In an ecosystem of high interest rates, targeting high-yield dividend stocks to buy might seem risky. After all, why bother dealing with the volatility of publicly traded businesses when you can buy safe, secure government bonds? The thesis isn’t as irrational as it sounds.
Sure, you can grab 10-year Treasuries that yield 4.3%. For the buy-and-hold types, that’s admittedly quite a deal. However, with the Federal Reserve possibly toying with the idea of interest rate cuts down the line, the buying opportunity for bonds may eventually fade. Second, buying government debt doesn’t give you the chance for capital appreciation.
But arguably the most important reason to consider high-yield dividend stocks to buy is the possible rotation away from risk-on names. Recently, technology-related securities saw $4.4 billion of outflows, the biggest such outflow on record. Right now, you’re seeing the red-hot cryptocurrency sector hit pause on the rally.
Don’t get me wrong: I’m not saying run around like your hair’s on fire. Rather, it just might be prudent to consider enterprises that offer robust passive income. With that, below are attractive high-yield dividend stocks to buy.
IBM (IBM)
Yeah, yeah, yeah – I talk way too much about IBM (NYSE:IBM). However, after years of disappointing trading sessions, the company is starting to finally look appealing. Since the beginning of this year, shares gained just under 20%. Over the past year, the security moved up almost 54%. It’s almost like we’re not talking about Big Blue.
You can credit artificial intelligence, machine learning and similar directives for a good chunk of the upside. While investors chase the usual suspects tied to digital intelligence, what I appreciate about IBM is that it has a long legacy of AI-related research and development. Also, it features ample case studies of real, practical innovations leveraging AI.
So, when analysts are looking for average earnings per share of $10.09 on sales of $63.77 for the current fiscal year, I believe it. The projections might even be understated. Either way, while you’re waiting for the narrative to play out, IBM investors can enjoy a solid forward dividend yield of 3.43%.
Experts only rate IBM a consensus hold with a $191.69 price target. Here, the high-side target of $220 seems more reflective of current realities.
Chevron (CVX)
At first glance, identifying Chevron (NYSE:CVX) as one of the high-yield dividend stocks to buy might go against contemporary beliefs. After all, electric vehicles are the future, climate justice, go green, yada yada.
However, hydrocarbons could very well be relevant for decades, maybe even centuries. Amid economic difficulties, you can’t just throw away infrastructure that’s been built for the combustion-powered paradigm.
We all got a taste of that recently. Following a key decision by the Department of Energy, EV stocks tumbled as government mandates to effectively force the electric transition have been softened. This update gives traditional automakers breathing room. It also means that there’s a runway for manufacturing gasoline-powered cars to 2030.
And who knows what could happen in the future? I’m almost certain that if President Joe Biden wins reelection this year, voters will pivot to the right in 2028. That could be very lucrative for CVX stakeholders.
Right now, Chevron pays a forward yield of 4.16%. Combined with a moderate buy rating, CVX ranks among the high-yield dividend stocks to buy.
Dine Brands (DIN)
One of the riskiest ideas for high-yield dividend stocks to buy, Dine Brands (NYSE:DIN) might even seem reckless. Since the start of the year, DIN lost more than 5% of equity value. But that’s not the worst of it. No, investors will quickly point to the loss of 31% over the past 52 weeks. That’s ugly and it’s not surprising given the consumer headwinds impacting the space.
However, many experts believe that revenge travel – or a similar sentiment or residual effect – will support a key segment of the discretionary retail sector. If that happens to be the case, then people may look to save money through cheap eateries. It doesn’t get that much cheaper than Dine Brands until you fall into the fast-food category.
It’s also worth noting that the company – despite significant sector headwinds – managed to beat earnings-per-share targets in all four quarters last fiscal year. The average positive earnings beat came out to nearly 17%.
Right now, Dine offers a forward yield of 4.4%. Carrying a strong buy consensus view, DIN should be on your radar.
Agree Realty (ADC)
Structured as a real estate investment trust (REIT), Agree Realty (NYSE:ADC) focuses on the acquisition and development of properties net leased to industry-leading, omnichannel retail tenants. Per its public profile, the REIT owns and operates a portfolio of 2,135 properties, located in 49 states and containing approximately 44.2 million square feet of gross leasable area.
