Highest Yields Up To 19.4%
What are high dividend stocks?
They are stocks that pay out a dividend significantly in excess of market average dividends. The S&P 500 currently has a dividend yield of just 1.4%.
The high dividend stocks in this article all have dividend yields of 5% or more.
High-yield stocks can be very helpful to shore up income after retirement. A $120,000 investment in stocks with an average dividend yield of 5% creates an average of $500 a month in dividends.
We have created a spreadsheet of stocks (and closely related REITs and MLPs, etc.) with dividend yields of 5% or more…
You can download your free full list of all securities with 5%+ yields (along with important financial metrics such as dividend yield and payout ratio) by clicking on the link below:
Not all high-yield stocks make equally good investments…
This article examines the 7 highest yielding securities in the Sure Analysis Research Database with Dividend Risk Scores of C or better, with a minimum yield of 5%.
Notes: We update this article near the beginning of each month so be sure to bookmark this page for next month. The spreadsheet uses the Wilshire 5000 as the universe of securities from which to select, plus a few additional securities we screen for 5%+ dividend yields.
With yields of 5% and greater, these securities all offer high dividends (or distributions). And with Dividend Risk Scores of C or better, they don’t suffer from the usual excessive riskiness of truly high-yielding securities.
In other words, these are relatively safe, high dividend stocks for you to consider adding to your retirement or pre-retirement income portfolio.
All high dividend stocks in this list have dividend yields above 5%, making them very appealing in an environment of low interest rates.
Separately, a maximum of three stocks were allowed for any single market sector to ensure diversification. Finally, all the stocks are based in the United States.
The 7 high dividend stocks with Dividend Risk scores of C or better are listed in order by dividend yield, from lowest to highest.
High Dividend Stock #7: Hanesbrands Inc. (HBI)
- Dividend Yield: 5.9%
- Dividend Risk Score: B
Hanesbrands is a leading marketer of everyday basic innerwear and activewear apparel. It sells its products under well-known brands, including Hanes and Champion, in America, Europe, Australia and the Asia-Pacific region.
Hanesbrands spent $2.9 billion on acquisitions in the last seven years but has dramatically underperformed the S&P 500 in the last five years, losing -44% while the index rallied 66%.
The company is trying to assimilate its past acquisitions while it is facing intense competition and a secular shift towards online sales. The high debt load from past acquisitions burdens the company via high interest expense.
In early May, Hanesbrands reported (5/5/21) financial results for the first quarter of fiscal 2022. Revenue grew 5% over the prior year’s quarter, with 6% growth in the global Champion brand and 1.5% growth in the U.S. innerwear business.
However, the company was hurt by supply chain disruptions and high cost inflation. As a result, its adjusted earningsper-share dipped 13%, from $0.39 to $0.34. Hanesbrands expects 4% revenue growth and adjusted earnings-per-share of $1.64-$1.81.
High Dividend Stock #6: Big Lots (BIG)
- Dividend Yield: 6.0%
- Dividend Risk Score: C
Big Lots is a home discount retailer with a focus on closeouts and low prices. With $6 billion in sales and a market cap of around $930 million, this S&P 600 component can trace its history to 1967.
The company reported Q4 and full year 2021 results on March 3rd, 2022 and announced a quarterly dividend of $0.30 per share. With 2021 earnings of $5.33 per share, and a forward annualized dividend of $1.20, the dividend is well covered by their existing business, despite the decrease in earnings since 2020 where they reported $7.35 per share in earnings.
Despite a negative impact of around $0.30 per share as a result of adverse shrink, and the issues with the supply chain that characterized 2021, the management team is confident that 2022 will see these issues abate. In 2022 the company plans on opening 50 net new stores, more than they have in the past 5 years combined, which should provide an opportunity for additional revenue growth.
Big Lots stock has a P/E below 5, making it a deep-value stock. Shares also have a dividend yield of 4.1%, while we expect no EPS growth.
High Dividend Stock #5: City Office REIT (CIO)
- Dividend Yield: 6.2%
- Dividend Risk Score: C
City Office REIT is an internally-managed real estate investment trust focused on owning, operating, and acquiring highquality office properties located in “18-hour cities” in the Southern and Western United States. Its target markets possess a number of attractive demographic and employment characteristics, which the trust believes will lead to capital appreciation and growth in rental income at its properties.
At its most recent filing, City Office REIT owned 26 properties comprising of 61 office buildings with a total of approximately 6.2 million square feet of net rentable area that were approximately 85.7% leased. The trust generates around $165 million in annual rental revenues and is headquartered in Dallas, Texas.
On May 5th, 2022, City Office REIT reported its Q1 results for the period ending March 31st, 2021. Rental and other revenues were $44.9 million, up 13.5% year-over-year. Same-Store Cash NOI (Net Operating Income) declined 4.7% as compared to Q1-2021. However, amid lower property operating expenses and lower general & administrative expenses, FFO grew by 21.5% to $17.6 million.
On a per-share basis, FFO jumped from $0.33 to $0.40. Occupancy stood at 85.7% at the end of the quarter, up 80 bps sequentially but down 480 bps compared to Q1-2021. Occupancy was impacted by the acquisition of two newly constructed properties that are in a lease-up phase and/or have signed leases that have not yet taken occupancy. Excluding these two properties, portfolio occupancy would be 87.8%. During the quarter, City Office closed approximately 221,000 square feet of new and renewal leases.
