In this article, we analyze the list of the best dividend stocks with over 9% yield according to analysts.
The ongoing debate between dividend yields and dividend growth has left investors split on this strategy. Although high yields can be tempting, excessively high yields can be concerning from the start. Investors are often warned against yield traps, as extremely high yields can indicate potential financial issues within the company. Investors may require a higher return to offset the increased risk associated with the investment. According to analysts, the best dividend stocks aren’t necessarily those with the highest yields. They recommend that investors look beyond just the yield and focus on stocks with reliable dividends, purchasing these stocks when they are undervalued. Dan Lefkovitz, a strategist for Morningstar Indexes, made the following comment about extremely high yields in the firm’s recent report:
“It’s really critical to be selective when it comes to buying dividend-paying stocks and chasing yield. Looking for the most yield-rich areas of the market can often lead you into troubled areas and dividend traps—companies that have a nice-looking yield that is ultimately unsustainable. You have to screen for dividend durability and reliability going forward.”
Does this mean investors should steer clear of high yields? While the general consensus might lean towards this, the real answer depends on the company’s fundamentals. It’s important to note that high yields aren’t necessarily a negative indicator. In fact, dividend yield becomes quite significant when investing in dividend stocks. It is a key factor as it shows how much income an investor can expect to earn from dividends compared to the stock’s price. However, factors such as the company’s cash flow generation, payout ratio, and dividend growth also need to be taken into account to fully benefit from high yields. If these metrics are strong, then stocks with high yields can also be worth considering.
Read Also Best Dividend Growth Stocks to Buy and Hold Now and 10 Best Dividend Aristocrats with Over 3% Yield.
Some reports have highlighted the long-term benefits of high-yield stocks, noting that as dividend yields increase, returns tend to rise while risk decreases. Hartford Funds recently did detailed research on this by taking annualized standard deviation into account. Standard deviation measures the volatility of a portfolio’s total returns, with a higher standard deviation indicating greater historical volatility. According to the report, from December 1969 to March 2024, high-dividend portfolios delivered an annualized return of 12.3%, mid-dividend portfolios 10.5%, and low-dividend portfolios 9.7%. The annualized standard deviations for these portfolios were 14.1%, 16%, and 20.8%, respectively.
In addition, a company’s dividend payout ratio is a crucial indicator of its ability to adjust its dividend policy. Firms that either just cover their dividends or allocate most of their earnings to dividends might face risks from competitive pressures, as their cash flow may be inadequate for operational needs. Companies with high payout ratios could experience slower future growth which may impact both share price appreciation and dividend increases. Nuveen examined the performance of companies with high payout ratios from December 2003 to December 2023. According to the report, stocks with the highest payout ratios have not been the strongest performers over the long term historically. Among companies that have paid dividends in the past 20 years, those with medium and medium-high payout ratios have generally outperformed. We also think these attributes make a strong case for including companies with robust balance sheets and solid fundamentals for future dividend investment in a portfolio. With that, let’s look at some of the best dividend stocks with over 9% yield according to analysts.
Photo by Sharon McCutcheon on Unsplash
Our Methodology:
For this list, we screened for dividend stocks with yields higher than 9% as of August 12. Then, we narrowed down the choices by finding stocks with the highest upside potential according to analysts. Among those stocks, we chose companies that have relatively stable dividend histories, however, a lot of the companies on the list don’t have a consistent record of paying dividends due to their exceptionally high yields. They either stopped or reduced their dividend payments in 2020 due to the pandemic or because they were facing financial difficulties. The stocks are ranked in ascending order of their upside potential, as of August 12.
We’ve also mentioned the hedge fund sentiment for each stock using Insider Monkey’s Q1 2024 database. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10 Best Dividend Stocks with Over 9% Yield According to Analysts
10. NextEra Energy Partners, LP (NYSE:NEP)
Upside Potential as of August 12: 7.31%
Dividend Yield as of August 12: 14.68%
NextEra Energy Partners, LP (NYSE:NEP) is a Florida-based master limited partnership (MLP) that focuses on the acquisition of clean energy projects. The MLP benefits from its parent company, NextEra Energy, one of the largest utility providers in the US. It primarily profits from acquiring renewable energy assets through transactions from its parent company. These sales help diversify the company’s portfolio and open up growth opportunities, contributing to strong cash flow generation. This financial stability allows the company to make positive forecasts about its future distribution per unit. Additionally, with increasing investments in renewable energy, the stock has the potential to deliver sustainable returns for investors.