So, a lot of companies make their business sound way more complicated than it needs to be. Here’s the deal with ADC stock. If you need something – groceries, a quick bite to eat, a home-improvement product – there’s a good chance that the store you go to will be located on a property that Agree owns. Unless you envision a world where commerce becomes obsolete, Agree should maintain permanent relevance.
To be fair, the company missed earnings targets last year. However, in the current fiscal year, analysts believe that Agree will print EPS of $1.86 on revenue of $593.58 million. Last year, the company delivered EPS of $1.63 on sales of $537.5 million.
Lastly, Agree pays out a forward yield of 5.32%. Combined with a strong buy view, ADC is easily one of the high-yield dividend stocks to buy.
Philip Morris (PM)
A big tobacco firm, Philip Morris (NYSE:PM) undoubtedly represents one of the most controversial names in the market. Still, for those who are agnostic about people’s personal decisions, PM could rank among the high-yield dividend stocks to buy. Per the company’s public profile, Philip Morris’ product portfolio primarily consists of cigarettes and smoke-free products, heat-not-burn, vapor, and oral nicotine products.
Since the start of the year, PM stock slipped just a bit below parity. However, recent sessions suggest that a turnaround may be possible. For one thing, the company generally can be relied upon to produce solid earnings. That said, it did miss expectations in Q4. Nevertheless, analysts anticipate that EPS for the current fiscal year will come in at $6.40. That’s noticeably above last year’s print of $6.01.
Moreover, the top line could rise to $37.17 billion, 5.4% above last year’s result of $35.25 billion. And in fiscal 2025, revenue could hit $39.56 billion, implying over 6% year-over-year growth. Factor in the forward yield of 5.47% and a moderate buy consensus view and PM could be an intriguing wager.
B2Gold (BTG)
A gold-mining enterprise, B2Gold (NYSEAMERICAN:BTG) operates the Fekola Mine in Mali, the Masbate Mine in the Philippines, and the Otjikoto Mine in Namibia. Per its corporate profile, B2Gold also has a 100% interest in the Gramalote gold project in Colombia among other endeavors. While gold-related investments occasionally perform well in periods of uncertainty, this didn’t rub off BTG stock.
Indeed, shares slipped almost 21% since the beginning of the year. Over the past 52 weeks, BTG is down nearly 34%. Obviously, B2Gold isn’t an investment for the faint of heart. To emphasize this point, just look at the financials. While the company handily beat the EPS target in Q1 last year, the other results weren’t so great. Overall, the average earnings surprise came out to a mere 0.45%.
Moreover, experts are anticipating a “lost” year in fiscal 2024. However, 2025 could see a turnaround, with revenue possibly coming in at $2.39 billion. While investors wait for the narrative to pan out, they can collect a forward dividend yield of 6.43%.
Analysts also peg shares a consensus moderate buy with a $4.15 price target, implying 67% upside potential. Thus, it could be one of the high-yield dividend stocks to buy for speculators.
Alliance Resource Partners (ARLP)
If you want the most extreme of high-yield dividend stocks to buy, you might want to consider Alliance Resource Partners (NASDAQ:ARLP). Straight off the bat, you need to know that Alliance is structured as a master limited partnership (MLP). Now, MLPs provide the tax benefits of a partnership with the liquidity of publicly traded securities. Long story short, MLPs pass through the majority of their income and tax liabilities directly to their investors.
Part of the joy of owning an MLP like Alliance is the often-hefty dividend yield. In this case, we’re talking about a forward annual dividend yield of 14.08%. Further, the payout ratio is relatively reasonable at 58.21%. All other things being equal, investors can depend on the reliability of this source of passive income.
On the other hand, the pain associated with MLPs is that because the tax liabilities are passed through to individual unit holders, investors must file a Form K-1, which details their share of the partnership’s income and losses on their individual tax returns.
Still, one last positive parting shot is ARLP’s moderate buy rating with a $27 price target.
— Josh Enomoto
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Source: Investor Place