Our article explores the top 10 dividend stocks that generate more return than the US average rental yield.
Investors have primarily favored dividend investments as a source of passive income. However, the recent rise in interest rates, geopolitical uncertainties after the change in the U.S. presidency, and fears of a potential economic slowdown have set the stage for a debate between stocks and rental income. Though real estate has traditionally been a reliable income source, Global Property Guide stated that the national average rental yield in the U.S. staggers around 6.1%. Rising property maintenance costs and mortgage rates owing to economic shifts affect the stability of the rental income, leaving investors unable to make their portfolio decisions. On the other hand, yields from several dividend stocks exceed this threshold, despite the unfavorable U.S. stock market.
READ ALSO: 7 Most Undervalued Dividend Stocks to Buy According to Hedge Funds
The U.S. stock market has experienced heightened volatility in recent months, influenced by Federal Reserve policy shifts. Meanwhile, corporate layoffs have increased, contributing to a slowdown in consumer spending. The rise in borrowing costs has added pressure to equity markets. Trade conflicts between the U.S. and China, as well as with neighboring countries like Canada and Mexico, have further contributed to uncertainty for international businesses. Even amid these headwinds, some dividend-paying stocks have remained resilient, acting as a source of stable income for investors, in a turbulent market.
Meanwhile, the real estate market is facing its challenges. Rising mortgage rates and the declining demand for properties in multiple U.S. regions have slightly reduced the attractiveness of rental investments. Landlords in various areas are experiencing a squeeze in their profit margins because of maintenance expenses, insurance costs, and property taxes. As a result, while real estate remains an option, dividend stocks provide an alternative for investors to generate passive income without burdening themselves with property management complications.
Liquidity and diversification enhance the appeal of dividend stocks. Unlike real estate investments, dividend stocks typically require less capital and can be sold more quickly. In this regard, dividend stocks offer flexibility for investors to adjust their portfolios in an evolving market condition. At times, such as now, when economic uncertainty along with Federal Reserve policies affect both equities and real estate markets, dividend-paying stocks interest investors seeking a balance between income generation and stability. Many companies continue to prioritize shareholder returns and offer dividend yield exceeding both inflation and the national average rental yield, providing an opportunity for investors to capitalize on consistent income streams without being tied to the challenges of property ownership.
Our article presents 10 dividend stocks that offer yields higher than the U.S. average rental yield, allowing investors to benefit from regular payouts and potential price appreciation – the advantages that rental properties do not always guarantee. Whether you are a retiree looking for steady income, an investor seeking to diversify away from real estate, or simply someone looking to sail through the volatile market of today with a reliable investment approach, these stocks could help in adjusting your portfolio.
With that said, let’s countdown the top 10 dividend stocks offering yields greater than the average U.S. rental return. Stick with us as we unveil the top 5. You might be amazed.
Our Methodology
Our list has been compiled based on a few criteria. Primarily, we considered only those stocks that offer a dividend yield of more than 6.1%. This represented the U.S. average rental yield. Stocks with a Buy recommendation from analysts were included in our list to ensure the companies featured have solid fundamentals. The final list is ranked according to dividend yield, as of March 22. We additionally considered the number of hedge funds tracked by Insider Monkey as of Q4 2024 backing the stocks, to estimate the institutional interests for the stocks as well.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Sunoco LP (NYSE:SUN)
Dividend Yield: 6.13%
No. of Hedge Funds: 3
Sunoco LP (NYSE:SUN) is a leading wholesale distributor of motor fuels, supplying gas stations, convenience stores, and commercial customers. The company is headquartered in Texas and lays its focus solely on fuel distribution. Operating an extensive logistics network, the company has created a large customer base for its business. Sunoco LP increased its market share through a combination of strategic partnerships and a strong retail presence in the U.S. market.
Sunoco LP (NYSE:SUN) delivers a dividend yield of 6.13%. Though comparatively lower than many of the other stocks in our list, the company positions itself as a reliable option for income investors, by exceeding the U.S. average rental yield of 6.10%. The company achieved a record year in 2024 with a 62% increase in its adjusted EBITDA, compared to 2023, reaching $1.56 billion. Such rise in value was attributed to the strong financial performance and synergies, resulting from the efficient and complete integration of NuStar assets. The company also expects to achieve a 5% growth in distributions this year, thus solidifying its dividend payment capabilities.