NextEra Energy Partners, LP (NYSE:NEP) was in a tough spot earlier about a possible dividend cut, but it surprised worried investors by not only avoiding a reduction but increasing its quarterly dividend by 1.4% on July 24 to $0.905 per share. It is one of the best dividend stocks on our list as the company has been growing its dividends every quarter since 2015. The company managed to raise its payouts because of its cash flow generation. In the second quarter of 2024, the company’s cash available for distribution (CAFD) came in at $220 million, up from $200 million in the same period last year. In the first six months of the year, the company’s operating cash flow jumped to $309 million, from $296 million in the prior-year period. As of August 12, the stock has a dividend yield of 14.68%.
At the end of Q1 2024, 18 hedge funds tracked by Insider Monkey held stakes in NextEra Energy Partners, LP (NYSE:NEP), which remained unchanged from the previous quarter. These stakes have a collective value of nearly $150 million.
9. B&G Foods, Inc. (NYSE:BGS)
Upside Potential as of August 12: 9.73%
Dividend Yield as of August 12: 9.48%
B&G Foods, Inc. (NYSE:BGS) is an American food company that specializes in food manufacturing and distribution. The company is encountering business challenges due to short-term declines in consumer packaged food demand. However, its second-quarter results largely met expectations, showing gradual improvement in base business net sales compared to the first quarter. Net sales in the high-margin Spices & Flavor Solutions segment rose by 4.9% from the previous year. In addition, the company refinanced a significant portion of its long-term debt recently, extending maturity dates several years into the future to lower balance sheet risk. The company is also reviewing potential divestitures to reduce debt, sharpen its focus on core businesses, and position B&G Foods for sustainable organic and acquisition-driven growth.
Historically, B&G Foods, Inc. (NYSE:BGS) operated exclusively within one industry segment. However, starting in the first quarter of 2024, the company began operating and reporting results across four separate business segments. This change reflects recent structural adjustments and the creation of four distinct units: Specialty, Meals, Frozen & Vegetables, and Spices & Flavor Solutions. In the latest quarter, three of these four segments reported losses due to fluctuations in the food sector. However, the Spices & Flavor Solutions segment saw nearly a 5% year-over-year increase in sales, driven by higher volumes across its entire portfolio.
On July 31, B&G Foods, Inc. (NYSE:BGS) declared a quarterly dividend of $0.19 per share, which was in line with its previous dividend. Though the company does not hold any dividend growth track record, it has been paying uninterrupted dividends to shareholders for the past 80 consecutive quarters, which places it on our list of the best dividend stocks. Street analysts project an upside potential of nearly 10% for the stock. It supports a dividend yield of 9.48%, as of August 12.
The number of hedge funds tracked by Insider Monkey owning stakes in B&G Foods, Inc. (NYSE:BGS) grew to 21 in Q1 2024, from 16 in the previous quarter. These stakes are valued at over $33.3 million in total. With over 1 million shares, Balyasny Asset Management was the company’s leading stakeholder in Q1.
8. Medical Properties Trust, Inc. (NYSE:MPW)
Upside Potential as of August 12: 11.36%
Dividend Yield as of August 12: 13.36%
An American real estate investment trust company, Medical Properties Trust, Inc. (NYSE:MPW) ranks eighth on our list of the best dividend stocks according to analysts. The stock is down by nearly 10% since the start of 2024 due to various issues surrounding its business. In the second quarter of 2024, the company is adjusting its capital allocation strategy, including decreasing MPT’s revolving credit commitment from $1.4 billion to $1.28 billion. In addition, the company has agreed to cap the cash portion of its total quarterly dividends at $0.08 per share. This is not the company’s first dividend reduction; it also cut its payout last year to enhance its balance sheet.
Medical Properties Trust, Inc. (NYSE:MPW)’s troubles began in early January when it revealed that its primary tenant, Steward Health Care, could not resume full rental payments, even after selling a non-core business in the fourth quarter. Steward remained financially distressed, prompting the company to postpone additional rent payments and work on a long-term solution. A few months later, Steward filed for bankruptcy protection, and the company agreed to provide $75 million in debtor-in-possession financing to support Steward’s ongoing operations.
That said, Medical Properties Trust, Inc. (NYSE:MPW) is not completely in a critical situation, and analysts continue to see potential in it. In the most recent quarter, the company has surpassed expectations in enhancing its liquidity this year. It has raised over $2.5 billion through the sale of several hospitals, establishing a new joint venture, and securing financing for multiple UK hospitals. These actions enabled it to repay $1.5 billion in debt, including all its obligations maturing in 2024. The stock has an upside potential of over 11% according to Street analysts. As of August 12, the stock supports a dividend yield of 13.36%.
