In this article, we are going to talk about 15 very high yield dividend stocks. Click to skip ahead and jump to the 5 very high yield dividend stocks.
We have different views on investing. Some investors are focused on day trading wherein you buy and sell stocks on a single trading day. Others prefer to swing trade wherein investors are buying a stock and holding it for a few days to profit more from price changes. Then we have the dividend stock investors wherein aside from earning capital gains from established companies they invested in, they receive dividend payments regularly. On the other hand, growth investors pay more attention to companies that prefer to re-invest and grow their assets wherein they spend on an asset acquisition or the act of buying another company. You can check out our article on the 15 biggest companies that don’t pay dividends for a more comprehensive review.
Dividends are a fraction of the revenue that a company distributes to its shareholders. One of the best ways to take advantage of a dividend-paying company is to focus on the very high yield dividend stocks. Very high yield dividend stocks are generally unloved stocks that are going through rough times. However, it is important not to dismiss these companies worthless investments that are on the brink of doom. Companies that pay high dividends are sometimes high dividend stocks because they are unjustifiably punished by the markets due to temporary headwinds. Some of these companies may deliver large capital gains over the coming quarters and their dividend yields fall back to “normal” levels.
Copyright: jirsak / 123RF Stock Photo
Is this the best time to build a portfolio with very high dividend stocks? Yes, if you are looking for a steady stream of income not only for a retirement fund, investing in these dividend stocks might be a smart move if you pick the right stocks. Plus, you can take advantage of the Fed’s slashing interest rates to nearly zero until 2023. Although I’m not gonna lie, the coronavirus recession has caught up with dividend stocks, many of which have reduced or discontinued payments altogether. Main industries that were affected by COVID-19 lockdown protocols such as air travel and hotels have suspended their dividend payouts since the start of the pandemic, this includes Boeing (NYSE: BA) and Marriott International Inc (NASDAQ: MAR). Meanwhile, lucky for those who invested in consumer staples as some companies such as Costco (NASDAQ: COST), Johnson & Johnson (NYSE: JNJ), and Procter & Gamble Co (NYSE: PG) have increased their dividends. For income investors, you might want to consider these pandemic-proof dividend stocks that we have on this list.
The ability of a company to pay regular dividends makes a big difference in communicating its fundamental strength and sustainability to shareholders. The dividend yield measures how much income has been received relative to the share price; higher returns are more attractive, while lower returns can make the stock appear less competitive to its industry. This is the reason we relied on the dividend yield of each company that we have on the list. To give you a thorough review of the very high yield dividend stocks to include your portfolio, we also added the company’s revenue, market cap, and assets for each company. Let’s take a look at the very high yield dividend stocks ranked from lowest to highest dividend yield:
15. Chevron Corporation (NYSE: CVX)
Dividend Yield: 5.80%
Revenue: $140.1 billion
Market Cap: $166.37 billion
Assets: 237.4 billion
Headquarters: San Ramon, CA
Chevron is one of the largest energy companies in the world. The company offers an annualized dividend of $5.16 per share yielding 5.80%. In December 2020, Chevron lowered its long-term capital spending guidance to $14 billion to $16 billion annually by 2025 from $19 billion to $22 billion. Chevron is one of the best-loved dividend stocks of income investors in its long history of dividends and its ability to sustain dividends even in historic downturns. Also, the oil giant has increased dividends in the past 33 years. We like reliable energy companies a lot right now. All major oil companies cut their capital expenditures significantly and they aren’t planning to boost it until we are completely out of the pandemic induced economic slump. Oil prices have been going up and currently sit above their levels before the pandemic started. Yet, CVX’s stock price hasn’t kept up with the increase in oil prices. Chevron was trading above $110 before the pandemic started. We believe CVX shares will trade at $110 later this year and outperform the market. We don’t mind getting paid nearly 6% while waiting for the 20% upside in CVX shares materialize.
Diamond Hill Capital underscored few stocks, including Chevron Corporation, in an investor’s letter stating:
“Integrated oil and gas company Chevron Corp. shares meaningfully declined during the quarter as OPEC+ failed to reach a deal, allowing us to establish a position in this lower risk, more diversified company at a sufficient discount to our estimate of intrinsic value.”
14. Philip Morris International (NYSE: PM)
Dividend Yield: 6.03%
Revenue: $30.2 billion
Market Cap: $127.68 billion
Assets: $37.5 billion
Headquarters: New York, NY
PM ranks 14th on our list of the very high yield dividend stocks. Philip Morris is one of the biggest names in the tobacco industry. According to Yahoo Finance, Philip Morris currently offers a quarterly dividend of $1.20 per share, yielding around 6.03%. The company also offers 12 consecutive years of increased dividends. Philip Morris is promoting their “Unsmoke” campaign which transitions the company’s business to next-gen tobacco products such as vaping and combustible heated tobacco. This strategy seems to be working as the company outperformed analysts’ expectations in its latest quarter and its shares rose more than 4% following the earnings release.
