3 “Strong Buy” Dividend Stocks Yielding Over 6% (2024)

Investors looking for a strong return can choose one of two main strategies: they can seek out stocks with high share price appreciation, or they can look for high dividends.

Dividends are profit sharing payments sent out to stockholders. Companies have a variety of reasons for paying them, ranging from simply sweetening the pie to attract investors to compliance with tax law. But whatever the motive behind them, dividends are cash in the investor’s pocket.

Companies usually make the payments quarterly, and they are analyzed by several metrics. The payment, of course, is the cash sent out. It can be stated as a quarterly or annualized sum. The yield is the annualized sum as a percentage of the share price – or, how much of the stock value is paid back to investors. Among S&P listed companies, dividend yields average near 2%. The payout ratio is the quarterly payment as a percentage of quarterly earnings, and is a measure of the dividend’s sustainability. Obviously, investors like high ratios, but if the ratio is too high a company simply cannot afford it.

With all of that in mind, we’ve opened up the Stock Screenertool from TipRanks, a company that tracks and measures the performance of analysts, to find stocks with high dividend yields. Setting the screener filters to show stocks with "strong buy" consensus rating and a high dividend yields exceeding 5% gave us a manageable list of stocks. We’ve picked three to focus on.

Two Harbors Investment (TWO)

Real estate investment trusts (REITs) are companies formed to buy, own, and manage various forms of real property – residential and commercial real estate – and to derive income from them. Investors provide the capital needed for purchases, and tax regulations require the companies to pay back a high percentage of income to shareholders. That last is the reason behind the high dividend yield offered by REITs like Two Harbors. It is not unusual to find an REIT with a payout ration that occasionally exceeds 100%.

Two Harbors owns both real properties and mortgage-backed securities, with a focus on residential properties. Ownership of both properties and mortgages is a hybrid strategy in the sector, designed to minimize the risks attached to either one, while maximizing income from varied streams. TWO has leveraged the hybrid strategy to build a steady revenue stream, which at $58.66 million beat the forecasts in the third quarter.

That revenue translated to an EPS of 24 cents, a 33% miss of the forecast, and down 50% yearly. Despite the low quarterly results, the company maintains its dividend, per compliance with tax law, at a high 40 cents per quarter. The annualized payment, $1.60, puts the yield at 10.96%, more than 5 times the S&P average. TWO has a history of adjusting the quarterly dividend to ensure that it can meet the obligation, even with a high payout ratio.

Wall Street’s analysts are bullish on TWO’s ability to maintain both its revenue stream and its dividend payment. Writing from Credit Suisse shortly after meeting with TWO management earlier this month, 4-star analyst Douglas Harter said, “The meeting highlighted the attractive returns available to TWO in Agency MBS and MSR. In the short-term, some of this return will be recognized in terms of gains and not through core earnings. The company’s track record of delivering economic return gives us confidence in the strategy despite the near-term core earnings shortfall.” In line with his optimism on TWO, Harter gave the company a Buy rating with a $14.50 price target. In recent days, TWO stock has surpassed that target. (To watch Harter’s track record, click here)

Jason Weaver, of Compass Point, agrees that TWO is a buying proposition. He writes, “In our view, the company offers a streamlined portfolio with attractive risk/reward characteristics in the current market environment, with sufficient ROE generation capacity to sustain the current dividend and grow book value over the long run.” Weaver’s $15.20 price target suggests a modest upside to the stock, of 4.1%, which is compensated for by the high dividend yield. (To watch Weaver’s track record, click here)

Two Harbors stock has shown gains this year, although at 14.5% those gains have underperformed the overall markets. The shares get a Strong Buy from the analyst consensus, based on 6 reviews that include 5 Buys and 1 Hold. The average price target, of $15.20, matches analyst Weaver’s, above. (See Two Harbors price targets and analyst ratings on TipRanks)

3 “Strong Buy” Dividend Stocks Yielding Over 6% (1)

MPLX LP (MPLX)

REITs are not the only place to find great dividend yields. The energy industry may get a bad rap from environmentalists and conspiracy theorists, but it typically gets a thumbs up from investors. As an industry, it tends to drip cash, and energy companies are well known for paying out, over the long term, high dividends. MPLX, a spin-off partnership of Marathon Petroleum which maintains a controlling interest, is no exception.

MPLX primarily handles midstream operations. The company has an array of assets, from pipelines to inland river shipping to oil and gas terminals to refinery storage, along with loading and dock facilities. In effect, Marathon shrugged off its product transport and created a company – MPLX – to handle that aspect of the business. It allows both companies to sharpen their focus and operate more efficiently.

Midstream is not MPLX’s only area of operation. It also has a significant natural gas business, with gathering and extraction systems. These operations produce industrially important natural gas derivatives such as ethane, ethylene, butane, propane, and propylene. MPLX also handles transport of these products.

