Income investors are always on the hunt for high dividend yields. But with stock prices at record highs, the average S&P 500 dividend yield is just 1.5%. And with interest rates near historic lows, income investors are starved for yield. This explains the obvious appeal of high dividend stocks.
However, investors should also try to make sure a company’s dividend payout is sustainable. The worst outcome for an income investor is to buy a high dividend stock that later cuts its payout. Not only does this result in lost income, but stock prices typically decline after a dividend reduction, often leading to very poor shareholder returns.
Our List of High Dividend Stocks
The following 15 stocks have yields above 5%, and a higher level of dividend safety when it comes to high yielding stocks. Stocks are ranked in order of dividend yield, from lowest to highest.
1. Whitestone REIT (WSR)
- Dividend Yield: 5.37%
Whitestone is a retail REIT that owns about 58 properties with about 5.0 million square feet of gross leasable area primarily in top U.S. markets in Texas and Arizona.
Its tenant base is very diversified with nearly 1,400 tenants. The top 5 industries are restaurant & food service, grocery, financial services, salons, and medical & dental.
During the pandemic, the REIT rightly halted acquisitions and development projects, and reduced expenses, as it focuses on improving its financial position and liquidity. The February 2021 dividend increase is a good sign. Management believes, post-pandemic, investments in acquisitions, re-development, and development projects can drive returns of at least 10%.
At the end of 2020, Whitestone had a debt-to-equity ratio of about 2.1x. Whitestone has no real estate debt maturing in 2021.
2. W.P. Carey (WPC)
- Dividend Yield: 5.35%
W.P. Carey is a commercial real estate focused REIT that operates two segments: real estate ownership and investment management.
The REIT operates more than 1,200 single tenant properties on a net lease basis, across the US and Northern and Western Europe. Its asset management business has AUM of approximately $2.8 billion.
In the 2021 first quarter, revenue increased 0.7% year-over-year to $311.2 million. Portfolio occupancy was 98.3%. For 2021 the company now expects AFFO between $4.87 and $4.97 per diluted share.
Growth is fueled by investments in new properties. Since 2012, the REIT invested more than $10 billion into new assets by either purchasing entire REITs or through single-asset/portfolio purchases.
3. Exxon Mobil (XOM)
- Dividend Yield: 5.85%
Exxon Mobil is an integrated energy giant with a market cap above $250 billion. Exxon Mobil operates upstream exploration and production activities, as well as a downstream refining and marketing segment.
The company was hit particularly hard by the pandemic—in 2020 Exxon Mobil reported a $20 billion loss in its upstream segment.
The rise in oil and gas prices to begin 2021 has been a huge tailwind for energy stocks. In the 2021 first quarter, Exxon grew its total production by 3%. The price of oil rallied thanks to the deep production cuts of OPEC and Russia while refining and chemical margins improved.
As a result, Exxon Mobil’s adjusted earnings-per-share rose to $0.65 in the first quarter, from $0.03 per share in the same quarter last year.
4. Universal Corporation (UVV)
- Dividend Yield: 5.78%
Universal Corporation is the world’s largest leaf tobacco exporter and importer. The company is the wholesale purchaser and processor of tobacco that operates between farms and the companies that manufacture cigarettes, pipe tobacco, and cigars.
In the most recent quarter, Universal’s revenue declined 2% to $620 million. Revenue decline was due to falling leaf tobacco volumes. Still, adjusted earnings-per-share increased 36% to $2.15.
Tobacco stocks are widely owned for their stable dividends, and Universal is no exception. The stock yields 5.7%, and the company has increased its dividend for 50 consecutive years, placing it on the exclusive list of Dividend Kings.
5. PPL Corporation (PPL)
- Dividend Yield: 5.91%
PPL Corporation owns and distributes power to more than 10 million people in the U.S and the U.K. Its U.S. operations are spread across Pennsylvania, Kentucky, Virginia, and Tennessee. It also has nearly 8 million U.K. customers.
This is a period of transition for PPL. On March 18th, 2021, PPL announced that it was selling its U.K. business to National Grid plc (NGG) for £7.8 billion. This divestiture should occur by the end of July.
