In this article, we discuss 12 best high-dividend stocks to buy right now. You can skip our detailed analysis of high-dividend stocks and their performance over the years, and go directly to read 5 Best High-Dividend Stocks to Buy Right Now.
With changing investment patterns, investors are constantly oscillating between different strategies, trying to adapt to new market conditions and opportunities. However, the search for income consistently remains their top priority, prompting them to invest in dividend stocks. High-dividend stocks have often proven to be successful investments as these equities typically offer higher dividend payouts compared to the other investments. In addition to this, historical analysis shows that high-dividend stocks have yielded better returns over the years. In an article titled "A Yield Effect in Common Stock Returns" published in the Journal of Portfolio Management (Winter 1995), J. Grant concluded that high dividend-yielding stocks from both small and large firms had been the top-performing equity investments over a thirteen-year period ending in December 1992. Grant noted that high-yield portfolios earned exceptionally high rewards despite relatively low return standard deviation.
Lowell Miller’s book “Single Best Investment” also threw light on Jim O'Shaughnessey's research, as outlined in the book “What Works on Wall Street”. O'Shaughnessy is one of the most popular American investors and the author of the highly acclaimed 'Invest Like the Best', which offers guidance on analyzing and capitalizing on investment data through the utilization of a computer program designed to mimic the investment strategies employed by professional money managers. According to the author, high yield emerged as a significantly influential factor in stock price performance, particularly when focusing on what he termed “large” stocks. Within this category, O'Shaughnessy discovered that the highest-yielding stocks consistently outperformed the broader market universe 91% of the time across all rolling ten-year periods.
Investors who favor high-yielding stocks typically seek dividend growth. In this scenario, company management tends to strive for continuous growth patterns whenever feasible. The S&P Sector-Neutral High Yield Dividend Aristocrats (HYDA), introduced in 2022, aims to achieve a balance between dividend growth and relatively higher yield. As reported by S&P Dow Jones Indices, between January 31, 2005, and July 31, 2023, the index's absolute return closely matched that of the benchmark. Notably, the S&P Sector-Neutral HYDA displayed lower overall volatility compared to the benchmark throughout the entire period, resulting in improved risk-adjusted returns. Moreover, the maximum drawdown during this timeframe was reduced by about 5%. The report also noted that historically, the index has acted as a shield against volatility. Typically, the index surpassed the benchmark in performance when the VIX level exceeded 20, with the most significant outperformance observed when the VIX level surpassed 30.
While high dividend yields have grabbed investors’ attention due to their positive historical returns, they do not reflect the respective company’s solid ground. Financial analysts advise investors not to fall for yield traps as they can be a sign of financial instability and unsustainable dividends. High dividend yields coupled with dividend growth can offer a promising strategy through which, investors can potentially benefit from both immediate income and the potential for future income growth. Philip Morris International Inc. (NYSE:PM), Verizon Communications Inc. (NYSE:VZ), and Bristol-Myers Squibb Company (NYSE:BMY) are some of the best high-yield dividend stocks that have raised their payouts consistently for years. In this article, we will take a look at some other high-dividend stocks to invest in.
For this list, we scanned Insider Monkey’s database of 933 hedge funds as of the fourth quarter of 2023 and picked dividend stocks that have yields above 4%, as of March 12. From that selection, we chose 12 companies with a proven track record of consistently paying dividends to their shareholders and ranked in ascending order of hedge funds’ sentiment toward them. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
Avista Corporation (NYSE:AVA) is an American diversified energy company that offers a wide range of related products and services to its consumers. On February 8, the company declared a 3.3% hike in its quarterly dividend to $0.475 per share. This was the company's 22nd consecutive year of dividend growth, which makes AVA one of the best dividend stocks with high yields. The stock has a dividend yield of 5.49%, as of March 12.
At the end of Q4 2023, 17 hedge funds in Insider Monkey's database reported having stakes in Avista Corporation (NYSE:AVA), up from 15 in the previous quarter. The collective value of these stakes is more than $45.8 million. Among these hedge funds, Millennium Management was the company's leading stakeholder in Q4.
NextEra Energy Partners, LP (NYSE:NEP) is a renewable energy company focused on owning and operating clean energy projects. These projects generate electricity from renewable sources such as wind turbines and solar panels, contributing to the transition to a low-carbon energy future. The company pays a quarterly dividend of $0.88 per share, having raised it by 1.4% in January this year. It is one of the best high-yield dividend stocks on our list as the company has raised its payouts every quarter since 2015. As of March 12, the stock has a dividend yield of 12.09%.