Hedge fund activity in Sunoco LP (NYSE:SUN) is minimal, with Insider Monkey reporting just three funds holding stakes at the end of Q4 2024. However, analyst sentiment remains positive, reflected in a Buy rating and a median price target of $64, with a 12.76% projected upside. The ex-dividend date for the company falls on May 09, 2025.
9. Haverty Furniture Companies, Inc. (NYSE:HVT)
Dividend Yield: 6.14%
No. of Hedge Funds: 13
Haverty Furniture Companies, Inc. (NYSE:HVT), headquartered in Georgia, is a specialty retailer offering premium home furnishings through its 120 stores strategically located across 16 states. The company attracts buyers and builds a strong customer base by leveraging its high-quality craftsmanship and personalized customer service. The in-house design team, in addition to customizable furniture options, makes the company stand out in the market. It primarily operates in the Southern and Midwest regions of the United States.
Haverty Furniture Companies, Inc. (NYSE:HVT) attracts its investors with a solid dividend yield of 6.14%. As reported in the Q4 earnings results, the company has maintained a strong gross margin of 60.7% for the year. Additionally, the year was completed with zero funded debt and over $120 million in cash, which translates positively to investors interested in benefiting from long-term dividend payments, since the debt in the mix will be low. Opening of new stores in St. Petersburg, Florida, Greenwood, Indiana, and Houston in 2024, increases the likelihood of growth in FFO in 2025.
Haverty Furniture Companies, Inc. (NYSE:HVT) has garnered support from 13 hedge funds, listed in the Insider Monkey Q4 2024 database, indicating moderate institutional interest. Despite having only one analyst covering the stock, the Buy rating remains intact. The 1-year median price target has been set at $30, representing an upside of 43.33% to the current price. Investors can purchase the stocks till May 23, 2025, to benefit from the next payout.
8. VAALCO Energy, Inc. (NYSE:EGY)
Dividend Yield: 6.35%
No. of Hedge Funds: 16
VAALCO Energy, Inc. (NYSE:EGY) is an independent energy company based in Houston, Texas. The company specializes in the exploration and production of oil and natural gas, with a primary focus on West Africa. It stands apart from many of its peers by targeting offshore fields that offer high-margin production potential. In addition to the United States, the company also operates in Gabon and Equatorial Guinea.
VAALCO Energy, Inc. (NYSE:EGY) currently offers a dividend yield of 6.35%, presenting an attractive return for income-focused investors. The company achieved an EBITDAX of $303 million in 2024, setting up a new record. This comes after a record production of nearly 25,000 working interest barrels equivalent per day. VAALCO Energy also achieved 1.8 times payback on the initial investment concerning the acquisition of Svenska in April 2024, and further has a positive outlook for the same in 2025, thereby supporting the dividend payments for the period as well.
VAALCO Energy, Inc. (NYSE:EGY) has drawn the attention of 16 hedge funds, reflecting a relatively higher institutional presence compared to some of its industry peers. Analysts maintain a Buy rating, with a median 1-year price target of $8.86, a substantial upside of 127.25%. Investors looking to benefit from the next dividend payment should note the ex-dividend date of May 16, 2025.
7. Saul Centers, Inc. (NYSE:BFS)
Dividend Yield: 6.59%
No. of Hedge Funds: 12
Headquartered in Bethesda, Maryland, Saul Centers, Inc. (NYSE:BFS) is a real estate investment trust. The company specializes in retail and mixed-use properties primarily in the Washington, D.C. metropolitan area. Additionally, the company focuses on high-density urban markets where tenant demands are stable. It has a total of 61 properties in its real estate portfolio, including four land and development properties.
With a dividend yield of 6.59%, Saul Centers, Inc. (NYSE:BFS) remains a notable choice for investors seeking stable income. Based on the Q4 results, the company’s revenue has increased to $67.9 million but fell behind the estimated $68.94 million. The earnings per share, standing at $0.22 also have missed the estimated $0.30 per share. However, the leasing activity with respect to the commercial portfolio saw an increase from 94.1% the previous year to 95.2%, suggesting potential rises in FFO in future quarters. With such a positive outlook, the company stands committed to creating and delivering shareholder value.
Institutional interest is moderate, with 12 hedge funds from the Insider Monkey Q4 2024 database currently holding ownership in Saul Centers, Inc. (NYSE:BFS). Analysts maintain a Buy rating, projecting a 1-year median price target of $47, which, when compared to the current price, offers a potential gain of 31.28%. Investors who purchase the stock before April 15, 2025, will benefit from the next dividend payout.