In a Q2 2020 investor letter, First Eagle Investment Management mentioned the following about PM’s market performance:
“Philip Morris was able to recover some of the ground lost during the first quarter selloff but remains well below its early-year highs. Tobacco industry volumes were hurt by Covid-19, as lockdowns and other social-distancing restrictions in certain key markets hurt demand. Duty-free sales also suffered given the lack of global travel during the period. Given its pricing power, cost discipline, and robust balance sheet, we believe Philip Morris appears well-positioned to navigate the ongoing transition from traditional combustible tobacco products to “heat not burn” alternatives.”
13. New York Community Bancorp (NYSE: NYCB)
Dividend Yield: 6.50%
Revenue: $1.9 billion
Market Cap: $5.08 billion
Assets: $54.3 billion
Headquarters: Westbury, NY
New York Community Bancorp is one of the leading investment companies engaged in multi-family loans and non-luxury leased buildings. According to Yahoo Finance, NYCB currently pays a quarterly an annualized dividend of $0.68 per share, yielding around 6.50%
12. Brandywine Realty Trust (NYSE: BDN)
Dividend Yield: 6.91%
Revenue: $580,417
Market Cap: $1.95 billion
Assets: $4,075,969
Headquarters: Radnor, PA
BDN ranks 12th on our list of the very high dividend stocks. Brandywine Realty Trust is an independent REIT specializing in buying, owning, selling, and developing suburban offices in the US. Its portfolio consists of more than 25 million sq. ft. of rentable space, located mainly in urban and suburban areas of the mid-Atlantic region, as well as California and Texas. According to Yahoo Finance, Brandywine Realty Trust offers an annualized dividend of $0.76 yielding 6.91%.
BDN shares were trading above $16 before the pandemic. If life goes back to normal after mass vaccinations, BDN shares will recover more of its losses. We believe BDN will outperform the S&P 500 Index in the next 12 months though we recommended a different real estate stock to our monthly premium newsletter subscribers and that stock is up more than 50% since the publication of our articles a few months ago.
11. AT&T (NYSE: T)
Dividend Yield: 7.27%
Revenue: $179.2 billion
Market Cap: $211.97 billion
Assets: $545.4 billion
Headquarters: Dallas, TX
AT&T ranks 11th on our list of the very high yield dividend stocks. Despite being the biggest telecom company in the world, AT&T had a tough 2020. The telecom giant’s shares are down about 21% in 2020 but for insiders, it is the best time to buy AT&T. AT&T currently pays an annual dividend rate of $2.08 yielding at 7.27%. Elliott Management went activist on AT&T and reached an agreement with the company wherein Elliott stated its agreement with AT&T:
“We have closely evaluated the company’s three-year plan and support the steps toward a faster-growing, more profitable, focused, and shareholder-friendly company. The combination of AT&T’s improving business performance, consistent and faster revenue growth, significant margin expansion, and enhanced capital return will generate meaningful earnings and cash flow growth over the next three years. In addition, AT&T will continue to refresh its Board as it executes on its plan to realize the $4.50 – $4.80 of EPS by 2022, a figure that is readily achievable and one which excludes the benefit of any portfolio actions. Altogether, we are confident this will yield significant share price upside at AT&T.”
10. Iron Mountain Inc (NYSE: IRM)
Dividend Yield: 7.35%
Revenue: $4.26 billion
Market Cap: $9.62 billion
Assets: $13.8 billion
Headquarters: Boston, MA
Iron Mountain is a Boston-based enterprise that stores records, usually physical records and data backup media, and provides information management services at various locations across North America, Europe, Latin America, Asia Pacific, and Africa. Currently, Iron Mountain pays an annual dividend rate of $2.47 yielding 7.35%.
In a Q3 2020 investor letter released by Nelson Roberts Investment Advisors, the firm highlighted Iron Mountain and stated that:
“In the real estate sector, we bought a position in Iron Mountain (NYSE: IRM), the global leader in document storage and information management systems. Iron Mountain has a reliable core business and boasts a hefty 9.5% dividend. To facilitate growth, the company is working to expand into new areas such as data centers.”
9. Kinder Morgan Inc (NYSE: KMI)
Dividend Yield: 7.46%
Revenue: $12.8 billion
Market Cap: $34.45 billion
Assets: $73.5 billion
Headquarters: Houston, TX
KMI ranks 9th on our list of the very high yield dividend stocks. Kinder Morgan owns and operates pipelines that transfer natural gas, gasoline, crude oil, carbon dioxide, and terminals that store petrochemicals and handle bulk materials such as coal and petroleum coke. The company offers an annualized dividend of $1.05 yielding 7.46%. In December 2020, KMI announced the Directors’ intention to increase the annual dividend from 2021 to $1.08 per share. This will mark a 3% spike in the dividend from 2020.