MPLX has been a profitable endeavor, on its own and for parent company Marathon. Q3 presents a good example. MPLX beat the forecasts on both revenue and EPS, with total sales coming in at $2.28 billion against the estimated $2.24 billion. EPS, at 61 cents, beat the forecast by 3.3%. The company announced a dividend for the quarter, of 67.5 cents per share, which annualized to $2.71 and yields 10.66%. Even better for investors, MPLX has a history of gradually raising the dividend payment; it was 59 cents in November 2017, and has gone up 1 cent every quarter since.

Michael Blum, 4-star analyst from Wells Fargo, reviewed MPLX and set a Buy rating on the stock. Of his $36 price target, he writes, “Our price target is based on a blend of (1) a three-stage distribution/dividend discount model, which assumes a required rate of return of 9% and long-term growth rate of 0.5%, (2) a 2021E EV-to-EBITDA multiple of ~11x, and (3) a sum-of-the-parts valuation based on our 2021 forecast.” The target implies an upside of 41% for MPLX shares. (To watch Blum’s track record, click here)

MPLX sells for an affordable price, just $25.43, making it a fine option for investors seeking both high upside and high dividends. The average price target, $31.75, indicates room for 24% growth in the coming year. The shares’ Strong Buy analyst consensus comes from 6 Buys and 2 Holds given in recent months. (See MPLX’s stock analysis at TipRanks)

3 “Strong Buy” Dividend Stocks Yielding Over 6% (2)

Brigham Minerals (MNRL)

By this time, we all know about the huge successes of the US oil extraction industry in the past decade. The US has become the world’s single largest producer of crude oil, and in September 2019, for the first time since WWII, the US exported more oil and oil products than it imported. In short, energy is a big and growing business in the US.

That business has to start somewhere, and that’s where companies like Brigham Minerals come in. Brigham is an acquisition company, buying oil and gas mineral rights in the western US. The company’s main properties are located in the Delaware and Midland basins Texas and the Bakken region in North Dakota – some of the most productive oil and gas fields in the US. MNRL also has extensive interests Oklahoma, Colorado, and Wyoming.

The value of MNRL’s acquisitions can be seen by the company’s Q3 revenues. Total income, at $25.11 million, beat the estimate by 1.4%. EPS, however, was down at 6 cents per share. Volatility is somewhat to be expected, as MNRL only started trading in April of this year. Management was unfazed by the lower EPS and announced a dividend of 33 cents. It was the company’s second quarterly dividend and equaled the previous payout. The dividend annualized to $1.32 per share and gives a yield of 6.3%. While lower than the stock above, this is still more than triple average dividend among S&P companies, and three and a half times higher than the Federal Reserve’s key rate.

5-star analyst T J Schultz, writing from RBC Capital, was impressed enough with MNRL’s position to reiterate his Buy rating. He says of the stock, “MNRL’s superior acreage position and strong counterparty producers are expected to drive >25% production growth in 2020. We think this level of production growth can translate into double digit dividend growth with >1.1x coverage. Furthermore, a strong balance sheet provides optionality to flex growth higher in 2020 via acquisitions.” Schultz puts a $25 price target on MNRL, suggesting an upside of 18%. (To watch Schultz’s track record, click here)

Overall, MNRL gets a good rap from Wall Street. The company has a Strong Buy consensus rating, based on 3 recent Buy reviews. The average price target, $25, matches Schultz’s, giving the stock a robust potential. Combined with the high dividend and the 21% gain since MNRL started trading, and the upside is clear. (See Brigham Minerals price targets and analyst ratings)

3 “Strong Buy” Dividend Stocks Yielding Over 6% (3)

3 “Strong Buy” Dividend Stocks Yielding Over 6% (2024)

FAQs

What stocks pay more than 6% dividend? ›

20 high-dividend stocks
CompanyDividend Yield
Washington Trust Bancorp, Inc. (WASH)7.86%
Ames National Corp. (ATLO)7.58%
Eagle Bancorp Inc (MD) (EGBN)7.27%
First Of Long Island Corp. (FLIC)7.26%
18 more rows
4 days ago

What are the three dividend stocks to buy and hold forever? ›

Key Points
  • Ford's dividend is high-yield, and unique thanks to family ownership.
  • Altria Group is transitioning to smokeless tobacco, but its dividend remains a top option.
  • J&J has spun off part of its business to focus on growth, and its dividend remains a huge focus for value to shareholders.
2 days ago

What are the three best dividend stocks? ›

The 10 Best Dividend Stocks
  • Comcast Corp Class A. (CMCSA)
  • LyondellBasell Industries NV Class A. (LYB)
  • Medtronic PLC. (MDT)
  • Verizon Communications Inc. (VZ)
  • Dow Inc. (DOW)
Aug 2, 2024

Is 6% a good dividend yield? ›

Yields from 2% to 6% are generally considered to be a good dividend yield, but there are plenty of factors to consider when deciding if a stock's yield makes it a good investment. Your own investment goals should also play a big role in deciding what a good dividend yield is for you.