As of the close of Q4 2023, 18 hedge funds tracked by Insider Monkey held stakes in NextEra Energy Partners, LP (NYSE:NEP), compared with 19 in the previous quarter. The consolidated value of these stakes is over $145.2 million.
British American Tobacco p.l.c. (NYSE:BTI) is one of the world's largest tobacco companies, engaged in the manufacturing, distribution, and sale of tobacco and nicotine products. The company declared a 6.1% hike in its quarterly dividend to $0.7431 per share on February 13. Through this increase, the company stretched its dividend growth streak to 26 years, which makes BTI one of the best dividend stocks with high yields. The stock has a dividend yield of 9.64%, as of March 12.
The number of hedge funds tracked by Insider Monkey owning stakes in British American Tobacco p.l.c. (NYSE:BTI) grew to 22 in Q4 2023, from 17 in the previous quarter. These stakes have a total value of nearly $400 million. With roughly 8 million shares, Orbis Investment Management was the company's leading stakeholder in Q4.
Broyhill Asset Management mentioned British American Tobacco p.l.c. (NYSE:BTI) in its Q4 2023 investor letter. Here is what the firm has to say:
“The largest detractors to performance over the quarter were LatAm airports (ASR, OMAB, PAC), Bayer, and British American Tobacco p.l.c. (NYSE:BTI). After years investing across the tobacco sector, it became increasingly clear that owning anything other than the global leader – Philip Morris – made little sense. Consequently, we liquidated our investment in British American Tobacco after deciding that the (seemingly) cheap valuation wasn’t worth the mental anguish. In a hollow victory, shortly after our sale, management promptly wrote down the value of its US tobacco brands by $31.5 billion, sending shares cratering.”
Enterprise Products Partners L.P. (NYSE:EPD) is an American leading midstream energy company that is primarily engaged in the transportation, storage, and processing of natural gas, natural gas liquids, crude oil, refined products, and petrochemicals. The company reported a strong cash position in FY23 as it generated roughly $5 billion in free cash flow during the year, from $3 billion in the previous year. Its operating cash flow for the year came in at $7.6 billion.
Enterprise Products Partners L.P. (NYSE:EPD), one of the best high-dividend stocks on our list, pays a quarterly dividend of $0.515 per share. In January this year, the company achieved its 25th consecutive annual dividend hike. The stock offers a dividend yield of 7.27%, as of March 12.
Insider Monkey's database of Q4 2023 indicated that 23 hedge funds owned stakes in Enterprise Products Partners L.P. (NYSE:EPD), compared with 25 in the previous quarter. These stakes are worth nearly $300 million in total.
Energy Transfer LP (NYSE:ET) is a Texas-based midstream energy company that operates a diversified portfolio of energy assets. The company was included in 34 hedge fund portfolios at the end of Q4 2023, which remained unchanged from its previous dividend, as per Insider Monkey's database. The stakes owned by these hedge funds have a total value of $824.4 million.
Energy Transfer LP (NYSE:ET) offers a quarterly dividend of $0.315 per share and has been raising its dividends for nine consecutive quarters. With a dividend yield of 8.38% as of March 12, ET is one of the best dividend stocks on our list.
Lincoln National Corporation (NYSE:LNC) is a diversified financial services company that offers a wide range of related services to its consumers in the US. On February 22, the company declared a quarterly dividend of $0.22 per share, which fell in line with its previous dividend. The company has a 35-year run of paying regular dividends to shareholders, which makes LNC one of the best dividend stocks with high yields. The stock's dividend yield on March 12 came in at 6.71%.
Lincoln National Corporation (NYSE:LNC) was a popular buy among hedge funds at the end of Q4 2023 as the company ended the quarter with 31 hedge fund positions, up from 25 in the previous quarter, according to our database. The stakes held by these hedge funds have a total value of over $270 million.
Altria Group, Inc. (NYSE:MO) ranks sixth on our list of the best dividend stocks with high yields. The American multinational tobacco company offers a quarterly dividend of $0.98 per share for a dividend yield of 9.11%, as recorded on March 12. The company has been rewarding shareholders with growing dividends for the past 54 consecutive years.
According to Insider Monkey's database of Q4 2023, 42 hedge funds owned stakes in Altria Group, Inc. (NYSE:MO), up from 40 in the previous quarter. These stakes are collectively valued at over $1.08 billion.
