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Including high-yield dividend stocks in your investment portfolio can be a smart strategy for an investor. They can provide a reliable income stream and allow you to see capital gain in your investment in the long run.
The US stock market has plenty of options for dividend investors, with many companies providing attractive yields. However, you must act wisely when selecting high-yield stocks, as not all are created equal.
Careful research is important to ensure that the high dividends are sustainable and backed by strong financial performance.
In this article, I have listed three dividend stocks from the US market that offer more than 5% yields. These companies not only provide generous dividends but also have robust business models and strategic initiatives that support long-term growth and stability.
After thorough analysis, I've identified Verizon Communications, Oneok, and Realty Income Corp. as top candidates for investors seeking high-yield dividend stocks.
Let's explore why I like these companies as a compelling choice for income-focused investors.
Before I reveal my secrets, I invite you to join my dividend-investing community. That way, you will not miss any essential articles and will learn to become a better investor. You will also receive a FREE welcome bonus—a 10-step guide to financial freedom.
Verizon Communications
Verizon Communications (NYSE: VZ) is a telecommunications giant known for its robust dividend yield of 6.7%. This impressive payout is underpinned by the company's stable and recurring cash flows, which are driven by customers paying their broadband and wireless bills consistently.
Verizon's financial strength is not just about its dividend; it's about a well-oiled cash flow machine that keeps the company growing and rewarding its shareholders.
Verizon's ability to generate substantial cash flow is incredible. The company consistently produces enough cash to invest in its network infrastructure, pay out a growing dividend, and strengthen its already solid balance sheet. A significant part of Verizon's strategy involves its investments in 5G technology, which are expected to boost its cash flow further in the coming years.
In addition to these investments, Verizon has been actively pursuing cost-cutting measures. The company aims to reduce operating costs by $2 billion to $3 billion by 2025 while also cutting capital expenses by more than $5 billion from their peak levels.
These efforts, along with a focus on reducing debt, are designed to increase Verizon's free cash flow, providing even more room to grow its dividend.
Verizon's commitment to its dividend is evident in its track record. The company has increased its dividend for 17 consecutive years. Although the growth rate has been modest, averaging about 2% annually in recent years, the high-yielding dividend is expected to continue rising gradually.
Verizon's first-quarter results for this year highlight wireless, solid revenue growth driven by recent price increases that have boosted sales without causing significant customer churn. Notably, Verizon allocated 60% of its cash flows in 2023 to dividends, underscoring its commitment to rewarding shareholders.
Oneok
Oneok (NYSE: OKE) offers a compelling dividend yield of 5.9%, supported by steady cash flow generated through long-term, fee-based contracts. The company's strategy focuses on maintaining and growing this dividend by 3% to 4% annually, leveraging both acquisitions and organic expansion projects.
Last year, Oneok completed a significant acquisition of Magellan Midstream Partners, a move that is expected to drive double-digit earnings growth this year. This acquisition not only enhances Oneok's operational capabilities but also positions the company for continued financial flexibility, allowing it to pursue more deals as attractive opportunities arise.
Oneok is also investing in several organic expansion projects that are currently under construction and in development. These projects aim to support the growing oil and gas production in the country, ensuring a steady increase in cash flow as they become operational.
While the transition to lower carbon energy is gradually taking place, fossil fuels will remain a critical energy source for decades, providing Oneok with a stable foundation to continue paying and increasing its dividends.
Realty Income Corp.
Here comes the OG when it comes to monthly dividend stocks. Realty Income Corp. (NYSE: O) stands out as a top choice for income investors. This real estate investment trust (REIT) has a long-standing reputation as one of the most reliable monthly dividend payers in the real estate sector.
Realty Income owns a vast portfolio of over 15,000 income-generating commercial properties located in and around major population centers across the United States. The company's tenant base consists predominantly of well-known, investment-grade corporations operating in sectors such as convenience stores, pharmacies, and big-box retail stores.
One of Realty Income's key attractions is that the company is among the S&P 500 Dividend Aristocrats club. Dividend Aristocrats are companies that have consistently increased their dividends for at least 25 consecutive years. Realty Income has an even more impressive track record, having paid a regular dividend throughout its 55-year history and consistently raising its payout.
The company's next dividend is set to be paid on June 14 to shareholders owning shares before June 3. This will mark Realty Income's 647th consecutive income distribution. This remarkable consistency underscores the company's commitment to providing reliable and growing income to its investors, making it a popular choice among those seeking stable monthly dividends.
Conclusion About High-Yield Dividend Stocks
Although it is commonly believed that high yield is dangerous and unsustainable, if carefully chosen, these dividend stocks can provide an excellent reward and lift your portfolio to delightful income generation.
I hope this article was interesting and inspired you to find some great dividend stocks that pay generously.
It is imperative that you educate yourself, become aware of your cognitive biases, and learn about investing before putting your hard-earned money at risk. I recommend you to check out my book, Live Off Dividends, where I dive into more details and prepare the reader for the investment journey.
I wish you reach your Dividend Horizon,
Artenie Alexandru
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