Medical Properties Trust, Inc. (NYSE:MPW) was included in 18 hedge fund portfolios at the end of Q1 2024, the same as in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of nearly $81 million.
7. Dynex Capital, Inc. (NYSE:DX)
Upside Potential as of August 12: 14.14%
Dividend Yield as of August 12: 12.83%
Dynex Capital, Inc. (NYSE:DX) is a Virginia-based real estate investment trust company that invests in mortgage-backed securities and other real estate assets. The company continued to implement its strategic plan aimed at providing steady dividend income through disciplined capital management. The company successfully raised capital at favorable rates and is positioned to capitalize on the historically wide spreads in the mortgage market. Emphasizing the importance of human capital, it made several crucial decisions to ensure future success.
Dynex Capital, Inc. (NYSE:DX) maintains a robust cash position for a dividend payer, as evidenced by its monthly dividend payments to shareholders, which have been consistently made since 2008. At the end of June, the company had over $286 million available in cash and cash equivalents, which grew from $120 million at the end of December 2023. The company’s trailing twelve-month operating cash flow came in at $28.4 million. It currently offers a monthly dividend of $0.13 per share and has a dividend yield of 12.83%, as of August 12.
Dynex Capital, Inc. (NYSE:DX) was a popular stock among elite funds in the first quarter of 2024 as hedge fund positions in the company grew to 13, from 6 in the preceding quarter, according to Insider Monkey’s database. These stakes are valued at over $87.3 million collectively. Among these hedge funds, Balyasny Asset Management was the company’s leading stakeholder in Q1.
6. BrightSpire Capital, Inc. (NYSE:BRSP)
Upside Potential as of August 12: 25.8%
Dividend Yield as of August 12: 12.08%
BrightSpire Capital, Inc. (NYSE:BRSP) is a California-based internally managed real estate credit company that manages a diversified portfolio of commercial real estate debt and net lease real estate investments. The company is facing challenges due to declining real estate values as it continues to acquire more properties, many of which have defaulted on loans and have not yet been sold at acceptable prices. The decrease in book value in the second quarter was primarily due to legacy office equity investments. Although the watchlist has remained stable from quarter to quarter and there is sufficient visibility to begin new lending activities, the loss of cash earnings from these legacy investments impacts the short term more than the future loan origination timeline. Consequently, to focus on long-term planning, the company is reducing its dividend during this reinvestment period.
Even with a dividend cut, analysts see potential in BrightSpire Capital, Inc. (NYSE:BRSP). Additionally, the company’s consistent dividend payments since 2018 contribute to its appeal. Although it has announced a reduction in dividends, the cut will not take effect until the next quarter, and it continued with its previous payout of $0.20 per share for this quarter. Street analysts maintained a consensus $6.67 price target on the stock, which reflects an upside potential of nearly 26%. With a dividend yield of 12.08% as of August 13, BRSP is one of the best dividend stocks on our list.
According to Insider Monkey’s database of Q1 2024, 11 hedge funds held stakes in BrightSpire Capital, Inc. (NYSE:BRSP), down slightly from 13 in the previous quarter. The consolidated value of these stakes is more than $93.6 million.
5. Vodafone Group Public Limited Company (NASDAQ:VOD)
Upside Potential as of August 12: 26.9%
Dividend Yield as of August 12: 10.24%
Vodafone Group Public Limited Company (NASDAQ:VOD) is a British multinational telecommunications company. It operates in expanding markets where it has solid positions and significant local scale. The company maintains a sustainable and predictable financial profile and benefits from strong structural drivers in Vodafone Business, Africa, and its investment portfolio. The stock has declined by over 71% on the Nasdaq exchange over the past decade as the board worked to stabilize the global giant. However, it seems the worst may be behind, with the stock rising nearly 7% since the beginning of 2024 and achieving a modest 12-month return of 2.22%.
Despite surging this year, Vodafone Group Public Limited Company (NASDAQ:VOD)’s recent earnings fell short of expectations. First-quarter revenues increased by 2.8% year-over-year to €9.04 billion ($9.68 billion), but progress has been uneven. While growth in Africa and Turkey was positive, it was offset by a slowdown in Europe and declining sales in the company’s crucial German market. This pattern has persisted for years and is commonly seen in large companies with diverse interests. Net margins have also been inconsistent. That said, it’s not all bad news. Shares are trading at a forward P/E multiple of 14.62x, making it relatively affordable. In addition, the company recently announced a share buyback program worth up to €500 million ($536 million).