6. Energy Transfer LP (NYSE:ET)
Dividend Yield: 6.90%
No. of Hedge Funds: 37
Texas-based company, Energy Transfer LP (NYSE:ET) is a leading midstream energy company engaged in the transportation, storage, and processing of natural gas, crude oil, and refined products. The company specifically focuses on infrastructure and operates an extensive pipeline network. Large-scale acquisitions and asset integration forms part of its business strategy to survive the market competition. The company’s business operations reach more than 40 U.S. states, Puerto Rico, Europe, and Mexico.
With a dividend yield of 6.90%, Energy Transfer LP (NYSE:ET) attracts dividend-seeking investors looking to adjust their portfolios. The adjusted EBITDA for 2024 stands at $15.5 billion, exceeding the value in 2023 by over 13%. In addition to achieving record volumes across its Interstate, Midstream, NGL, and Crude segments, Energy Transfer LP also reported record NGL exports from its terminals as well. The 20-year LNG sales and purchase agreement with Chevron further suggests high growth for its Lake Charles LNG project, empowering the company to cover its dividend payments.
Energy Transfer LP (NYSE:ET) had significant hedge fund interest at the end of Q4 2024, with 37 funds from the Insider Monkey database currently holding positions, suggesting strong institutional backing. Analysts have assigned a Buy rating with the 1-year median price target of $23, indicating a 23.66% upside potential. Shareholders can purchase stock before May 09, 2025, to qualify for the next dividend payments.
5. Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL)
Dividend Yield: 7.30%
No. of Hedge Funds: 14
Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL) is a global dry bulk shipping and logistics company based in Newport, Rhode Island. The company provides tailored transportation solutions for industrial clients. Unlike the traditional shipping firms, Pangaea Logistics Solutions, Ltd. leverages ice-class vessels, and niche trade routes to optimize freight efficiency and differentiate itself from competitors through a vertically integrated logistics model. The company serves a global network of ports, with a focus on the United States, Europe, and Asia.
Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL) offers an attractive dividend yield of 7.30%, taking its place in our list of dividend stocks that pay more than the U.S. average rental. With a fleet size of 41 owned vessels and an operating fleet of 60 to 70 vessels, the company increased its adjusted EBITDA by $4 million in 2024, reaching a total of $23.2 million, despite the headwinds from the dry bulk market. Successful completion of a merger with a shipping fleet adds 15 Handysize dry bulk vessels, expanding their market segment and ensuring the capability of the company in its shareholder commitments.
Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL) has found favor among institutional investors, with 14 hedge funds holding positions at the end of Q4 2024, as per Insider Monkey’s database. Analysts remain bullish, assigning a Buy rating and a 1-year median price target of $8.95, which implies a strong potential upside of 67.29%. Investors interested in collecting dividends should be aware of the ex-dividend date of May 30, 2025.
4. Spok Holdings, Inc. (NASDAQ:SPOK)
Dividend Yield: 7.86%
No. of Hedge Funds: 8
Headquartered in Alexandria, Virginia, Spok Holdings, Inc. (NASDAQ:SPOK) is a leader in critical communication solutions. The company provides secure messaging and emergency communication services across industries including healthcare and government as well as for enterprise clients. It attracts market share by specializing in mission-critical paging and secure messaging systems. Aside from the U.S., the company also has business operations in Canada.
With a dividend yield of 7.86%, Spok Holdings, Inc. (NASDAQ:SPOK) offers a steady income stream for investors seeking dividend income. The total revenue of the company for the year 2024, as per the Q4 earnings report, was down from $139 million in 2023 to $137.7 million. However, double-digit growth achievements were recognized in professional services business and software operations bookings. Particularly, the software operations bookings saw a 13% increase compared to the previous year. Additionally, the company continues to maintain strong profitability levels, indicating its resilience in making dividend payments.
Spok Holdings, Inc. (NASDAQ:SPOK) has a relatively lower hedge fund presence, with only eight funds invested. Even so, it has gained a Buy rating from analysts. The 1-year median price target of $20 suggests a 25.87% upside potential if invested now. Those looking to secure dividend payouts should purchase stock before May 23, 2025.
