Dividend stocks can be enriching investments. They supply income and have historically produced higher total returns than non-payers.
With the stock market rallying last year, dividend yields are down. The S&P 500’s yield is near a 20-year low of 1.2%. However, there are still some attractive dividend stocks out there for those seeking a higher income yield. Here are five top dividend stocks yielding more than 5% to buy this year.
Brookfield Renewable
Brookfield Renewable (BEPC) (BEP) currently offers a 5.7%-yielding dividend. The leading global renewable energy producer generates lots of stable cash flow to cover its high-yielding payout. It has signed long-term, fixed-rate power purchase agreements with utilities and large corporations for about 90% of its power. Most of those contracts index rates to inflation, accounting for 70% of its revenue.
Enbridge
Enbridge’s (ENB) dividend yield is around 6% these days. The Canadian pipeline and utility company generates very stable cash flow to support its dividend. About 98% of its earnings come from cost-of-service or contracted assets. Meanwhile, most of those structures have built-in inflation protection. Enbridge’s earnings are so predictable that it was well on its way to delivering its 19th straight year of achieving its financial guidance in 2024.
The company recently raised its dividend payment, marking its 30th straight year of dividend growth. Enbridge has plenty of fuel to continue increasing its payout. It currently has a massive backlog of commercially secured capital projects under way that should enter service through 2029. They help fuel Enbridge’s expectation that it can grow its cash flow per share at a 3% compound annual rate through 2026 and by around 5% per year after that.
Realty Income’s (O) monthly dividend yields 5.8% these days. The real estate investment trust (REIT) generates very stable rental income. It has a globally diversified portfolio of properties — retail, industrial, gaming, and others — net leased to many of the world’s top companies. Net leases require tenants to cover all operating expenses, including routine maintenance, building insurance, and real estate taxes.
The REIT has an exceptional record of increasing its dividend. It has raised its payout for 30 straight years, including the past 109 quarters in a row. That steady upward trend should continue. Realty Income has an elite financial profile, giving it ample flexibility to continue acquiring additional income-generating properties. It has a long growth runway, given that there are trillions of dollars of commercial real estate across the U.S. and Europe suitable for the net lease structure.
Verizon
Verizon (VZ) pays a 7%-yielding dividend. The telecom giant produces pretty stable cash flow as consumers and businesses pay their wireless and broadband bills. The company generates billions of dollars in cash flow each year, giving it the money to expand its 5G and fiber networks, pay dividends, and strengthen its balance sheet.
Vici Properties
Vici Properties’ (VICI) dividend yields 5.9%. The REIT also produces very stable income. It owns casinos and other experiential real estate secured by long-term net leases with the operators of those facilities. It also provides financing to develop experiential real estate, which generates interest income.
The REIT has increased its payout for seven years in a row, and every year since its formation. It has grown its dividend at a 7% compound annual rate during that period, well above its peer group average of 2.2%.
Vici Properties should be able to continue growing its payout in the future. It has multiple growth drivers, including contracts that give it the right to buy additional casino properties from its existing tenants. In addition, many of its financing agreements enable the REIT to purchase those properties and others owned by the same developer in the future.
High-yielding and growing income streams
Brookfield Renewable, Enbridge, Realty Income, Verizon, and Vici Properties all pay dividends above 5%. More importantly, they back those high-yielding dividends with rock-solid financial profiles. That has enabled the companies to continue investing in growing their business, which has allowed them to steadily increase their dividends. Those features make them great dividend stocks to buy this year for investors seeking a higher-yielding and steadily rising income stream.
— Matt DiLallo
46-Year-Old CEO Bets $44.2 Billion on One Stock [sponsor]Netflix is NOT the future of entertainment. It's only a small fraction. And one billionaire CEO is taking charge of what Netflix DOESN'T do and leading the way for the next generation of entertainment. His forward-thinking company, which many people haven't even heard of yet, doesn't only want to compete with Netflix... It wants to rule the world...
Source: The Motley Fool