In a separate transaction, PPL will acquire the Narragansett Electric Company from a subsidiary of National Grid for $3.8 billion. This transaction should close in Q1 2022.
PPL announced first quarter earnings results on 5/6/2021. Adjusting for the pending sale of the U.K. business, revenue grew 4% to $1.5 billion.
6. Kinder Morgan Inc. (KMI)
- Dividend Yield: 5.91%
Kinder Morgan is among the largest energy companies in North America. It is engaged in the storage and transportation of oil and gas, and other products. It owns an interest in or operates approximately 83,000 miles of pipelines and 144 terminals.
Its pipelines transport natural gas, refined petroleum products, crude oil, carbon dioxide (CO2), and more. Kinder Morgan’s transportation assets operate like a toll road, whereby the company receives a fee for its services, which generally avoids commodity price risk. Approximately 90% of Kinder Morgan’s cash flow is fee-based.
Kinder Morgan expects to produce a net income of $2.7 billion to $2.9 billion, and a distributable cash flow of $5.3 billion. It also expects to maintain a net debt-to-adjusted EBITDA ratio of 3.9x to 4.0x.
7. New York Community Bank (NYCB)
- Dividend Yield: 6.07%
New York Community Bancorp is the parent of a state-chartered bank called New York Community Bank. The wholly-owned subsidiary operates 238 branches in New York, New Jersey, Ohio, Florida, and Arizona.
The bank focuses on multi-family loans in New York City, particularly in buildings that are rent controlled. That book of business is about three-quarters of its entire lending portfolio. The bank has assets of more than $50 billion.
In the most recent quarter, New York Community Bank reported 27% revenue growth due to 30% growth in net interest income.
Future growth will also come from acquisitions. The company also announced in late April that it was buying Flagstar Bancorp (FBC) in an all-stock transaction with an implied valuation of $2.6 billion.
8. Landmark Infrastructure Partners LP (LMRK)
- Dividend Yield: 6.22%
Landmark Infrastructure Partners provides real estate on a leased basis to wireless carriers for their cell towers, advertising operators for their outdoor displays, power companies for their renewable energy units, and data storage businesses for their data centers.
LMRK also recently began leasing a neutral-host smart pole designed for carriers and other wireless operators. The company has essentially no maintenance capex and owns property rights (real property interests) in difficult-to-replicate major population centers. The partnership garners most of its revenues from so-called tier 1 tenants, which are large publicly traded companies with national footprints.
In the 2021 first quarter, adjusted FFO per unit came in at $0.37, up 12% from the year-ago quarter. Shares currently yield over 6%.
9. Enbridge Inc. (ENB)
- Dividend Yield: 7%
Enbridge is an oil & gas company that operates in Liquids Pipelines, Gas Distributions, Energy Services, Gas Transmission & Midstream, and Green Power & Transmission.
In the 2021 first quarter, the distributable cash flow of $1.37 per common share increased 2.2% from the same quarter last year.
Enbridge is one of the largest pipeline operators in North America. Its vast asset footprint serves as a tremendous competitive advantage, as it would take many billions of dollars of investments from new market entrants if they wanted to be able to compete with Enbridge.
The stock has a nearly 7% dividend yield and the company has increased its dividend for over 25 consecutive years.
10. Altria Group (MO)
- Dividend Yield: 7.23%
Altria Group is a tobacco giant, with its flagship Marlboro brand. It also has a wine business under the Ste. Michelle brand, and it owns 10% of global beer giant Anheuser-Busch InBev (BUD).
More recently, Altria has targeted two additional product categories for growth, vaping and cannabis. Altria owns a 35% stake in e-cigarette maker Juul, and a 45% stake in cannabis producer Cronos Group (CRON).
The company is also rolling out its own heated and vapor products such as Marlboro HeatSticks and IQOS, both of which are slowly being expanded across the U.S.
The company has increased its dividend for 50 consecutive years, qualifying it as a Dividend King.
11. Enterprise Products Partners LP (EPD)
- Dividend Yield: 7.44%
Enterprise Products is a notable exception, as this Master Limited Partnership has increased its unitholder distribution for 22 consecutive years.