3. Alliance Resource Partners, L.P. (NASDAQ:ARLP)
Dividend Yield: 10.67%
No. of Hedge Funds: 11
Headquartered in Tulsa, Oklahoma, Alliance Resource Partners, L.P. (NASDAQ:ARLP) is a diversified natural resource company engaged in the business of coal production and transportation. The focus of the company lies in integrating mining, logistics, and marketing to optimize operational efficiency. It also invests in energy infrastructure and minerals to diversify revenue streams. The company operates in the United States with mining operations in the Illinois Basin, Northern Appalachian, and Central Appalachian coal-producing regions.
Alliance Resource Partners, L.P. (NASDAQ:ARLP) offers a dividend yield of 10.67%, exceeding the U.S. average rental yield stands of 6.1%. In the last quarter’s earnings results, the company reported total revenues of $2.4 billion for the full year 2024. The strong performance in revenue was supported by the successful completion of major infrastructure projects at Tunnel Ridge, Hamilton, Warrior, and Riverview, ensuring reliable, low-cost operations for the future. The company’s oil and gas royalties business saw another record year of volumes, suggesting a high capability to cover dividend payments.
Our Insider Monkey database recorded 11 hedge funds backing up Alliance Resource Partners, L.P. (NASDAQ:ARLP), indicating moderate institutional interest. Analysts have assigned a Buy rating for the company, with a 1-year median price target of $29, representing a 10.48% upside to the current price. Investors interested in the stock can purchase them before the next ex-dividend date of May 07, 2025.
2. Ellington Financial Inc. (NYSE:EFC)
Dividend Yield: 11.79%
No. of Hedge Funds: 9
Based in Connecticut, Ellington Financial Inc. (NYSE:EFC) is a specialty finance company investing in residential and commercial mortgage-backed securities. The company employs quantitative models and active risk management to optimize portfolio performance. Though the market is filled with tough competitors like AGNC Investment, the company thrives through dynamic asset allocation alongside expertise in structured credit markets.
Ellington Financial Inc. (NYSE:EFC) stands out with an impressive dividend yield of 11.79%, close to two times the U.S. average rental yield of 6.1%, thus becoming part of our list of top 10 dividend stocks. The company saw significant growth in its loan portfolios. It recorded a 39% combined increase in closed-end second lien, HELOC, Prop Reverse, and commercial mortgage bridge loan portfolios. High performances from the Longbridge Reverse Mortgage segment contribute to the company’s high earnings with increased origination volumes and improved margins, garnering shareholders’ confidence in the company.
Ellington Financial Inc. (NYSE:EFC) has limited hedge fund involvement with only nine funds holding positions., as per Insider Monkey’s Q4 2024. Yet the stock maintains a Buy rating from analysts. The 1-year median price target is set at $14.50, reflecting an upside of 8.90% to the current price. Investors interested in locking in dividends should invest in the stock before March 31, 2025.
1. Mach Natural Resources LP (NYSE:MNR)
Dividend Yield: 13.24%
No. of Hedge Funds: 2
Headquartered in Oklahoma, Mach Natural Resources LP (NYSE:MNR) is an independent oil and gas company focused on acquiring and developing hydrocarbon assets in the Anadarko Basin. The specialty of the company lies in maximizing production efficiency from mature fields without compromising on their cost principles. The company competes with players like Continental Resources and Devon Energy for market shares in the United States.
Mach Natural Resources LP (NYSE:MNR) boasts an impressive dividend yield of 13.24%, positioning itself as one of the highest-yielding stocks on our list. The fourth quarter earnings call indicates a favorable environment for the company, with the net income for 2024 crossing $185 million. Since its inception, the company has distributed over $1 billion to its shareholders since inception highlighting the company’s commitment to maximizing cash distributions, which could translate positively for new and potential income-seeking investors.
The institutional interest in Mach Natural Resources LP (NYSE:MNR), however, remains limited, with only two hedge funds currently invested, as per the Insider Monkey Q4 2024 database. Analysts, nonetheless, maintain a Buy rating, with the median price target set at $24.50, a potential gain of 60.97% from the current price. Investors looking to qualify for the upcoming dividend payout should purchase stock before May 23, 2025.
Overall, Mach Natural Resources LP (NYSE:MNR) ranks first on our list of the best dividend stocks. While we acknowledge the potential of MNR 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 time frame. If you are looking for a deeply undervalued dividend stock that is more promising than MNR but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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