6 Best Stocks Yielding Over 5%

10/11/2018 5:00 am EST

Focus: STRATEGIES

Ned Piplovic

Assistant Editor, Eagle Financial Publications

Using our proprietary dividend screener, I found hat nearly 1,100 individual equities offer yields above the 5% mark. To whittle down this list to a manageable size, we must introduce additional constraints to the analysis, asserts Ned Piplovic, income expert and editor of DividendInvestor.

Therefore, the six best dividend stocks listed below include equities that — in addition to yielding 5% or more — also have positive total returns over the past 12 months, dividend payout ratios between 40% and 65% with just one exception, distribute dividends at least four times per year and have boosted their annual dividend payouts for at least the past three years.

Based on the above criteria and sorted in ascending order by dividend yield, the six best dividend stocks yielding 5% or more are:

Altria Group (MO)
Headquartered in Richmond, Virginia, and founded in 1919, Altria Group, Inc., manufactures and sells cigarettes, smokeless products and wine in the United States.

In its ninth year of a consecutive annual dividend hikes streak, the company boosted its quarterly dividend 14.3% in September, which is the second dividend hike in 2018. The company already offered a 6.1% quarterly dividend boost six months earlier.

During the current streak of consecutive annual dividend hikes, MO enhanced its total annual dividend amount nearly 150%, corresponding to an average annual growth rate of nearly 12%. Having just gone ex-dividend in mid-September, the next ex-dividend date will occur in mid-December with the pay date to follow in early January 2019.

Aircastle (AYR)

Based in Stamford, Connecticut, and founded in 2004, Aircastle Limited leases, finances, sells and manages commercial flight equipment to airlines worldwide.

Over the past eight years, the company has advanced its annual dividend distribution amount more than three-fold, which is equivalent to an average growth rate of 15.6% per year. The company’s current 2.34% yield is 11% higher than its own 4.8% average yield over the past five years.

The current 40% dividend payout ratio is in a sustainable range and significantly lower than the 103% five-year average payout ratio, which indicates that the company’s earnings are currently in much better position to support future dividend distributions and annual hikes.

Braemer Hotels & Resorts (BHR)

Headquartered in Dallas Texas, and established in 2014, Braemar Hotels & Resorts is a real estate investment trust (REIT) that invests primarily in full-service luxury hotels and resorts.

The company anticipates its luxury properties to generate revenue per available room (RevPAR) at least twice the current U.S. average RevPAR for all hotels.

The company boosted its annual dividend over the past four consecutive years at an average growth rate of 33.7% per year, which resulted in an overall annual dividend amount enhancement of 220%. The REIT’s current 5.6% yield is nearly 65% above the fund’s own 3.4% five-year average.

B&G Foods (BGS)

Headquartered in Parsippany, New Jersey, and founded in 1996, B&G Foods manufactures, sells and distributes a portfolio of shelf-stable, frozen food and household products in the United States, Canada and Puerto Rico.

The company’s current 6.29 yield is almost 34% above the company’s own 4.7% average yield over the past five years and more than triple the 2.01% average yield of the entire Consumer Goods sector. The current yield is also more than triple the 1.89% simple average yield of all the companies in the Processed & Packaged Goods industry segment.

Energy Transfer Equity LP (ETE)

Based in Dallas, Texas, and founded in 2002, ETE sells and transports natural gas to electric utilities, independent power plants, local distribution companies and other end-users.

The current $0.305 quarterly distribution corresponds to a $1.22 annualized payout and currently yields 7.03%, which outperformed the 4.8% average yield of the company’s peers in the Oil & Gas Pipelines segment by more than 46%. ETE maintained an average annual growth rate of more than 18% over the past 11 consecutive years and advanced its total annual distribution 635% over that period.

New Residential Investment Corp. (NRZ)

Based in New York, New York, and founded in 2011, the New Residential Investment Corporation is a real estate investment trust (REIT) that focuses on investing in and managing residential mortgage-related assets in the United States.

Over the past four years, the total annual dividend amount advanced 20%, which corresponds to an average annual growth rate of 4.6%. The current 11.06% yield is 260% above the 3.06% average yield of the entire Financials sector, as well as 150% higher than the 4.44% average yield of all the companies in the Residential REITs industry segment.

Additionally, as the third-highest yielding REIT in the segment, NRZ’s current 11.06% yield outperformed the 6% average yield of the sector’s only dividend-paying companies by 85%.

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