We believe KMI is also very likely to outperform the market in 2021 as risk averse investors will get tired of holding cash that yields next to nothing and take some chances with high yielding stocks like KMI and ENB.
8. Enbridge Inc (NYSE: ENB)
Dividend Yield: 7.76%
Revenue: $37.5 billion
Market Cap: $89.64
Assets: $125.9 billion
Headquarters: Calgary, Canada
Enbridge is one of the best MLP and Pipeline stocks to buy. It is a North American energy infrastructure company and a global leader in the transport of crude oil, natural gas, and natural gas liquids. According to Yahoo Finance, Enbridge pays an annualized dividend of $2.56 per share yielding at 7.76%. Enbridge has paid dividends to its shareholders for more than 66 years, and over the last 26 years, the dividend payout has grown at an average compound annual growth rate of 10%.
7. Brookfield Property Partners (NASDAQ: BPY)
Dividend Yield: 7.80%
Revenue: $1.54 billion
Market Cap: $17.02 billion
Assets: $21.97 billion
Headquarters: New York, NY
Brookfield Property ranked 7th on our list of the very high yield dividend stocks. Brookfield Property is a major player in the global real estate industry. Brookfield Property pays an annualized dividend of $1.33 yielding 7.80%. In a Q2 2020 investor letter by Horos Asset Management, the firm highlighted a few stocks and Brookfield Property Partners L.P. (NASDAQ: BPY) is one of them wherein they stated:
“The Canadian company Brookfield Property Partners (“BPY”) is one of the largest real estate asset managers in the world. It owns, operates, and develops a large portfolio of office, retail, multi-family, industrial, hospitality, and student housing properties, among others. The company has seen a significant stock price decline this year of about 65%, caused—as it cannot be otherwise—by the great impact of the coronavirus pandemic on the occupation and use of its assets. To this, we must add the market’s structural fear regarding BPY’s high exposure to shopping centers, where bankruptcies and closures have occurred in recent years due to changes in the population’s consumption patterns given the rise of e-commerce.
Despite this, we think that BPY provides an interesting window of opportunity to invest at this time. The reasons? On the one hand, the company’s portfolio of shopping centers is of high quality and has been acquired at very attractive prices (see, for example, the acquisition of General Growth Properties). On the other hand, BPY is controlled—51% of the capital—by Brookfield Asset Management, one of the world’s largest alternative asset managers and possibly one of the best teams allocating the capital of its companies. In the case of BPY, this translates into value-creating acquisitions, high dividend payments, and share buybacks with a high discount on Net Asset Value (NAV). As an example of this, on July 2 BPY announced the offer to buy back its own shares for about 8% of the company’s capital.
In short, investing in BPY means buying a global and diversified portfolio of assets with a high discount on its NAV (of 70% at the stock price lows) and partnering with outstanding capital allocators, who will take the necessary measures to reduce this discount and unlock the real value of these assets.”
yuttana Contributor Studio/Shutterstock.com
6. Lumen Technologies (NYSE: LUMN)
Dividend Yield: 8.08%
Revenue: $22.4 billion
Market Cap: $12.50 billion
Assets: $4.47 billion
Headquarters: Monroe, LA
Formerly known as CenturyLink, Lumen Technologies secured the 6th spot on our list of the very high yield dividend stocks. Lumen Technologies offer innovative data center, wireless, and network solutions. The company offers a $1 annualized dividend yielding 8.08%. LUMN is on the wrong side of the technological change and its investors experienced large negative returns over the last 5 years. Billionaire Mason Hawkins is optimistic as he believes CTL is trading at deeply discounted values. In a 2019 investor letter, Southeastern Asset Management highlighted LUMN and stated that:
“CenturyLink (-19%,-1.72%), the fiber and telecom company, was the primary detractor to first-quarter returns after a dividend cut. We were disappointed by that decision and filed a 13-D to enable us to become more active in the investment through seeking to improve the board, encouraging opportunistic asset sales, and exploring creating tracking stocks for the company’s two segments. Private-market transactions of assets comparable to some of CenturyLink’s (CTL) fiber assets have been over 15X EBITDA, far above CTL’s depressed 5X EBITDA stock price. In addition to monetizing some of this fiber, separating the enterprise and consumer segments into distinct tracking stocks could help highlight the values and different opportunity sets for both. We believe that adding board members with experience in fiber and financial transactions can bring additional capital allocation discipline to drive value recognition. We maintain our support for Jeff Storey and his team operationally even while disagreeing about some capital allocation items. Storey bought $1 million in shares personally in the quarter, and CFO Neel Dev, as well as multiple directors, also increased their ownership of the stock.”
Click to continue reading and see the 5 very high yield dividend stocks.
Suggested articles:
- 15 Best Blue Chip Stocks To Buy Now
- 10 Best Cheap Stocks To Buy Now
- 10 Best Growth Stocks To Buy Now
Disclosure: No position. 15 Very High Yield Dividend Stocks Worth Checking Out is originally published at Insider Monkey.