The reason for EPD’s impressive distribution growth history is its premier assets. Furthermore, it owns 50,000 miles of pipelines that transport natural gas liquids (NGLs), crude oil, natural gas, and other refined products.
EPD also owns storage assets with 260 million barrels of NGL, petrochemical, crude oil, and refined products storage capacity. It has another 14 billion cubic feet of natural gas storage capacity.
The company also has a healthy balance sheet to protect its distribution. EPD has a credit rating of BBB+ from Standard & Poor’s, and Baa1 from Moody’s. These are among the highest ratings in the MLP space.
12. British American Tobacco (BTI)
- Dividend Yield: 7.65%
British American Tobacco is one of the world’s largest tobacco companies. British American Tobacco owns many tobacco brands, including Kool, Benson & Hedges, Dunhill, Kent, and Lucky Strike.
The company also acquired the remaining 48% stake in Reynolds American Tobacco that it did not already own in July of 2017.
In 2020, British American Tobacco generated revenues of US$35.6 billion. The company has generated strong growth in its New Categories (reduced risk products) segment, where British American Tobacco has been able to expand its market share.
The company expects constant–currency revenue growth of 3%–5% for 2021, and mid–single digit earnings–per–share growth. This should cover the company’s dividend payment.
13. Magellan Midstream Partners LP (MMP)
- Dividend Yield: 8.76%
Magellan Midstream Partners LP is a midstream MLP. Its system consists of 9,800 miles of pipelines, 54 terminals, and 47 million barrels of storage capacity.
The company has paid distributions for 20 years, and has never cut its distribution. Magellan expects a distribution coverage ratio of at least 1.1 for 2021.
Magellan is in the midst of a $750 million unit repurchase program, and repurchased $277 million of its units in 2020.
Importantly, Magellan’s balance sheet is in healthy shape. Magellan has strong credit ratings of BBB+ from Standard & Poor’s and Baa1 from Moody’s. The company does not face a bond maturity until 2025, which helps improve distribution coverage.
14. AGNC Corp. (AGNC)
- Dividend Yield: 8.93%
AGNC is especially attractive for income investors. Not just because of its 8.5% yield, but also because AGNC is a monthly dividend stock that pays a dividend once a month, equating to 12 dividend payments per year.
AGNC is a mortgage REIT. It invests in agency mortgage-backed securities. Further, it generates income by collecting interest on its invested assets, minus borrowing costs. It also records gains or losses from its investments and hedging practices.
The majority of investments are fixed-rate agency MBS. Most of these are MBS with a 30-year maturity period. The counterparties to most of AGNC’s assets are located in North America. Counterparties in Europe also represent a significant percentage of the trust’s total portfolio.
The current monthly dividend payout of $0.12 per share represents an 8.5% dividend yield. Dividend payouts can be volatile with mortgage REITs, although AGNC’s dividend payout appears sustainable at the present time.
15. MPLX LP (MPLX)
- Dividend Yield: 9.56%
MPLX is another quality MLP. Beyond midstream storage and transportation, MPLX also has logistics assets and offers fuel distribution services.
Coverage is boosted by the company’s prudent capital allocation program. Its renewed focus on high-grading its portfolio toward projects with stable, fee-based earnings, means MPLX expects to generate excess cash flow in 2021 even after growth capital expenditures and distributions.
MPLX has three major projects in logistics and storage. It also has two separate processing plants under construction, in the Marcellus and Delaware shales, that will each boost capacity by 200 million cubic feet per day.
MPLX’s distribution payout of $2.75 per unit, represents a current yield above 9%. This is a very appealing yield for income investors.
High Dividend Stocks FAQ
There is no exact definition of a high dividend stock. In general, many investors refer to high dividend stocks as those with current yields above 5%.
With interest rates at near-zero levels, investors are having a harder time generating suitable income from their investment portfolios. This is particularly true for investors who want to live on their investment income, such as retirees.
Investors should always conduct proper due diligence before buying individual stocks. Specifically, investors buying high dividend stocks should keep an eye on a company’s debt level and payout ratio, which are indicators of whether it can afford its high dividend payout.
*Disclaimer: Information current as of pre-market July 15, 2021