significant pullback in share price — dropping 37.03% in March. But the company’s share price began rebounding in May with a 24.93% increase and it has been climbing since then. However, this financial struggle was not without consequence and forced GLP to make its first-ever dividend cut, dropping this year’s annual dividend distribution by 9.6% when compared to 2019.
Despite the dividend cut, Gaming and Leisure Properties still maintains an average dividend growth rate of 1.9% per year over the last five years. Its gross profit margin of 95% and net margin of 39.5% — impressive especially when compared to the 54.1% and 9.3% of its peers, respectively — bode well for investors, where www.StockRover.com has ranked the company the 5th most efficient REIT among 432 total companies. The financial struggle surrounding lockdowns could mark an excellent time for investors to purchase shares of this highly profitable trust.
Best Dividend Stocks #4: W.P. Carey, Inc. (NYSE:WPC)
Market Capitalization: $12.18 billion
Dividend Yield: 5.9%
Dividend Payout Ratio: 160.8%
First Dividend: 1998
Consecutive Annual Hikes: 6 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 grown its dividend steadily at a rate averaging 1.8% over the last 5 years. Its rising unit price combined with the 5.9% dividend yield to deliver a total return of 4% just over the past 12 months, beating its industry average and maintaining low volatility in the process. The three-year return was 21.9% and the five-year total return came in at 60.7%. Investors interested in collecting the next round of dividend payouts on January 15, must claim stock ownership before the upcoming December 30, 2020, ex-dividend date.
Best Dividend Stocks #3: PPL Corporation (NYSE:PPL)
Market Capitalization: $20.82 billion
Dividend Yield: 6.1%
Dividend Payout Ratio: 81.7%
First Dividend: 1946
Consecutive Annual Hikes: 18 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% and currently grows its dividend each year at a rate of 1.7%. Despite the financial trouble surrounding the COVID-19 pandemic, PPL has paid its dividend consistently, currently keeping its quarterly distribution level at $0.41 per share or $1.64 annually.
Best Dividend Stocks #2: Omega Healthcare Investors, Inc. (NYSE:OHI)
Market Capitalization: $8.36 billion
Dividend Yield: 7%
Dividend Payout Ratio: 377.5%
First Dividend: 1992
Consecutive Annual Hikes: 16 years
Headquartered in Hunt Valley, Maryland, and founded in 1992, Omega Healthcare Investors is a self-administered REIT that finances the sale, leaseback, construction and renovation of healthcare-related real estate properties located in the United States and the United Kingdom. After cutting its 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 over 340%, and over the last 10 years has grown its dividend at a rate of 6.9% per year.
The stock price of OHI suffered a temporary pullback in March 2020 — dropping 21% — but has since recovered and grown 0.8% in the last 12 months amid economic confusion. It’s less recent capital appreciation has been much more significant, having grown 74.3% in the last 3 years alone.
Best Dividend Stocks #1: Brookfield Property Partners LP (NASDAQ:BPY)
Market Capitalization: $18.1 billion
Dividend Yield: 8.5%
Dividend Payout Ratio: 25.37%
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 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, and over the past five years, the quarterly payout rose an average rate of 4.6% every year. Its current quarterly distribution of $0.33 corresponds to a $1.32 yearly payout and a dividend yield of 8.5%.
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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.