Vodafone Group Public Limited Company (NASDAQ:VOD) has persisted in its investment in innovative practices. Recently, in collaboration with Qualcomm Technologies, Inc. and Xiaomi, it successfully tested a new 5G technology in Germany and Spain. This technology achieved download speeds nearing 1.8 gigabits per second (Gbps) using a new smartphone. The enhancement in speed and data throughput is expected to boost network capacity, freeing up additional bandwidth at mobile sites and improving the overall customer experience. The company currently offers a semi-annual dividend of $0.468 per share for a dividend yield of 10.24%, as of August 12.
Insider Monkey’s database of Q1 2024 indicated that 22 hedge funds held stakes in Vodafone Group Public Limited Company (NASDAQ:VOD), compared with 24 in the previous quarter. These stakes are worth over $172.6 million in total.
4. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Upside Potential as of August 12: 34.02%
Dividend Yield as of August 12: 9.80%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is an American multinational retail holding company that owns and operates retail pharmacy chains and other pharmaceutical manufacturing and distribution companies. The company faced a major setback at the beginning of 2024 when it had to reduce its dividend, ending a 47-year streak of consistent growth. This decision was made to conserve cash for supporting growth initiatives and strengthening its balance sheet. As a result, the stock dropped to new lows of around $10.68 per share and has declined by more than 60% year-to-date.
Despite recent setbacks, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is working to recover its losses. The new CEO has announced plans to close several underperforming stores and reduce its focus on primary-care business ventures. In addition to these closures, the company aims to implement a US Retail Pharmacy action plan to improve customer and patient experiences across various channels. It will also streamline its US Healthcare portfolio and align its US pharmacy and healthcare operations to enhance market capabilities.
Ariel Investments also highlighted this in its Q1 2024 investor letter. Here is what the firm has to say about WBA:
“Alternatively, several positions weighed on performance. Shares of retail drugstore operator, Walgreens Boots Alliance, Inc. (NASDAQ:WBA), declined over the period as challenging consumer and macroeconomic conditions, ongoing operational issues and a significant cut in the dividend weighed on shares. To address these performance lows, WBA’s new CEO is rebuilding the company’s management team with leaders who have significant experience in healthcare services. Meanwhile, WBA continues to execute on its cost savings initiatives to optimize profitability and is using excess capital to prioritize the sustainability of its operations and balance sheet. Over the medium-term, we expect a re-rating in shares as the new executive team earns credibility, margins and free cash flow show signs of improvement and the company deleverages. WBA shares are currently trading at a significant discount to our estimate of private market value.”
The key question is whether these strategies are benefiting Walgreens Boots Alliance, Inc. (NASDAQ:WBA). The fiscal Q3 2024 earnings report showed that the company is dealing with a tough operating environment, with ongoing pressures on U.S. consumers and recent market dynamics negatively impacting pharmacy margins. However, the company reported revenues of $35.4 billion, a 2.6% increase from the previous year and better than expected. Its cash position was also strong, with $605 million in operating cash flow and $334 million in free cash flow, reflecting an increase of $778 million from the previous year. Despite these positive aspects, the negatives outweigh the positives, leading the company to lower its guidance for the second time this year, which has raised concerns among investors.
That said, there are hopeful signs with the new CEO and the implemented measures, even though they may take time to show results. Moreover, the company’s cash flow indicates a promising outlook for dividends, which could be further supported by cost-cutting efforts. Walgreens Boots Alliance, Inc. (NASDAQ:WBA) currently offers a quarterly dividend of $0.25 per share and has a dividend yield of 9.80%, as of August 12.
As of the close of Q1 2024, 41 hedge funds in Insider Monkey’s database held stakes in Walgreens Boots Alliance, Inc. (NASDAQ:WBA), growing from 31 in the previous quarter. The total value of these stakes is over $715 million.
3. Xerox Holdings Corporation (NASDAQ:XRX)
Upside Potential as of August 12: 44.18%
Dividend Yield as of August 12: 10.30%
Xerox Holdings Corporation (NASDAQ:XRX) is a Connecticut-based company that develops and manufactures print and digital document products and offers related services. The company’s first and second quarters of 2024 didn’t impress investors much, causing it to decline by nearly 44% since the start of 2024. One major factor contributing to the earnings decline is the company’s ongoing structural changes. Its core print business experienced a 9.9% year-over-year drop in the second quarter of 2024, generating over $1.45 billion. The company’s revenue for the quarter came in at $1.58 billion, which fell by 10% from the same period last year. The revised guidance for FY24 also didn’t reassure investors much. The management has revised its 2024 revenue guidance, now projecting a decline of 5% to 6% in constant currency, compared to the previous forecast of a 3% to 5% decrease.