Following several acquisitions and dispositions last year, the company continues to expect almost no investment activity this year. Management also continues to expect FY2022 FFO/share between $1.56 and $1.60, the midpoint of which we have utilized in our estimates. It represents a 16% increase compared to last year.
High Dividend Stock #4: Altria Group (MO)
- Dividend Yield: 8.7%
- Dividend Risk Score: B
Altria Group was founded by Philip Morris in 1847. Today, it is a consumer staples giant. It sells the Marlboro cigarette brand in the U.S. and a number of other non-smokeable brands, including Skoal and Copenhagen.
The flagship brand continues to be Marlboro, which commands over 40% retail market share in the U.S.
Altria also has a 10% ownership stake in global beer giant Anheuser-Busch InBev, in addition to large stakes in Juul, a vaping products manufacturer and distributor, as well as cannabis company Cronos Group (CRON).
On 04/28/22, Altria reported first quarter FY22 results. Adjusted diluted earnings-per-share increased 4.7% to $1.12 year-over-year. Net revenue stood at $5.9 billion, down by 2.4% mainly caused by the sale of the wine business in October 2021. Reported diluted earnings per share stood at $1.08, up by 40.3% year-over-year. Revenue decreased 1.2% to $4.82 billion year-over-year.
Meanwhile, Altria reported approximately $1.2 billion remaining under the company’s existing $3.5 billion share repurchase program which is expected to complete by December 31, 2022. The company also reaffirmed full-year 2022 adjusted diluted earnings-per-share guidance of $4.79-$4.93.
Altria has increased its dividend for over 50 years, placing it on the exclusive Dividend Kings list. It is also a Dividend Champion.
High Dividend Stock #3: Magellan Midstream Partners LP (MMP)
- Dividend Yield: 9.0%
- Dividend Risk Score: C
Magellan Midstream Partners is a Master Limited Partnership, or MLP. Magellan has the longest pipeline system of refined products, which is linked to nearly half of the total U.S. refining capacity.
This segment generates ~65% of its total operating income while the transportation and storage of crude oil generates ~35% of its operating income. MMP has a fee-based model; only ~10% of its operating income depends on commodity prices.
MMP has a long history of steady distributions:
In early May, MMP reported (5/5/22) financial results for the first quarter of fiscal 2022. Distributable cash flow fell -4% over the prior year’s quarter, mostly due to losses from price hedges and some contract expirations in crude oil. Nevertheless, earnings-per-share of $1.10 exceeded analysts’ consensus by $0.04. MMP has proved resilient to the pandemic and currently has a distribution coverage ratio of 1.24.
Management expects total shipments of refined products to grow 4% this year and raised its guidance for annual distributable cash flow from $1.075 billion to $1.09 billion.
High Dividend Stock #2: Sunoco LP (SUN)
- Dividend Yield: 9.1%
- Dividend Risk Score: B
Sunoco is a Master Limited Partnership that distributes fuel products through its wholesale and retail business units. The wholesale unit purchases fuel products from refiners and sells those products to both its own and independently-owned dealers.
The retail unit operates stores where fuel products as well as other products such as convenience products and food are sold to customers.
Sunoco reported its first quarter earnings results on May 4. Revenues totaled $5.4 billion, which was 56% growth from the previous year’s quarter. Fuel prices rose heavily which boosted revenues. But fuel prices are mostly a flow-through item for Sunoco as its costs increase when fuel prices rise. Therefore, adjusted EBITDA was up 22% year over year, rising to $216 million during the quarter.
Distributable cash flows totaled $142 million during the quarter, which was 31% higher compared to the previous year’s quarter, and which equated to DCF of $1.67 per share, which covered the dividend easily. For 2022, Sunoco is forecasting EBITDA of around $795 million to $835 million, representing growth of around 10% versus 2021.
High Dividend Stock #1: MPLX LP (MPLX)
- Dividend Yield: 10.0%
- Dividend Risk Score: C
MPLX LP is a Master Limited Partnership that was formed by the Marathon Petroleum Corporation (MPC) in 2012.
The business operates in two segments: Logistics and Storage – which relates to crude oil and refined petroleum products – and Gathering and Processing – which relates to natural gas and natural gas liquids (NGLs). In 2019, MPLX acquired Andeavor Logistics LP.
You can see highlights of the company’s first-quarter report in the image below:
In early May, MPLX reported (5/3/22) financial results for the first quarter of fiscal 2022. Net income and distributable cash flow (DCF) per share grew 12% and 8%, respectively, over the prior year’s quarter. The strong performance resulted from 4% volume growth in Logistics & Storage, higher NGL prices and higher volumes in Gathering & Processing. MPLX maintained a healthy consolidated debt to adjusted EBITDA ratio of 3.7x and a solid distribution coverage ratio of 1.65.
MPLX maintained a healthy consolidated debt to adjusted EBITDA ratio of 3.7x and a solid distribution coverage ratio of 1.65.
Final Thoughts
The 7 high dividend stocks analyzed above all have dividend yields of 5% or higher. And importantly, these securities generally have better risk profiles than the average high-yield security.
That said, a dividend is never guaranteed, and high dividend stocks are potentially at risk of dividend reductions or suspensions if a recession occurs in the near future.
Investors should continue to monitor each stock to make sure their fundamentals and growth remain on track, particularly among stocks with extremely high dividend yields.
So where should you invest right now?
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