In this article, we will take a look at some of the best high yield stocks for a dividend capture strategy.
Dividend investing appears to be a simple strategy on the surface, but in reality, it requires a much deeper analysis. These stocks are best known for their long-term appeal, a trait recognized by seasoned investors. Over the years, dividend growth stocks have outperformed other asset classes during periods of economic downturns.
This can also be observed in today’s economic landscape. With the Trump administration’s trade war or soft economic data, dividend stocks have the potential to outperform, according to analysts. In addition, these equities are currently trading at lower price-to-earnings ratios than the broader market, which could be a great entry point for income investors. Wolfe Research analyst Chris Senyek also advised investors to pay attention to dividend growth stocks as they can serve as a buffer against market downturns. Here is what he said:
“Our favorite defensive dividend strategy, dividend aristocrats, is a good place for investors to ‘hide’ in the event of an economic slowdown or recessionary environment.”
For this, he recommends investing in the Dividend Aristocrats Index, which tracks the performance of companies that have achieved 25 consecutive years of dividend growth. The index is outperforming the broader market this year, surging by over 2%, compared to the market’s nearly 5% decline.
Though dividend aristocrats are gaining this year, their performance in the last two years has been less impressive. With AI taking center stage, dividend stocks were overlooked by investors, leaving many still trading at a discount. Analysts are presenting a strong outlook for dividend stocks this year because of the changing economic and political landscape. According to a report by BNY Investments, dividend stocks are poised for growth this year as tech stocks have also entered into the dividend territory last year. Combining factors of growth and income can bode well for dividend equities. As of September 2024, nearly 80% of the companies in the S&P index pay dividends to shareholders, 24% of which are from the tech sector. The percentage has grown significantly from 13% a decade ago, as reported by BNY.
Dividend yield is an important aspect of dividend investing, and investors often pay attention to yields when making investment decisions. However, falling for yield traps does more harm than good. Dan Lefkovitz, a strategist for Morningstar Indexes, made the following comment for investors with a preference for high yields:
“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.”
While dividend stocks are mostly known for their long-term appeal, some investors also reap profits in the short term through a dividend capture strategy. By using this approach, investors can buy shares of the company just before it pays dividends and then sell those shares shortly after receiving the dividend. The main aim of this strategy is to capitalize on dividend income while also benefiting from a stock’s price increase leading up to the dividend announcement. Given this, we will take a look at some of the best dividend stocks for a dividend capture strategy.
Image by Steve Buissinne from Pixabay
Our Methodology
For this list, we selected dividend stocks that will trade ex-dividend in April 2025. Ex-dividend date indicates the cutoff day to buy a stock to receive its upcoming dividend payment. These stocks have dividend yields above 2%, as of March 30. The stocks are ranked according to their ex-dividend dates.
At Insider Monkey, we are obsessed with hedge funds. 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).
15. Realty Income Corporation (NYSE:O)
Ex-Dividend Date: April 1
Dividend Yield as of March 30: 5.69%
Realty Income Corporation (NYSE:O) is an American real estate investment trust company, headquartered in California. The company mainly invests in single-tenant commercial properties across the country. It reported a strong performance in the fourth quarter of 2024, with its revenues coming in at $1.34 billion, up significantly by 24.4% from the same period last year. The company’s Adjusted Funds From Operations (AFFO) per share also grew by 4% to $1.05 per share, which registered its 14th consecutive year of AFFO per share growth.
Realty Income Corporation (NYSE:O) has a portfolio of 15,600 properties, and nearly 80% of them are leased to retailers. The company’s holdings are mainly well-known retailers, including Dollar Tree, 7-Eleven, and Walgreens. In addition, grocery and convenience stores represent 20% of its portfolio. The company’s growing portfolio significantly contributes to its dividend policy.
Realty Income Corporation (NYSE:O) offers monthly dividends to its shareholders, which makes it a reliable option for income investors. It currently offers a monthly dividend of $0.2685 per share, having raised it by 0.2% in March. This was the company’s 130th dividend hike since it went public in 1994. With a dividend yield of 5.69%, as of March 30, O is one of the best dividend stocks for a dividend capture strategy. The stock will trade ex-dividend on April 1.
14. Sysco Corporation (NYSE:SYY)
Ex-Dividend Date: April 4
Dividend Yield as of March 30: 2.75%
Sysco Corporation (NYSE:SYY) is an American multinational company that specializes in marketing and distributing food and related products. The company’s operations span North America and Europe, and it has an extensive distribution network. In addition, it has diverse product offerings, including dairy, meat, and non-food items. This diversification has helped the company a lot over the years to mitigate risks associated with different economic cycles. In the past five years, the stock generated a nearly 88% return for shareholders.
In fiscal Q2 2025, Sysco Corporation (NYSE:SYY) reported a revenue of $20.15 billion, which showed a 4.47% growth from the same period last year. The revenue also surpassed analysts’ estimates by $49.8 million. The company’s food service volume also saw a 1.4% YoY growth. Its gross profit of $3.7 billion also showed a 3.9% growth on a YoY basis. The company’s international business remained the winner, recording a 14.5% increase in operating income and a 26.5% increase in adjusted operating income.
Sysco Corporation (NYSE:SYY)’s cash position also remained stable. In the first 26 weeks of the fiscal 2025, the company generated $498 million in operating cash flow. Moreover, it returned $803 million to shareholders, including $503 million in dividends. Currently, it offers a quarterly dividend of $0.51 per share and has a dividend yield of 2.75%, as of March 30. The company is a Dividend King with 54 consecutive years of dividend growth under its belt. It is among the best dividend stocks for a dividend capture strategy.
13. Bristol-Myers Squibb Company (NYSE:BMY)
Ex-Dividend Date: April 4
Dividend Yield as of March 30: 4.13%
Bristol-Myers Squibb Company (NYSE:BMY) is an American pharmaceutical company. The stock has surged by over 13% in the past 12 months, despite facing some challenges in the past. The company’s forthcoming patent cliffs and high debt load had resulted in the stock trading at a significant discount, with a forward P/E of 8.87. At the end of 2024, BMY’s debt totaled around $47.6 billion in comparison to its cash and marketable securities of $11.2 billion.
That said, Bristol-Myers Squibb Company (NYSE:BMY)’s growth strategy and strong dividend policy make it an attractive investment among income investors. In 2024, the company managed to secure two key approvals—one for Cobenfy and the other for Breyanzi. These drugs have the potential to generate billions in revenue for the company, contributing significantly to its growth. In the fourth quarter of 2024, BMY’s Growth Portfolio reported $6.4 billion in revenue, up 21% from the same period last year. This increase was mainly due to the strong demand for its treatments. Overall, its revenue was recorded at $12.34 billion for Q4, which also showed a 7.5% growth on a YoY basis.
Bristol-Myers Squibb Company (NYSE:BMY), one of the best dividend stocks for a dividend capture strategy, has been making regular dividend payments to shareholders for the past 93 years. In addition, the company raised its payouts for 16 years in a row. Its quarterly dividend comes in at $0.62 per share for a dividend yield of 4.13%, as of March 30. The stock will trade ex-dividend on April 4.