Although Xerox Holdings Corporation (NASDAQ:XRX) is not currently in an ideal situation, its cost-cutting efforts, steady dividend payments, and positive cash flow guidance offer some reassurance in these tough times. For FY24, the company anticipates generating around $550 million in free cash flow and at least $600 million in operating cash flow, which is favorable news for dividend investors. In the most recent quarter, its free cash flow jumped to $115 million, from $88 million in the prior year period. Despite not increasing its dividends since 2017, the company has consistently paid them and managed to maintain these payouts even during the pandemic, which is notable given its financial challenges. The company currently offers a quarterly dividend of $0.25 per share. The stock’s dividend on August 12 came in at 10.3%. It is among the best dividend stocks on our list with an upside potential of over 44%.
At the end of the March quarter of 2024, 31 hedge funds owned stakes in Xerox Holdings Corporation (NASDAQ:XRX), up from 25 in the preceding quarter, according to Insider Monkey’s database. These stakes are valued at over $88.3 million in total.
2. Nordic American Tankers Limited (NYSE:NAT)
Upside Potential as of August 12: 50.8%
Dividend Yield as of August 12: 12.01%
With an upside potential of over 50%, Nordic American Tankers Limited (NYSE:NAT) ranks second on our list of the best dividend stocks according to analysts. The Bermuda-based international tanker company has declined by nearly 18% since the start of 2024 due to growing geopolitical tensions across the Red Sea. This shows that despite having a strong business model, the company is not immune to ongoing global challenges.
Let’s concentrate on the positives for now. The current supply and demand dynamics for Nordic American Tankers Limited’s (NYSE:NAT) fleet are favorable, supporting an optimistic outlook. Furthermore, the company boasts one of the lowest debt levels among publicly traded tanker firms. As of March 31, 2024, the company’s net debt—determined by subtracting current assets from total liabilities—was $228 million. With a fleet of 20 vessels, this amounts to $11.4 million of debt per ship. The company also has a low debt-to-equity ratio of 0.5.
Nordic American Tankers Limited (NYSE:NAT) places significant emphasis on the strategic timing and financing of expansions to ensure financial stability and maintain its commitment to dividend payments. The company has consistently paid dividends for 107 consecutive quarters, making it one of the best dividend stocks on our list. It currently pays a quarterly dividend of $0.12 per share for a dividend yield of 12.01%, as of August 12. The company anticipates increasing its payouts when market conditions improve. In addition, its cash position is robust, with over $37.5 million in operating cash flow generated in the first quarter of 2024.
The number of hedge funds tracked by Insider Monkey owning stakes in Nordic American Tankers Limited (NYSE:NAT) grew to 18 in Q1 2024, from 16 in the previous quarter. The consolidated value of these stakes is more than $20.2 million. With over 8.5 million shares, Two Sigma Advisors was the company’s leading stakeholder in Q1.
1. FAT Brands Inc. (NASDAQ:FAT)
Upside Potential as of August 12: 268.6%
Dividend Yield as of August 12: 10.32%
FAT Brands Inc. (NASDAQ:FAT) is an American multi-brand restaurant company, based in California. Over the past three years, FAT Brands (FAT) has expanded its portfolio to include 18 renowned restaurant brands, with around 2,300 units spread across 40 countries and 49 US states. The company is experiencing strong business momentum this year as it has opened 45 new restaurants so far in 2024, 24 of which were launched in the second quarter, and it plans to open over 120 new locations in 2024. The company is seeing significant activity from new franchisees, ongoing interest from existing partners to develop additional brands and increased enthusiasm for exploring co-branding opportunities that capitalize on synergies within its brand portfolio.
In the second quarter of 2024, FAT Brands Inc. (NASDAQ:FAT) generated over $152 million in revenues, which showed a 42.4% growth from the same period last year. The company is also optimistic about its business prospects for the remainder of the year. Its long-term strategy focuses on generating value through the organic growth of its existing brands, acquiring new brands that strategically enhance its portfolio and realizing value from strategic divestments to manage outstanding debt. Ultimately, the goal is to increase long-term value for stakeholders.
On July 11, FAT Brands Inc. (NASDAQ:FAT) declared a quarterly dividend of $0.14 per share, which was in line with its previous dividend. The stock has a dividend yield of 10.32%, as of August 12. Street analysts maintained a Consensus Buy rating on the stock with a $20 price target, which reflects a significant upside potential of 269%.
As per Insider Monkey’s database of Q1 2024, 4 hedge funds held stakes in FAT Brands Inc. (NASDAQ:FAT), the same as in the preceding quarter. These stakes are worth nearly $7 million in total. Among these hedge funds, ADW Capital was the company’s largest stakeholder in Q1.
While we acknowledge the potential of FAT as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than FAT but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