What are the cheapest stocks that pay the highest dividends? ›

7 Best Cheap Dividend Stocks to Buy Under $10
StockForward dividend yield*
Telefonica SA (TEF)7.5%
Banco Bradesco SA (BBD)6.4%
Vodafone Group PLC (VOD)11.1%
Nokia Corp. (NOK)3.9%
3 more rows
Jun 17, 2024

What stock pays the highest dividend monthly? ›

Top 9 monthly dividend stocks by yield
SymbolCompany nameForward dividend yield (annual)
EPREPR Properties7.56%
SILASILA Realty Trust6.84%
APLEApple Hospitality REIT6.57%
MAINMain Street Capital Corp.5.75%
5 more rows
Aug 1, 2024

What is the highest paid dividend stocks? ›

10 Highest-Paying Dividend Stocks in the S&P 500
StockTrailing Dividend Yield
Ford Motor Co. (F)5.6%
Crown Castle Inc. (CCI)5.7%
AT&T Inc. (T)5.8%
Verizon Communications Inc. (VZ)6.6%
6 more rows
Aug 1, 2024

What is the safest dividend stock? ›

PepsiCo has an impressive track record of increasing its dividend for 50 consecutive years. This consistent dividend growth, combined with the company's stable business model and strong cash flow from operations makes PepsiCo a top pick for a “safe” dividend stock.

What are the three stocks to own for monthly dividends? ›

Three high-yielding stocks that can provide you with some excellent dividend income are Innovative Industrial Properties (NYSE: IIPR), AT&T (NYSE: T), and Enbridge (NYSE: ENB). Since these stocks pay dividends in different months, investing in all three can result in monthly income for your portfolio.

How to find the best dividend stock? ›

Look at dividend growth

Generally speaking, you want to find companies that not only pay steady dividends but also increase them at regular intervals—say, once per year over the past three, five, or even 10 years.

Which are the best stocks to invest in 2024? ›

Best stocks in 2024
S.No.NameCMP Rs.
1.Man Infra189.35
2.BLS Internat.391.85
3.Black Box548.00
4.RHI Magnesita598.10
22 more rows

What is the best dividend ETF? ›

7 high-dividend ETFs
TickerCompanyDividend Yield
SPYDSPDR Portfolio S&P 500 High Dividend ETF4.24%
SDOGALPS Sector Dividend Dogs ETF3.91%
RDIVInvesco S&P Ultra Dividend Revenue ETF3.83%
SPHDInvesco S&P 500 High Dividend Low Volatility ETF3.83%
4 more rows
Aug 1, 2024

What are the best dividend stocks to buy and hold forever? ›

10 Best Dividend Growth Stocks to Buy and Hold Forever
  • Lowe's. Home-improvement retailer Lowe's (NYSE: LOW) has grown its dividend by 15.8% annually over the past five years. ...
  • Visa. ...
  • Parker-Hannifin. ...
  • Nordson. ...
  • Abbott Laboratories. ...
  • Target. ...
  • Nike. ...
  • S&P Global.
Jul 21, 2024

Which share gives the highest dividend? ›

Overview of the Top Dividend Paying Stocks in India
  • Hindustan Petroleum Corp Ltd. ...
  • Indian Oil Corporation Ltd. ...
  • Bharat Petroleum Corporation Ltd. ...
  • Vedanta Ltd. ...
  • Coal India Ltd. ...
  • Chennai Petroleum Corporation Ltd. ...
  • UTI Asset Management Company Ltd. ...
  • Oil and Natural Gas Corporation Ltd.
4 days ago

Is 8% a good dividend yield? ›

The Rule of 72 says an 8% yield can double your investment in nine years if reinvested. Let's see how. A $10,000 investment can earn you $800 in dividends. If you reinvest this amount, you will earn 8% on $10,800, increasing your second-year interest to $864.

Which stock has given highest dividend? ›

Some of the highest dividend-paying stocks in India are Vedanta Ltd., Hindustan Zinc Ltd, Coal India Ltd, T.V. Today Network Ltd, Bhansali Engineering Polymers Ltd, Balmer Lawrie Investment Ltd, and Coal India Ltd.

What stocks have paid dividends the longest? ›

York Water (YORW): The oldest investor-owned utility also has a better than 200-year record of paying dividends. Stanley Black & Decker (SWK): The world's biggest tool company owns some of the best-known hand and power tool brands.

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